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The high price tags of Elliston 23 and similar high-end buildings may only affect the renters who are looking for luxury. Credit: Xavier Dunigan / Flickr Creative Commons
A developer from Ohio has purchased Elliston 23, a high-end apartment complex in the Midtown neighborhood, at a record-high price tag this week: $95 million dollars, or about $287,000 per unit.
The sale broke a record set just a few weeks ago, when a developer from Toronto bought Vista Germantown for about $220,000 per unit. The record before that was set in January.
“The concern people have when they have a plethora of new apartments is: Is everyone going to raise the rent?” says Woody McLaughlin, a member of the statistics committee for the Greater Nashville Apartment Association and an apartment investor in the area.
If you look at the numbers, he says, the answer is probably no.
The biggest driver of apartment growth is job growth, he says. And Nashville has plenty of that — Forbes just ranked Nashville the sixth-best city in the country for jobs. New jobs bring new people, more people increases demand for housing, and high demand pushes prices up.
But there’s a lot of supply to counter the demand: 16,000 units are under construction or getting approved for construction right now, McLaughlin says. The increased supply forces developers to compete by bringing their prices down.
Some new developers are targeting renters who are willing to pay more for luxury apartments, like Midtown’s Elliston 23. But the average person in Nashville will be looking for apartments in a lower price range. There is somewhat of a trickle-down effect — as those top-tier apartments get more competitive, they might start luring some renters away from the tier below, which then starts getting more competitive, and so one — but the further you get from that price point, the less of an effect it has.
“Cadillac sales will have some impact on my used Volkswagen price, but it’s not very direct,” McLaughlin says.
The bottom line, he says: The typical renter shouldn’t be too worried about what this sale means for their monthly rate.