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Nashville housing boom strains neighborhoods
Michael Schwab/The Tennessean

From his office above a Whole Foods store in upscale Green Hills, John Brittle Jr. and his team of agents target the next affordable Nashville neighborhood for redevelopment.

Brittle, a broker with Parks Realty, is called the “Infill King.” His developer clients rely on him to spot bargain older homes, which they tear down and replace with bigger, more expensive properties.

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“For 30 years, real estate agents have been talking about the TSU and Fisk areas,” Brittle said, referring to the neighborhoods surrounding Tennessee State University and Fisk University, two of Nashville’s historically black institutions. “We’re going to see some beautiful stuff there.”

Investors and builders have transformed entire neighborhoods in recent years as Nashville’s appetite for homes soared. Countywide, nearly half of all properties with single structures demolished and new construction approved had two or more residential buildings planned for the lot, according to a Tennessean analysis of Metro Nashville permit data.

The familiar scene replays throughout the urban core: Multiple modern, three-story homes replace one-story brick houses. Some derelict homes are demolished and property taxes flow into city coffers. Meanwhile, long-time neighbors live with construction dust, noise, blocked sunlight and changing faces — until they too move, often outside the city. 

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“Some people don’t like what we do,” said Brittle, who wishes city regulations would allow for denser, less expensive development. “But the fact of the matter is that the market demands this. People are wanting to move into these neighborhoods.”

Metro Nashville issued 962 residential demolition permits in 2015 and 1,035 in 2016 — nearly three houses a day. That rate has cooled off by 10 percent in 2017, but the rapid redevelopment has left many residents wondering what is happening to their city. 

Nearly half of demolished properties have more than one building permit

The Tennessean analyzed building permit data from the past three years to see where most residential demolitions happened, and what was being built in their place.

The 37209 zip code that includes The Nations and Sylvan Park had the most residential demolitions, with 583 between September 2014 and September 2017. At those properties, 376 had approval for new housing. And on those lots, builders obtained 608 new home permits. 

Nashville ZIP codes with most residential demolition permits, Sept. 2014 – Sept. 2017

  • 583 permits – 37209 (The Nations/Sylvan Park/Sylvan Heights)
  • 383 – 37206 (East Nashville)
  • 254 – 37208 (Germantown, North Nashville)
  • 251 – 37215 (Green Hills)

Source: Metro Nashville Codes Department data; Tennessean analysis

“You tear down the eyesore and build two nice houses in their place, and raise the property values,” said George Lauderback, owner of L & S Construction Services, the company with the most permits to build on lots with recent demolitions.

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While some homes were clearly dilapidated, which homes are “eyesores” and which are “nice” depends on whom you ask. Sharon Jarrett, a retired state worker who lives on Ninth Avenue Circle, just south of downtown, watched her neighbors’ homes fall one by one. In a two year span, three one-story 1970s-era homes on her cul-de-sac were demolished and replaced with six three-story residences.

Most of the original homes were occupied by seniors, she said. “Some just got brand new roofs, others had a lot of work done,” said Jarrett, 56, next to her freshly-mowed lawn. “These seniors took care of their properties.”

Today, neighboring houses that have been finished either sit vacant or are rented on a short-term basis, Jarrett said, talking above the din of construction work.

“They work on weekends. They work on Sundays,” she said as a tractor revved. “You can’t get any rest here.”

‘Tall skinny’ homes add to the property tax base

Jarrett’s zip code, 37203, had the fifth most demolitions in the three-year period, with 237. The leader was 37209, which includes The Nations, a post-industrial neighborhood northeast of Downtown, with 583. East Nashville, Germantown/North Nashville and Green Hills also ranked in the top five.

City planners, new residents and real estate professionals point to the benefits of infill development. “It pays the bills for the city,” said Brittle, the real estate broker. 

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While using existing roads, sewers and sidewalks, infill generates new tax revenue for city coffers because of higher property values and more homes per lot.That money can then be spent on schools, police and other services. For example, the Metro Nashville Police Department’s Midtown Hills Precinct opened near Jarrett’s neighborhood in 2014. 

“There are a lot of people out there who really like the tall and skinnies,” said Metro Nashville Zoning Administrator Bill Herbert, referring to the nickname given to multiple big homes on a single lot. “It’s revitalizing neighborhoods.”

But critics say the term “revitalization” masks a substantial side effect: displacement. Low-income residents can’t afford to live in new homes built in their gentrifying communities. Instead, residents are moving in from wealthy suburbs like Franklin and from coastal cities, real estate agents say.

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The house next door to Jarrett’s, slate grey with dark panels, is listed for $689,000. Jarrett bought her house 16 years ago for $45,000, she said. Her neighbors, she said, sold their homes for about $170,000, and real estate agents were knocking on her door every week.

“I told them I wasn’t ready to sell,” she said. “I’m not ready to move at that point.”

Residents can’t find replacement homes

A home fetching three or four times its original purchase price sounds great, but homeowners can struggle to find an affordable replacement nearby. Jarrett said one of her neighbors moved in with her sister in La Vergne, about 20 miles southeast.

That problem could be solved, in part, by changing land-use regulations and speeding up the approvals process to allow for smaller-lot development, said Brittle, the infill broker. His team proposed building up to eight homes on two lots in Barrett’s neighborhood. Two or three of the houses could have been “workforce housing,” he said — affordable to people like teachers or firefighters. But the plan wasn’t in accord with the area’s land use designation, Brittle said, and neighboring landowners who recently bought lots objected.

“We would love to be part of the solution,” Brittle said.

Reach Mike Reicher at 615-259-8228, mreicher@tennessean.com and on Twitter @mreicher.

How much can be made with two “tall skinny” homes?

In 2017, most residential lots in Nashville’s redeveloping neighborhoods cost builders about $200,000, according to brokers. After building two homes and selling them at $400,000 each, a developer could expect a profit of about $100,000, said John Brittle, broker at Parks Realty.

But just a few years ago, investors could snap up properties under $100,000 and turn a substantial profit. Here’s an example, based on public records, of one property redeveloped in The Nations neighborhood:

August 2013: A 1935 1-story wood bungalow in The Nations neighborhood sold for $59,000.

July 2015: Residential demolition permit issued for the home, for an estimated construction cost of $2,500, Metro records show. 

August 2015: Two new townhome building permits issued, for an estimated construction cost of $185,000 each. The townhomes are two stories tall, with 1,700 square feet each.

December 2015: One townhome sold for $330,000.

March 2016: The other townhome sold for $333,000.

Gross income: $663,000

Land and construction costs: $431,500

Other costs (commission, closing, loan interest payments, etc.): $100,000

Total costs: $531,500

Net profit (Gross income – Total costs): $131,500

 

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