Higher interest rates are slowing down Middle Tennessee’s housing market, but prices are still high

Higher interest rates are starting to hit everyday Tennesseans when it comes to buying a house. This means the market is slowing down, but that doesn’t guarantee a bargain.

Mid-pandemic, the housing market was chaotic. Properties were consistently selling for more than the asking prices. Houses went under contract almost immediately, and buyers felt pressure to make a decision quickly.

Steve Jolly, president of Greater Nashville Realtors, says that’s not the case anymore.

“A lot of those things that made the market crazy and that was the focus of the markets over the last year, a lot of that has disappeared,” Jolly says.

Jolly says this is because interest rates are going up, but that’s a double-edged sword for potential buyers.

“For every 1% increase in that interest rate, a buyer loses 11% of their buying power,” Jolly says.

WPLN News fact-checked that with the director of MTSU’s Business and Economic Research Center, Dr. Murat Arik, who confirmed that a 1% interest rate hike typically decreases buying power between 8 and 12%, depending on the specific situation.

That means some people will be edged out of the housing market, especially since home prices are still high. The median for a single family home in Middle Tennessee is nearly half a million dollars.

The bottom line: It may be logistically easier to buy a house now than it was a year ago — but only if you have the money to afford it in the first place.