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Housing, Child Care, Utilities—Nashville Faces Exceptional Inflation Hit From All Sides

One thing that's accelerated after the pandemic is mobility. Folks can work remotely and move places they find more attractive without quitting their employer. This has accelerated migration to the Southern states which generally have lower taxes, or more business friendly and in many cases offer better quality of life. The byproduct is more folks move in and much of a good thing.

Housing, Child Care, Utilities—Nashville Faces Exceptional Inflation Hit From All Sides

Influx of new residents causes housing prices to soar, pushing out some longtime inhabitants; ‘It’s just too expensive’

By J.J. McCorvey, WSJ

June 1, 2022 10:11 am ET

NASHVILLE—Few Americans are getting squeezed by inflation in more different ways than the residents of Tennessee’s capital.

Housing prices in Nashville have more than doubled over the past 10 years, partly because of a population boom that has brought nearly 400,000 new residents to the metropolitan area. That has pushed some locals farther away from the city center, adding hours to their weekly commutes. Meager public-transit options mean soaring fuel prices are hitting them especially hard.

To make matters worse, the price of utilities has exceeded the national average every year since 2009. And the surging population has pushed up the price of daycare, too.

Many Nashville residents said in interviews that they are cutting back their spending or taking on more work. Nearly all of them are re-evaluating their budgets to determine what is a necessity and what isn’t. Some have had enough and are leaving town.

“I love that Nashville is growing, but so many people are coming here to the point that I can’t afford to put my kids in daycare,” said Tianna Martin, a 23-year-old mother of two. “I can’t afford to have a nice house in town because it’s just too expensive.”

Ms. Martin, who works as a Waffle House cook, has lived in Nashville her entire life. She said the two places she has felt inflation most directly in recent months were at the gas pump and at the grocery store.

To compensate for the higher prices, she gave up her home internet service last year and began skipping snacks at the checkout counter. Recently, she left the city altogether, moving from a $1,300 a month, two-bedroom apartment to a three-bedroom home in Sumner County, 30 minutes outside Nashville, for $1,400 a month. “It’s just not worth it” to live in the city, she said.

An influx of new residents is fueling new construction in Nashville.

Median home-sale prices in Nashville reached a record of $423,105 at the end of March, according to Zillow Group Inc., compared with a nationwide median of $337,560. Average rent reached $1,802 a month in April, up 19% from a year earlier.

The main culprit, according to economists and city leaders, is the population surge. Nashville is one of several midsize American cities that have seen an influx of new residents, coming either from surrounding areas in search of jobs or larger cities in search of a more affordable location.

Sources: Commerce department (regional price parities); Zillow (home prices)

There is no government-reported inflation rate for Nashville. The inflation rate for the South stood at 8.8% as of April, above the national rate of 8.3%.

Prepandemic inflation in the census region made up of Tennessee, Kentucky, Mississippi and Alabama was 1% in February 2020—the lowest in the country at the time. That region has since seen the second-largest acceleration by Census division, according to an analysis of Bureau of Labor Statistics data conducted by the Economic Innovation Group, a public-policy think tank.

According to the Bureau of Economic Analysis, utility prices in the Nashville area have exceeded the national average every year from 2009 to 2020, the most recent data available. The average residential electricity rate in Tennessee is up nearly 6% from a year ago, according to the energy company Choose Energy.

Partly because of the surge of new households, annual infant daycare costs in Tennessee rose to an average of $10,780 in 2020, from $9,017 in 2019, according to the advocacy network Child Care Aware, surpassing the national average of $10,174.

In many ways, the cost of living in Nashville is catching up to what it is elsewhere in the nation, said Dr. Achintya Ray, an economics professor at Tennessee State University. “The South, as an area, used to be a little cheaper than the rest of the country,” he said. “That difference is kind of shrinking right now.”

In March, Gov. Bill Lee proposed a 30-day suspension of the state’s 4% sales tax on groceries, which the legislature passed. The suspension takes effect in August.

Star Malone, pictured with the youngest of her four children, has felt the pinch from rising prices, including her rent.

For Star Malone, a patient scheduler at Nashville General Hospital, the rent on her three-bedroom apartment in East Nashville has increased by $400 over the last two years to $1,240. The price of her daughters’ favorite chicken wings shot up to $22 a pack, from $13. Her electricity bill can swing from $60 a month to $120.

Every day around 6 p.m., her four daughters—ages 17, 15, 14 and 7—file into her bedroom to tell her about their day. They often request a weekend outing, such as a trip to the movies. Increasingly, she demurs.

