Crom Carmichael Weighs in on Oracle Move and Middle Tennessee’s Real Estate Quandary
Live from Music Row Wednesday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed the original all-star panelist Crom Carmichael to the studio who weighed in on the recent announcement of Oracle’s big move to Nashville’s East Bank and a harried Tennessee real estate market.
Leahy: In studio the original all-star panelist Crom Carmichael. Crom, big news last night. This is from WSMV. Oracle is coming to Nashville, the big software company. Big big software company after the Metro Council approved plans to install the new headquarters in Music City. Tuesday night in a unanimous vote, City Council has approved Oracle’s bid that they presented to the Metro Finance Committee on Monday night, where they promised to bring 8,500 jobs to the city within a decade.
After the Metro Council passive vote, Mayor John Cooper expressed his optimism for the project, calling it, “the largest private investment and largest job creation deal in our history.” Oracle, Crom, looks to install a bridge over the Cumberland River as access to their new facility. The bridge still requires two more rounds of voting by the City Council, but past its initial round of voting on Tuesday night. Crom?
Carmichael: Well, given our city-state of finances, that’s a bridge over troubled waters.
Leahy: Ohhh, that Crom, Crom.
Leahy: That’s very good Crom. People don’t realize. (Laughter) People don’t really people don’t know this, but Crom used to be a standup comedian, and that just shows his capabilities there. It’s still funny. (Laughs)
Carmichael: Thank you. I have a friend of mine who’s in real estate that sends me a column that comes from The Tennessee Ledger. And this is a writer who writes about Tennessee real estate. And he will generally pick a particular house that has sold, and then he’ll build his story around it on what’s going on in Nashville.
Leahy: So he’ll go into one of the neighborhoods and say a house in this neighborhood sold.
Carmichael: A particular house. You’re looking at a particular house here. This one is at 1104 Lenore Street. That house sold. Now it went on the market. This is instructive. It went on the market for $750,000. It sold for $950,000 and $175,000 above the asking price.
Carmichael: This same house in 2018 sold for $194,000. It was gutted and fixed up.
Leahy: Somebody made some money.
Carmichael: But then that house after it was gutted and rebuilt, it then sold for $550,000. So that $550,000 converted into $950,000.
This is $440 a foot, $440 a foot! Right now in Nashville, and these numbers may be slightly off because they’re one month old, but only slightly. There were 2,500 single-family residences on the market at the end of March. There were 200 single-family homes that closed in March. There’s a three-week supply.
Carmichael: Now a seller’s market is 60 days of supply. A three-week supply, if a house goes on the market, it sells almost immediately. A typical Realtor will have nine buyers for every listing. For every listing, then they have nine buyers. And so if you’re listing a house, you say I am scheduling appointments every 15 minutes, (Leahy chuckles) and I’m doing it over these two days. And then I will be accepting offers, and the negotiations will then begin.
Leahy: It’s not just in Nashville, it’s in Williamson County. All around Middle Tennessee.
Carmichael: Yes. All around Middle Tennessee. Now, there are some areas where there’s still lots of land where you can build new developments, but the cost of the dirt in those areas, is what is going up, the cost of buying the land. But it’s really interesting to see what is going on in Nashville with the growth. Now I was down in Naples, Florida.
Leahy: In Florida.
Carmichael: Yes. Naples, Florida, is very similar. It used to be that you drive down a highway called 41, which is a six-lane wide highway. And then if you went inland on one Street, it was four lanes. Now if you go inland one street it was four lanes. Now you go inland four or five streets before you get to two-lane highways.
So Naples is growing East. It’s also growing North, but it’s growing East inland at an incredible rate. And so when you have that and in Nashville, the difference is in Naples, they’re able to build the infrastructure. They’re able to widen the roads because as they’re moving inland these are two-lane roads and the development hasn’t happened yet. Nashville is already developed. Now Oracle I think, is locating on the East Bank.
Leahy: I think that’s correct. Of the Cumberland Yes.
Carmichael: And so they’re going to build the bridge.
Leahy: The bridge over troubled waters. (Laughter)
Carmichael: But what this is going to do to East Nashville…
Leahy: Boom. And East Nashville has been re gentrifying over the last five or six years. But this will even accelerate that pace.
Leahy: Now the story at WSMV, Oracle promised to bring wait for it…8,500 jobs to the city within a decade. It’s a big company. What’s that going to do to the real estate market in Middle Tennessee?
Carmichael: Well, the real estate market in Tennessee is going to stay red hot until you get the supply of houses back up to 90 days. This means there will have to be nine to 10 single-family homes on the market available to buy. And I don’t see that happening anytime soon because building 3,000 homes a month is a lot of homes to be built. And all that does is keep you at the three-week supply. So you’ve got to get up to where you’re building 5,000 homes a month. I’ve been here since 1967 and I’ve never seen anything like that.
Leahy: Nothing like this.
Carmichael: Nothing like this.
Leahy: Here’s the other part about this, which is interesting. There are two elements to talk about. First, the underlying economics of migration within the United States. I see that trend continuing away from high tax blue states to really the three leading no state income tax states in the country. Texas, Florida, and Tennessee.
Carmichael: Private schools are getting 15 to 20 inquiries a week from just people moving here from California. That’s just from one state. There are all kinds of issues that are being created because it takes a while to plan and build a new school or even to do a major expansion of an existing school. And most private schools don’t want to have more than 100 or maybe 120 per class.
Leahy: It’s hard to make them fit together.
Carmichael: The private schools want to keep themselves small enough so that they are meeting the needs of each child which is my big beef with the government-run schools because there’s no reason that a government-run school ought to have 1,500 or 2,000 students in high school. There’s no reason for that. It’s just that way because that’s how the system likes it.
Leahy: The other issue I want to chat with you about that comes along with this huge growth, the huge increase in home prices and real estate prices in Middle Tennessee is for people who have lived in Tennessee all their lives and who perhaps are not homeowners, they’re being priced out of the market.
Carmichael: Yes. And that’s what I’m saying. That’s one of the examples. There are three or four. There are three or four pressure points that are going on. One is the demand for private school education exploding. And the number of private schools is not. And so there’s a huge imbalance there than what you just brought up.
If you don’t own a home, and if you don’t have $50,000 in cash, maybe even $100,000 in cash to put down on a house because they’re still requiring 20 percent down on most houses unless it’s an FHA-type thing. And even those, it’s almost impossible to get the mortgage if you don’t make a substantial down payment.
Leahy: And this does lead to, I think, resentment towards newcomers who have more cash because they live in states where they can sell their houses for very high prices. They come here and even with this increase, they’re able to pocket some money from the sale of the house in California.
Carmichael: If it was a really expensive house in California. But the trick is selling expensive houses in California now is finding buyers who buy an expensive house in California because California is losing a congressional seat.
Leahy: I’m so sad about that too by the way.
Carmichael: It’s the first time. It’s the first time, I think ever.
Leahy: I think you’re right.
Carmichael: It’s shrinking.
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