Nashville is consistently ranked as one of the most expensive cities to live in the US. The high cost of living is driven by a number of factors, including the city’s strong economy and high demand for housing.
Nashville is also a popular tourist destination, and its hotels and restaurants are expensive. Nashville’s housing market is particularly expensive, with median home prices well above the national average.
The high cost of living in Nashville can be a challenge for residents, but the city’s strong job market and vibrant culture make it a desirable place to live. If you want to live in Nashville, you will need to have a good income.
Why Is Nashville so Expensive?
The housing market is extremely competitive. Nashville’s population has exploded in recent years, thanks in part to the influx of tech workers drawn to large companies like HCA Healthcare and Bridgestone Americas.
This has put a serious strain on the city’s housing supply, driving up rent and home prices. Another factor contributing to Nashville’s high cost of living is the city’s transportation system.
While Nashville does have a light rail system, it doesn’t cover the entire city, meaning many residents have to rely on cars to get around. And with gas prices consistently rising, that can add up quickly.
Let’s dig deeper at the factors contributing to the high cost of living and the high demand for real estate in Nashville.
1. High Demand for Housing
Like many other cities, Nashville is facing a shortage of affordable housing. Since 2021, the median rent in Nashville has increased by 10.4%. But, why is there such a huge demand for housing?
One of the main reasons is the booming tech industry. Many of the top companies in the tech industry are either based in Nashville or have a large presence in the city.
This has led to a large number of highly paid-employees moving to the city. It has also led to an increase in the number of people who want to live there.
The high demand for housing has led to a supply shortage. Builders have not been able to keep up with the rising demand. At the same time, the city has imposed some restrictions on buildings.
This has further limited the amount of available housing. All of this has contributed to higher prices for housing in the city.
2. Limited Supply of Land
Nashville has a great climate for outdoor activities. It also has a beautiful landscape. All of this adds to the appeal of living in the city.
At the same time, the geography of the area limits the supply of land for residential and commercial purposes. The surrounding land is hilly and unsuitable for building. This has resulted in a very limited supply of land for development.
Because of this limited supply, the price of land in Nashville is very high. It has become a very expensive place to build new residential and commercial structures. This has also contributed to the increase in the price of land and housing.
3. Nashville is the Best Retiree Destination
Retirees are drawn to Nashville because it is a beautiful city. It also has a mild climate. There are also plenty of activities that retirees can enjoy. This makes Nashville an excellent place to retire.
In fact, Nashville has been named the best retiree destination in the United States. All of this has contributed to Nashville becoming an extremely popular city for retirees to move to.
In fact, the number of people 65 and older moving to Nashville has doubled in the last decade. This large number of retirees has had a significant impact on the housing market in Nashville.
Retirees generally have a higher disposable income than younger workers. As a result, retirees are able to afford the high price of housing in Nashville.
The high price of housing has forced lower income to leave the city and move elsewhere. This has again contributed to the shortage of affordable housing in the city.
4. Booming Tech Industry
Nashville is home to many large and well-known tech companies. This includes Asurion, Nissan North America, and HCA Healthcare. All of these companies have a significant presence in Nashville.
This has contributed to a large number of high-paying jobs in the city. Workers who are employed in these industries are able to earn a high salary. They are also able to pay a large amount of money as taxes.
This has led to a substantial increase in the amount of money flowing into the city. This has helped fuel the economic growth in Nashville. Economic growth has resulted in an increase in the demand for housing.
5. High Tax Rates
Nashville is an expensive city to live in due, in part, to high tax rates. The cost of living in Nashville is high, and taxes are a significant contributing factor. Higher taxes mean that residents have less disposable income, which can make it difficult to afford basic necessities and other expenses.
Nashville has some of the highest tax rates in the country (9.25%). In fact, Tennessee state has the highest sales tax in the country at 9%. Property taxes in Nashville are also high. The average property tax rate in the Nashville area is $25%.
6. Presence of High Paying Jobs
This one might seem like a no-brainer. After all, if there are high-paying jobs available in a city, wouldn’t that be a good thing? Well, yes and no. Obviously, high-paying jobs are a good thing.
They also come with a high price tag. Let’s explain how. When a large number of people move to a city to work in one industry, it can put a strain on the demand for housing.
Again, when there is a limited supply of land, this can lead to an increase in the price of housing. When a city’s primary industry is a high paying one, you can expect the median rent to be significantly higher.
Again, this can make the city unaffordable for many people.
7. Headquarters of Larger Corporates
Nashville is home to the headquarters of some of the largest companies in the world. This includes Bridgestone Americas, Louisiana-Pacific, and Change Healthcare.
The cost of living is driven up by the demand for housing and other necessities, which is created by the influx of people who work for these companies. Large corporations also tend to drive up wages, which further contributes to the high cost of living.
This increase in costs is then passed on to consumers in the form of higher prices. This can make it difficult for people on fixed incomes or with low incomes to afford to live in the city.
In addition, the presence of these corporations can make it difficult for small businesses to compete, which can also make life more expensive for residents.
8. Popular Travel Destination
Many people are attracted to Nashville because of its natural beauty. The high demand for travel to Nashville has made it one of the most expensive cities in the US.
The city’s popularity as a destination for music, food, and culture has made it a top choice for vacationers, which has driven up prices for hotels, restaurants, and attractions.
While this may be frustrating for locals who are trying to enjoy their city on a budget, the influx of tourists also brings much-needed revenue into the city.