Agent: Prices will rise as waters recede

Hammond looks to post-Katrina New Orleans for indicators
Print By J.R. Lind
05-05-2010 3:03 PM

Nashville real estate agent Grant Hammond thinks housing prices will head for higher ground as the Cumberland recedes.

Hammond blogs that the basic principles of supply-and-demand are in effect – and uses a post-Katrina New Orleans as an example.

As New Orleans recovered, rental prices jumped 39 percent and home prices in the suburbs surged. Some of the Big Easy's bedroom communities had home prices increase by as much as 23 percent in the months following the hurricane.

Of course, it's not an exact parallel. Devastation was widespread in New Orleans and many people left the city completely. Rebuilding was – and continues to be – a slow process. Hammond predicts home prices in the hardest hit areas of Nashville – Bellevue, Antioch and Pennington Bend - will drop sharply. But, he suspects, widespread out-moving may not be a problem.

"However, there are several large rental complexes very near those areas that may allow displaced residents to temporarily remain close to home. This is an important fact, since the further loss of consumer spending in those specific areas would magnify the loss in real estate prices through population attrition," he writes.


Hammond predicts a spike in sales in neighborhoods near Bellevue – specifically northern Brentwood, Franklin and West Meade.

"Eastern Bellevue, Green Hills, Hillwood and West End may see an increase in rental demand. Unquestionably, downtown Nashville itself as well as the Cool Springs area will experience higher than usual demand as displaced persons attempt to secure a rental or permanent residence closer to where they work," he said.

Hammond agrees with what a North Dakota agent told NashvillePost.com earlier this week: The flood could prove to be a boon to the Nashville real estate market.

"It is true that Nashville is in the beginning stages of scratching and clawing its way out of the national economic downtown. It is also true that jobs and general optimism had also begun to return to this area. For the supporting reasons above, I am predicting that the resulting economic impact from the flood will cause the Nashville real estate market to recover faster than if the flood had not occurred. The storm has caused the total inventory of homes to decrease more than the resulting demand. While this affect many only last 6-12 months, it may seamlessly blend into a recovering national recover," Hammond said.