5 Reasons Investing in Nashville Real Estate Is a Smart Move
Last Updated: February 06, 2o25
Steve Nabity
February 06, 2025
5 Reasons Investing in Nashville Real Estate Is a Smart Move
Nashville aka “The Music City” is best known for being the birthplace of country music. It does have a thriving music scene even today and a strong economy to go along with it. The population in the Nashville MSA has been growing at over 20% every decade for the past 3 decades. This number is far higher than the national average. Advanced manufacturing and automotive manufacturing are among the largest employment-providing sectors in the area. Educational institutions like Vanderbilt University provide the STEM talent needed to fuel the growth of the technology and healthcare-related industries.
Home prices, as per the Zillow Home Index, have shot up from around $225,000 in 2016 to well over $440,000 in 2024. There is an influx of new residents seeking a vibrant lifestyle and new construction to support the growth. Demand for housing has also led to an increase in rents. Nashville has lately been ranking among the top cities for the highest year-on-year rent increases.
Job counts in most of the important sectors are at record levels. The economy appears to be as vibrant as the music scene. A high job count points to hiring from within the metro and outside, leading to inward migration. In short, what is there not to like about Nashville from a real estate perspective?
In this article, we will look at Nashville’s population growth, one of the key factors driving the demand for residential and commercial real estate. A growing population also needs to be supported by a growing economy. So, we will discuss Nashville’s economy and job market. Next, we will explore Nashville’s rental demand and policy environment. We will also look at the diverse residential and commercial real estate investment opportunities that Nashville can offer investors. We will end the article by highlighting some important trends in the Nashville real estate market.
1. Strong Population Growth
Nashville’s population increased by 14.7% from 2010 to 2020. The population growth for the 10-year period was the highest since 1960-70. The Nashville metropolitan area (MSA) had 10-year population growth rates of over 20% since 1990. So, while the population growth has been healthy in the city, the suburban areas seem to have experienced even stronger growth rates. The population of the MSA doubled from over a million in 1990 to over 2 million by 2020. The population of Nashville, as of 2023, was 687,788 as per data from the US Census Bureau.
The population growth in the Nashville area is driven by a combination of factors. There is no state income tax in Tennessee. Companies have also been relocating from more expensive, regulated, and denser parts of the country. Job opportunities, especially high-skilled jobs in emerging areas such as technology and manufacturing are also key drivers of population growth. The average home value in Nashville, as per Zillow’s Home Value Index, was $428,358 in November 2024. Nashville offers a dynamic lifestyle with a thriving music scene, diverse cultural attractions, vibrant nightlife, outdoor spaces, and a relatively lower cost of living.
2. Booming Economy and Job Market
Nashville is home to four major country music labels. The city is often called the home of country music. The music industry is a big part of the local economy. However, the largest employer is HCA Healthcare, the largest private hospital operator in the world. Besides HCA, there are 300 healthcare companies operating in the Nashville area. The Vanderbilt University Medical Center is also among the top employers in Nashville.
The technology sector in Nashville has been a growing one in recent years. Software giant Oracle is setting up a 65-acre campus in Nashville while Amazon already has an established facility in Nashville which serves as a bug of the southeastern US. Health-tech startups are also increasingly locating themselves in Nashville. The strong local economy of Nashville is reflected in the low unemployment rate of the MSA compared to the national average. The unemployment rate in the Nashville MSA was 2.9% as of November 2024, much below the national average of 4.2%.
Strong population growth and job creation ultimately lead to higher demand for residential and commercial real estate. There has been an influx of professionals looking for career opportunities. Such migration leads to more people looking for rental housing. Strong job growth also leads to consumer spending, benefitting retail properties. The median income in Davidson County, where Nashville is located, has doubled from $40,000 in 2005 to over $80,000 in 2023.
(Luxe Apartments – One of our portfolio multifamily properties in Nashville, TN)
Get More Content Like This Right to Your Inbox
3. High Rental Demand
The growing population of Nashville and a strong economy has resulted in an influx of young professionals and their families. Migrants tend to favor renting a home, especially when they are in the process of building their careers. This has resulted in a strong demand for rental housing and pushed up occupancy rates. With higher occupancy rates, rental yields have increased and attracted investors to the residential sub-segment of real estate.
