Nashville Bits and Pieces

[CenterHill]

Council tonight voted to pass BL-608, which phases out investor-owned  STRs from residential zoned neighborhoods after three years.      This is a win for Nashville neighborhoods and a major loss for the billion dollar STR industry.    Amazing considering the opposition is grass roots citizens vs. the millions AirBnb  has spent on an army of lobbyists, PR firms,  tv ads, press stories, STR investor meetings, letter writing campaigns and drafting gazillions of obstructive and delaying Metro council amendments to STR bills.      

AirBnb  will now take the fight to the state legislature to try to ram through preemptive legislation.    Last year, you’ll recall, AirBnb lobbyists persuaded the state house to pass a bill that said the city of Nashville (yes, it was exclusive to one city in the state) may not pass any ordinance that restricts STRs from operating.    The bill died in the state senate just as the legislature adjourned.      Nashville residents will now take up the fight against industry lobbyists at the state level.     Stay tuned.     More importantly, if you have an opinion, write your Nashville delegation at the state legislature  to let them know how you feel about the state interfering with Nashville neighborhood zoning matters. 

[titanhog]

49 minutes ago, CenterHill said:

Council tonight voted to pass BL-608, which phases out investor-owned  STRs from residential zoned neighborhoods after three years.      This is a win for Nashville neighborhoods and a major loss for the billion dollar STR industry.    Amazing considering the opposition is grass roots citizens vs. the millions AirBnb  has spent on an army of lobbyists, PR firms,  tv ads, press stories, STR investor meetings, letter writing campaigns and drafting gazillions of obstructive and delaying Metro council amendments to STR bills.      

AirBnb  will now take the fight to the state legislature to try to ram through preemptive legislation.    Last year, you’ll recall, AirBnb lobbyists persuaded the state house to pass a bill that said the city of Nashville (yes, it was exclusive to one city in the state) may not pass any ordinance that restricts STRs from operating.    The bill died in the state senate just as the legislature adjourned.      Nashville residents will now take up the fight against industry lobbyists at the state level.     Stay tuned.     More importantly, if you have an opinion, write your Nashville delegation at the state legislature  to let them know how you feel about the state interfering with Nashville neighborhood zoning matters. 

The lobbyist "industry" is one ruthless little monster.   It's amazing how much money is used to influence votes.  Glad to see the city isn't just giving into AirBnB on this.  Turning residential neighborhoods into investor-owned "hotels" is bad for the future of those neighborhoods.  An occasional home here and there being AirBnB seems reasonable...but these guys appear to be running roughshod over certain neighborhoods.

[nashwatcher]

So all the investors from out of state who bought houses to rent out will now have to sell them in the next three years? Any guess how many homes this might be? 

Good decision by the Metro Council. Increasing the sense of community in our neighborhoods is a good thing. And let the bachelorette parties be downtown where they belong.

[smeagolsfree]

1 hour ago, nashwatcher said:

So all the investors from out of state who bought houses to rent out will now have to sell them in the next three years? Any guess how many homes this might be? 

Good decision by the Metro Council. Increasing the sense of community in our neighborhoods is a good thing. And let the bachelorette parties be downtown where they belong.

Not necessarily, as they could turn them into long term rentals. 

[Nash_12South]

43 minutes ago, smeagolsfree said:

Not necessarily, as they could turn them into long term rentals. 

I'm not sure the money in long term rentals would equate to short term. I think many would simply sell the homes and move on.

[samsonh]

3 minutes ago, Nash_12South said:

I'm not sure the money in long term rentals would equate to short term. I think many would simply sell the homes and move on.

Which is the point. STR properties have a negative influence on neighborhoods. They also increase the price of housing. My guess is that many are not paying the required taxes either. 

[CenterHill]

5 hours ago, nashwatcher said:

So all the investors from out of state who bought houses to rent out will now have to sell them in the next three years? Any guess how many homes this might be? 

Good decision by the Metro Council. Increasing the sense of community in our neighborhoods is a good thing. And let the bachelorette parties be downtown where they belong.

This map will give you some idea of the housing stock that has been lost to STRs.    This map shows issued Type II permits (non-owner occupied STRs).     Every dot is a house that someone bought as investment to rent out as an STR.     No one lives in these houses.        

And this only shows the ones with issued permits.   There are estimated to be several thousand more STR properties operating without permits (you can compare the permit data with platform websites (eg, AirBnb.com) and find many more STRs operating in a given neighborhood).      This data also only shows Type II issued permits and does not reflect STRs where the owner applied for a Type I (owner-occupied) permit, but does not actually live in the house. 

https://data.nashville.gov/Licenses-Permits/Residential-Short-Term-Rental-Permits-Map-/wa2i-5s6e

 

[thenorthchannel]

Will be interesting to see how the passing of BL-608 plays out in the State Senate and in the local housing market.   I can say already, that for the past say 6 months on Realtracs when I see a home that is newer than 3 years old in 37203 and I pull the complaint history on epermits.nashville.gov, more and more often they have been recently shut down by the city for errant STR use.  