“Sometimes they don’t understand why I don’t want to go,” said Ms. Malone, 36, who moved to the East Nashville neighborhood after she separated from her husband. “It’s because I don’t have a lot of money to spend.”

She changed jobs, but her hourly pay increased by only $1.50, to $17.50. She receives Section 8 housing assistance and has taken budgeting courses at church, she said. “I got a new job, to move up, do better, make more money for my household, but it seems like it’s still never enough,” she said.

Food prices are slamming local restaurants, affecting one of the city’s most celebrated dishes. At GrandDaddy’s Hot Chicken, located in the Joelton community, a single tender—seasoned, fried and coated with a cayenne pepper blend—costs $3. A year ago, it was $1.85.

“Technically, I should have raised stuff a long time ago, but I can’t, because people are not going to want to buy,” said Tommy Buchanan, 41, who owns the restaurant. He said a 40-pound case of tenders now costs $160, twice what it did a year ago. He has taken wings off the menu completely because of the rising cost.

Tommy Buchanan, top, owner of GrandDaddy's Hot Chicken, said rising food costs have led him to increase prices for some items and remove others from the menu.

The influx of new residents is expected to continue driving up housing costs. The Boyd Center for Business and Economic Research, based at the University of Tennessee, Knoxville, projects about 150,000 people moving to the area over the next five years. Census data shows many recent transplants have come from cities like Chicago, New York and Los Angeles. Earlier this year, real-estate brokerage firm Redfin estimated that the average new resident had $736,900 to spend on a home, compared with local buyers’ average budget of $573,400.

The population surge and resulting home-price spike is altering the city’s demographics and sparking calls for improvements in its infrastructure. The white, Asian and Latino populations of the county in which Nashville is located have grown considerably amid the city’s population boom, but its Black population declined by nearly half a percent between 2020 and 2010, according to U.S. census data.

“Black people and poor people are getting pushed out of this city,” said Rev. Jeff Carr, a community activist and founder of the Infinity Fellowship, an interfaith community center in Nashville. “And the people who live here are unable to afford to stay here.”

“Displacement is a highest priority concern right now,” said John Cooper, a former business executive who was elected mayor in 2019.


How has inflation affected you to date? Do you expect prices to continue to rise? Join the conversation below.

City leaders say they must invest in local infrastructure, including transit, to support the influx of people. Employers in its bustling tourism and hospitality industries have struggled to get residents who moved beyond city limits to commute back into town.

Kirsten Curry said soaring real-estate prices in Nashville have made it impossible for her to buy a home in the city.

Two years ago, Kirsten Curry was set on becoming a homeowner. Her mother had purchased the condo in which she grew up, in nearby Franklin, when she was a child. Now 24 years old, she wanted to do the same. She had about $10,000 and had been working toward accumulating a down payment.

When she connected with a couple of real-estate agents to learn more about properties in the Kingston Springs neighborhood, she got a reality check. Even the homes she could afford would require upper-six-figure loans to purchase and make necessary repairs, she said. “It was abysmal,” said Ms. Curry, who manages a CBD store.

In late April, she moved to another rental closer to work, but she still wants to leave the Nashville area within five years. “You want to flourish here, but Nashville is for the elite,” she said.

Some longtime residents worry that the more expensive Nashville gets, the harder it will become for the city to lure the up-and-coming musicians who have made it famous.

Julie Williams, 25, was drawn to Nashville from Tampa, Fla., in 2019. She had heard that Music City was among the best places for budding singer-songwriters to begin a career. She expected to perform for little pay if it meant exposure, and if she could just get a part-time gig to supplement her earnings, she could thrive.

After just a few years, that illusion is gone, she said.

Nashville, known as Music City, draws both tourists and aspiring musicians.

Ms. Williams shares a $1,950 rental with two roommates—up from $1,600 when she moved in. Her public-policy degree from Duke University has made her a sought-after nanny and tutor, but the city’s snarled rush-hour traffic means she is now filling her 2017 Nissan Rogue with $50 to $60 of gas a week, compared with $35 before the pandemic.

Ms. Williams is holding on for now. Recently she has performed at popular venues such as The Basement and The Listening Room. She arrived in Nashville with a few thousand dollars in her savings, but now has difficulty keeping the account above zero.

“I’ve been able to really skate by so far. It’s a matter of how long I want to keep skating,” said Ms. Williams, who said some of her musician friends have already left.

“We’re missing out on the next Vince Gill,” said David Ewing, a local historian and chief executive of Nashville History on Tour, who said his family spans nine generations in the city. “Because if that person just can’t afford to move here or can’t afford to stay long enough until they’re discovered, maybe they just give up before someone discovers how talented they are.”

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