Nashville’s thriving music scene has driven tourism as well. Short-term rentals on platforms like Airbnb have also become lucrative investment options for some investors. Such short-term rentals often cater to those coming into the city for events and festivals. Short-term rentals from such audiences tend to do well in specific pockets. Locations where visitors are willing to pay a premium by staying closer to their areas of interest are the ones that do well. For longer-term renters, affordability and connectivity matter.
Nashville has specific laws relating to short-term rentals. Factors like occupancy limits, registration of the property and business with the city, and taxation must be understood before making any investment. Nashville’s zoning laws dictate where multifamily properties can be built. The local building and safety codes spell out how the structures need to be designed and constructed.
4. Diverse Real Estate Investment Opportunities
When looking to invest in real estate, one of the questions that comes to mind is what kind of real estate. There is residential real estate, which consists of condos, multifamily complexes, single-family housing, student housing, affordable housing, etc. Commercial real estate is broad and includes office buildings, retail properties, and flex workspaces. Industrial real estate includes warehouses, factory units, manufacturing sheds, etc. Then there are self-storage properties, data centers, and much more. It is almost like an ocean out there.
Residential real estate tends to be more stable. People need a place to live even in a crisis. Leases in real estate can be short-term or long-term. Identifying the right location with consistent demand and strong connectivity to multiple areas of interest is the key.
Commercial real estate tends to offer a higher yield than residential but it also means higher risk. Dealing with tenants is more complex while the leases can be longer and more complicated too. The tenant base is more diverse but commercial real estate is more sensitive to economic factors and market cycles.
A growing city like Nashville offers investment opportunities in all real estate subsegments. Certain neighborhoods like East Nashville, The Gulch, and Franklin have been high-growth pockets in recent times. East Nashville is closer to downtown and has an eclectic vibe. The Gulch was an industrial area that has now been transformed into a trendy urban district. Franklin has had strong job growth and family-friendly amenities.
Skyline Point Capital monitors development, population, and demographic trends to identify neighborhoods in promising metro areas with strong potential for investment returns.
(The City of Nashville)
5. Nashville’s Real Estate Market Trends
As per Zillow’s Home Values Index, the average home value of Nashville was $428,358 as of November 2024. This number was $235,724 in November 2016. So, the home value has nearly doubled over an 8-year period, a compounded annual growth rate of over 7.7%. Property values have been on an upward trajectory and consistently rising. A strong economy, expanding job market, and robust population growth have increased demand for residential and commercial real estate. Strong demand and high occupancy ultimately help drive strong rental yields and make the market an attractive one for investors.
Despite economic shocks and downturns that have happened over the years, Nashville’s growth drivers of the economy and population growth have continued their positive trend. So, the real estate market has also been resilient. Inward migration has helped sustain the demand for real estate as young professionals and retirees have made Nashville their home. Urban revitalization and other development projects will create new opportunities for investors. An expansion of the transit system and infrastructure projects may be of particular interest to investors. Nashville’s real estate market appears to be well-placed for future growth. It is certainly one of the markets that Skyline Point Capital is monitoring for investment opportunities.
(source: Zillow)
Conclusion
We hope you now have a general idea of the Nashville market and its potential for future growth. We have talked about the historical population growth in the Nashville area, its strong economy, the increasing role of growth sectors like technology, and the diversity of real estate opportunities available to investors.
We also touched upon the price trajectory of homes and rents in Nashville over the past few years. If you want to learn more about investing and develop a sense of evaluating markets like Nashville, then we encourage you to check out our library of complimentary resources. We also recommend you join the Founders Investor Club where a community of business owners, entrepreneurs, and investors get access to investment opportunities that we are currently analyzing.
If you would like to speak to us about anything real estate, feel free to schedule an introductory call. Start building your wealth by investing in real estate.
