It’s no secret anymore: Rutherford County is one of Tennessee’s hottest real estate markets.
“Out of the top 10 zip codes most popular in the Nashville area, four are in Rutherford County,” county property assessor Rob Mitchell said.
- No. 4: West Murfreesboro’s 37128, encompassing the growing Blackman community.
- No. 5: Central and northeastern Murfreesboro in the 37130 zip code.
- No. 8: Smyrna’s 37167.
- No. 9: The 37129 zip code includes Medical Center Parkway and northwestern portions of the county near Interstate 840.
“People are interested in Rutherford County … because there’s a hometown feel … and because there are great school systems, and (Middle Tennessee State University) is a huge draw,” said John Goodman, a 28-year real estate veteran with Red Realty.
Job growth in Middle Tennessee is another major reason people are moving here, Goodman said. The Nissan Assembly Plant in Smyrna opened in 1983 and drew thousands. Companies that support the production plant then opened, along with other manufacturing and distribution plants such as Bridgestone.
Over time, locall jobs and a proximity to Nashville’s growing employment market boosted Rutherford County’s population in excess of 330,000.
Lower cost of living
Although home prices may shock residents who have been in Rutherford County for years, it’s still less expensive than Davidson and Williamson counties.
“This is the place everybody is looking to move because we have (some of) the lowest medium-priced homes in the Middle Tennessee area that connect to Davidson County,” Mitchell said.
According to data from Realtor.com and Redfin real estate, the average Rutherford County home sale in April was $320,000, up 12.3 percent from last year. Davidson County’s median price is $370,000 and Williamson County is $640,000.
Only Cheatham County ($289,000) and Robertson County ($300,000) are less.
Homes in Rutherford County typically sell for 1.1% over list prices and remain on the market for an average of 20 days. The average price per square foot is now $163 — up $22 over last year’s number.
Davidson County ($203) is much higher, as is Williamson County ($217).
Rutherford County is also close to the Nashville International Airport and Interstates 840 and 24. Mitchell said approximately 30% to 40% of Davidson County’s workforce lives in Rutherford County, making it an easier commute.
So often those employed in neighboring Williamson and Davidson counties buy in Rutherford where homes are cheaper and there’s still a solid quality lifestyle with plenty of shopping, recreational opportunities, moderate weather and a growing number of jobs.
Growth brings challenges
There are challenges to Rutherford County’s growth.
“We have 3,000 people wanting to buy homes here but no inventory. That’s huge,” Mitchell said.
Why?
Michell said real estate investment companies are “equity mining” generational wealth out of the middle class.
“Those investors are buying up bundled packages of single-family homes in order to cash in on Tennessee and Rutherford County’s statutory 75% tax break,” Mitchell explained.
For instance, if a home is appraised for tax purposes at $100,000, buyers will only be assessed for 25% of that value. Dwellings with two or more units under one roof only get the 40% assessment rate.
“So it makes better business sense to buy single-family homes instead,” Mitchell said. “These bundles packages of single-family home have a 60% tax savings over a multi-family apartment complex.
With investment companies buying up older homes and a shortage of new homes, supply and demand is driving up costs, Mitchell added.
Traditional starter homes that once dotted the landscape are lucrative for builders because land cost has risen. So today’s starter homes are evolving into townhomes or condominiums.
“I have to have a lot of motivational conversations with my buyers to keep them very positive,” said Monica Greer of Keller Williams Realty in Murfreesboro.
“It can be discouraging when your goal is to become a homeowner. When you’re finally approved, and then your reality doesn’t seem like it can be a reality, a lot of them are ready to give up.”
Buyers who have FHA and VA loans may have a harder time winning a bid for a house. Those loans can’t be more than the appraisal amount, Greer said.
“First-time home buyers who have some sort of cash reserves will be able to compete in this market,” Greer said.
Greer listed a home last week that had 30 offers and sold for $50,000 over the appraised value.
“If you have buyers coming into a market, they need to have cash reserve,” Greer said. “This is money the buyer needs to be willing to pay in the event the home does not appraise for the purchase price. They need to be prepared to pay at least $10,000 to $15,000 over appraised value.”
Buyers should also be prepared to pay their own closing costs and down payment.
And forget asking for contingencies. Investment companies or buyers who are able to pay well above listing price are able to close much quicker than families who must jump through hoops for a bank to approve loans.
“We’re having bidding wars … and if you’re asking for a home inspection, sometimes you’re not even in the running (to purchase),” Goodman said. “That’s how tough the market has gotten. It’s really hard to compete against an investment buyer.”
With fewer existing homes on the market, Greer said buyers are looking to new construction because there’s no competition. But even new homes have disadvantages.
One of Greer’s clients signed a contract for new construction and planned to move in by August. It’s already been pushed back to October.
“Because of the cost of lumber … and when the lumber factories were closed down during the pandemic … (builders) haven’t caught up,” Greer said.
Prepare and plan
Thinking about buying a home?
One of the first things buyers should do is find a lender who can figure out how much home they can afford so they can get prequalified for a loan — if they’re not paying cash, Greer said.
“The biggest thing for buyers is to make sure you have good credit scores or manage your credit well,” said Greer, who teaches home buyers education classes that help clients improve their finances.
Pricey homes:9 Rutherford County homes sold for $1 million or more in 2020. See where they are
Greer also encourages buyers to “have as much savings as you can” so you can be competitive in the market.
“Buyers should also have an idea of what’s important to them and what’s non-negotiable when looking for a home,” Greer said, whether it’s location, having a backyard or big kitchen.
Although the market is hot, Greer makes sure her clients know the risks so they can be prepared when the market levels. In the economic downturn of 2008, many buyers were left owing more than their homes were worth, and it could happen again.
Said Greer: “A lot of buyers are very anxious right now.”
Reach reporter Nancy DeGennaro at degennaro@dnj.com.
Four out of the top 10 zip codes in the Nashville area are in Rutherford County
No. 4: 37128 (Murfreesboro)
No. 5: 37130 (Murfreesboro)
No. 8: 37167 (Smyrna)
No. 9: 37129 (Murfreesboro)
Source: Rutherford County Property Assessor Rob Mitchell
The average Rutherford County home sale in April was $320,000, up 12.3 percent from last year. It was still less than neighboring counties.
Davidson County: $370,000
Williamson County: $640,000