[smeagolsfree]

4 hours ago, Nash_12South said:

I'm not sure the money in long term rentals would equate to short term. I think many would simply sell the homes and move on.

It would be less for sure, but given the current market, the return would still be good.

[Hey_Hey]

45 minutes ago, smeagolsfree said:

It would be less for sure, but given the current market, the return would still be good.

I’m not so sure. Much of the new construction that has been built was sold at prices that only make sense from a STR perspective. For example, on Sigler/Hawkins streets in Edgehill just outside the Gulch there have been houses sold that are priced in the $900,00-1.2 million range. From a rental perspective, that property would need to have revenue of around $60,000 to roughly break even (assuming a loan). That’s $5000/month to just break even, and more like $7500/month for it to make any sense for the owner (there has to be some type of positive cash flow).  Those types of numbers can be found with STRs, but the long term rental market can’t match those revenue targets.  I’m afraid we’ve had lots of people who saw a way to make a quick buck and bought at prices assuming that can only be financially feasible with AirBNB rental income. 

[samsonh]

11 minutes ago, Hey_Hey said:

I’m not so sure. Much of the new construction that has been built was sold at prices that only make sense from a STR perspective. For example, on Sigler/Hawkins streets in Edgehill just outside the Gulch there have been houses sold that are priced in the $900,00-1.2 million range. From a rental perspective, that property would need to have revenue of around $60,000 to roughly break even (assuming a loan). That’s $5000/month to just break even, and more like $7500/month for it to make any sense for the owner (there has to be some type of positive cash flow).  Those types of numbers can be found with STRs, but the long term rental market can’t match those revenue targets.  I’m afraid we’ve had lots of people who saw a way to make a quick buck and bought at prices assuming that can only be financially feasible with AirBNB rental income. 

with the abundance of new hotel rooms coming online I would imagine many of these Airbnb investors might take a bit of a hit regardless of Metro legislation.

[bigeasy]

Wow, that looks like a whole lot of houses!!! Wonder what % of the homes that is?

[Hey_Hey]

53 minutes ago, samsonh said:

with the abundance of new hotel rooms coming online I would imagine many of these Airbnb investors might take a bit of a hit regardless of Metro legislation.

That is likely true. While I don't buy into the notion that the hotel boom will cause a crash of AirBNB prices (I think they are different products and target somewhat different visitors), I could easily see a 10-15% correction of prices.  However, even a 10-15% drop in prices could disrupt several of these owners' financing plans. 

Another risk to current owners is the potential for legislation from the state that would mandate the city allowing STR without limitation.  Opening the flood gates for STRs in these neighborhoods could provide significant downward pressure on those currently operating as Type II rentals. 

Edited January 24, 2018 by Hey_Hey

[PaulChinetti]

8 minutes ago, bigeasy said:

Wow, that looks like a whole lot of houses!!! Wonder what % of the homes that is?

It looks like a lot but it's not really. Even East Nashville with something like 2000 homes available, they allow 3% of owner and 3% non-owner occupied. So that's something like 82 in total...

I know in my neighborhood, it's something like 18 total permits available to be issued. Out of around 200ish houses.

But like everyone says, there are tons that aren't permitted. 

[titanhog]

42 minutes ago, PaulChinetti said:

It looks like a lot but it's not really. Even East Nashville with something like 2000 homes available, they allow 3% of owner and 3% non-owner occupied. So that's something like 82 in total...

I know in my neighborhood, it's something like 18 total permits available to be issued. Out of around 200ish houses.

But like everyone says, there are tons that aren't permitted. 

That map looks like way more than 82 homes in East Nashville.

[PaulChinetti]

Sorry I meant to say those numbers are the allowed ones, or the amount of permits that are actually offered for the area.

"No more than 3% of the single-family and two-family units within each census tract shall be permitted as non-owner-occupied short-term rental use."

http://maps.nashville.gov/strp/

My area. 9 permits for 289 owner occupied parcels/units. And they wonder why people do it illegally.

Some of the other areas are even crazier, 2332 parcels/units - Existing permits 59, available 11. That was just picking a random house off Gallatin and plugging in the address.

