Massive Housing Shortage Predicted for Nashville

Nashville is on track to face a significant housing shortfall, with a projected need for 90,000 new homes over the next 10 years.

Trends suggest only 70,000 units are likely to be built in that time, leaving a gap of 20,000 homes and raising concerns about the city’s ability to keep up with its rapid growth, the Nashville Business Journal reported, citing the Metro Planning Department.

The housing shortage is attributed to a combination of factors, including zoning restrictions, lengthy permit processes and a growing population. Local officials should maximize opportunities for development in urban corridors, suburban areas and infill sites to address the deficit, said the planning department’s Greg Claxton.

Nashville has seen a peak in housing production in recent years, averaging 10,000 to 13,000 units annually. A rate of just 9,000 homes per year is needed to cover the gap. But “given the uncertainties to growth patterns and household structure,” Nashville should target 15,000 to 25,000 units a year, Claxton said.

Just a year ago, it looked like Nashville’s multifamily market was headed for oversupply, with 16,000 vacant apartment units and 18,000 units in the development pipeline, according to CoStar.

Now city officials are exploring ways to accelerate construction and reduce barriers for developers. Streamlining permitting processes and revising zoning codes to encourage higher-density developments are among the potential solutions. Mixed-use projects, which combine residential, commercial, and recreational spaces, are also being touted as strategies to maximize land use and support urban growth.

Austin-based Sett Studio is among the developers adding to Nashville’s luxury housing supply. The company is leading the development of Martin Reserve in Nashville’s Green Hills neighborhood. The nearly 5-acre site will include 10 single-story homes ranging from 3,500 to 6,000 square feet, with prices starting at $3.5 million.

Meanwhile, Chicago-based Albion Residential landed a $102 million construction loan last spring to build 850 apartments across two high-rise buildings on Music Row.

— Andrew Terrell