[jmtunafish]

There were 38,470 new homes built in Tennessee last year, of which just over half--19,292--were in the Nashville MSA.  There were more homes built in Tennessee than in the other three states in our Census region (Alabama, Kentucky, and Mississippi) combined.  There were more homes built in the Nashville MSA in 2017 than in the following states:

• Alabama
• Alaska
• Arkansas
• Connecticut
• Delaware
• Hawaii
• Idaho
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Mississippi
• Missouri
• Montana
• Nebraska
• New Hampshire
• New Mexico
• North Dakota
• Oklahoma
• Rhode Island
• South Dakota
• Vermont
• West Virginia
• Wisconsin
• Wyoming

And there were almost as many homes built in the Nashville MSA as in the following states:

• Indiana (20,115)
• Minnesota (22,927)
• Nevada (19,376)
• Oregon (19,886)
• Pennsylvania (22,509)

Here are the metro areas in the US with the most housing construction in 2017:

1. Dallas-Ft Worth (61,709)
2. New York City (49,893)
3. Houston (42,673)
4. Atlanta (32,890)
5. Los Angeles (31,198)
6. Phoenix (29,693)
7. Seattle-Tacoma (27,371)
8. Washington (26,429)
9. Austin (25,803)
10. Denver (22,547)
11. Chicago (21,869)
12. Charlotte (21,425)
13. Orlando (19,432)
14. Miami-Ft Lauderdale (19,296)
15. Nashville (19,292)
16. Tampa-St Petersburg (18,280)
17. Portland (17,034)
18. San Francisco-Oakland (16,977)
19. Boston (14,819)
20. Minneapolis-St Paul (14,677)

https://www.census.gov/construction/bps/

[jmtunafish]

By the way, at just over 19,000 new homes built in 2017, that's like adding a city the size of Hendersonville to the metropolitan area in one year.

[NashvilleObserver]

2 hours ago, jmtunafish said:

By the way, at just over 19,000 new homes built in 2017, that's like adding a city the size of Hendersonville to the metropolitan area in one year.

How many of these were built on the site of a smaller pre-existing home?

[markhollin]

Nashville's chances of hosting the Grammy Awards are getting better, but the earliest could be 2022.

https://www.tennessean.com/story/entertainment/music/2018/01/26/could-nashville-host-grammys-again-heres-what-music-city-up-against/1062088001/

 

[Dale]

CBD question: I have a fix on the amount of office construction underway or announced, but can anyone give me a rough estminate on residential and retail ? 

 

Thanks!

[smeagolsfree]

Wow, that's a tough one to answer because it changes so often. There are a number of announced projects as far as residential that have stalled waiting for the market to catch up, especially in the luxury area. 

As far as retail goes, almost all of the announced hotels will have some type of retail. The Fifth Plus Broad project, Nashville Yards, Endeavor 2 projects, Capitol View all have some type of retail.

There are around 30 to 35 mid-rise, high-rise under construction or slated to start in the 12 months, many of which are hotels, but things are happening so fast I cant keep my finger on the pulse without doing a bit of research.

There are at least 6 high-rise residential projects either under construction or hopefully to start soon, not counting a few stalled projects. There are probably about twice that many in the general core area that are mid-rise and hotels are at least a dozen, maybe 14 or 15,  mostly high rise and most are amount to start or are under way.. Office towers mid rise and high-rise there are about 8 or 9.

 

Let me know, if this is enough, but I would bet that either Mark or myself can get some numbers crunched.

[MidTenn1]

Does your town have a couple of Bald Eagles hanging out along the river? Kingston Springs does....

This guy flew along side my car the other day for a few seconds.  I'm sure he winked at me.   

[Dale]

1 hour ago, smeagolsfree said:

Wow, that's a tough one to answer because it changes so often. There are a number of announced projects as far as residential that have stalled waiting for the market to catch up, especially in the luxury area. 

As far as retail goes, almost all of the announced hotels will have some type of retail. The Fifth Plus Broad project, Nashville Yards, Endeavor 2 projects, Capitol View all have some type of retail.

There are around 30 to 35 mid-rise, high-rise under construction or slated to start in the 12 months, many of which are hotels, but things are happening so fast I cant keep my finger on the pulse without doing a bit of research.

There are at least 6 high-rise residential projects either under construction or hopefully to start soon, not counting a few stalled projects. There are probably about twice that many in the general core area that are mid-rise and hotels are at least a dozen, maybe 14 or 15,  mostly high rise and most are amount to start or are under way.. Office towers mid rise and high-rise there are about 8 or 9.

 

Let me know, if this is enough, but I would bet that either Mark or myself can get some numbers crunched.

Mindboggling! Strong as Charlotte is, I have a feeling that you guys are killing us, certainly as regards existing inventory to projected additions.

I know the Fifth Plus Broad project features 183K retail. And wouldn't be surprised to see all the ancillary retail doubling that.

[smeagolsfree]

We just are not getting the tall boys here for several reasons.

One, Metro height restrictions 

Two, availability of sites as we have a much larger inner core than Charlotte, not to mention a area like Midtown and West End does not really exist in Charlotte. 

Three, banks seem to be unwilling to loan aon huge high rise buildings here. Charlotte is a banking center and Nashville is not near Charlotte in that area.