Our read
Qualitative judgments on a five-point scale, not licensed index values. Ranked #8 of 49 markets we cover.
The case for
- No state income tax draws both residents and private capital.
- Healthcare headquarters give the employment base a durable anchor.
The case against
- Supply delivered into the urban core has outpaced absorption, and short-term rental conversion distorts comparable rents in some submarkets.
Our stanceWatching the delivery schedule. Suburban submarkets read better than the core to us right now.
The figures that matter
- Total nonfarm employment
- 1,196,200 +1.6% year over year July 2026, preliminary · U.S. Bureau of Labor Statistics Growing, unlike Atlanta, on a civilian labor force of 1,199,100.
- Construction employment
- 65,300 -2.8% year over year July 2026, preliminary · U.S. Bureau of Labor Statistics Falling while total employment rises. That combination is the setup we look for.
- Leisure and hospitality
- 147,200 +6.1% year over year July 2026, preliminary · U.S. Bureau of Labor Statistics The fastest-growing sector in this metro, and the lowest-paying.
- Unemployment rate
- 3.0% July 2026, preliminary, not seasonally adjusted · U.S. Bureau of Labor Statistics The lowest of any metro we have researched.
- Median household income, Davidson County
- $77,853 ACS 2020-2024, in 2024 dollars · U.S. Census Bureau Against $105,768 in Wake County and $95,292 in Fulton County.
- Renter share, Davidson County
- 47.2% ACS 2020-2024 · U.S. Census Bureau The deepest renter pool of any Southeast market we have researched.
- Local rent regulation
- Preempted, with damages Tenn. Code Ann. 66-35-102 · Tennessee General Assembly Preempted statewide, and the statute creates a private right of action for losses.
- Effective cap rate at entry
- Pending Not held · U.S. Census Bureau Transaction cap rates require a licensed subscription we do not hold. We will not estimate one.
Where we would and would not transact
Both signals point the same way here, which is unusual
Sources 1 U.S. Bureau of Labor Statistics2 U.S. Census Bureau
Across the markets we have researched so far, the supply and demand signals have contradicted each other. Charlotte and Raleigh have strong demand and an expanding construction workforce building into it. Atlanta has a thinning construction workforce and an employment base that stopped growing. Nashville is the first case where the two align in an owner’s favor.
Total nonfarm employment reached 1,196,200 in July 2026, up 1.6 percent over twelve months, on a civilian labor force of 1,199,100 with unemployment at 3.0 percent, the lowest rate of any metro we have researched. Over the same period mining, logging and construction employment fell to 65,300, down 2.8 percent.1
That is the combination a value-add buyer wants: a builder workforce being reduced while the payroll that pays rent continues to expand. Deliveries already under way get absorbed by a growing base rather than competing for a static one, concession pressure fades rather than persists, and an owner buying into the thinning captures the recovery instead of funding it.
Davidson County authorized 5,632 residential permits in 2025 against 389,379 housing units, roughly 1.4 percent of stock on our arithmetic. That is a moderate rate: well below the 2.6 percent we measure across Wake and Durham, close to Mecklenburg County, and consistent with a pipeline that is normalizing rather than accelerating.2
- Total nonfarm employment up 1.6 percent; construction employment down 2.8 percent.1
- Unemployment 3.0 percent, the lowest we have measured.1
- Permits about 1.4 percent of county stock, roughly half the Raleigh-Durham rate.2
A builder workforce shrinking while the payroll that pays rent keeps growing is the combination we look for. Nashville is the first market in this series where both point the same way.
The sector driving this market is also its lowest-paying
Sources 1 U.S. Bureau of Labor Statistics2 U.S. Census Bureau
Having made the case, here is the thing that complicates it, and it is specific to Nashville.
Leisure and hospitality employs 147,200 people in this metro and grew 6.1 percent over twelve months. That is the fastest-growing sector in this metro, and among the fastest leisure and hospitality prints we have measured anywhere, behind Greenville at 9.0 percent. Nashville’s job growth is genuinely led by its tourism, music and hospitality economy.1
Hospitality is also, consistently, among the lowest-paying major sectors in any metro, and it is the most cyclical. Restaurant, hotel, venue and visitor-serving employment falls faster and further in a downturn than healthcare or professional services, because it depends on discretionary spending by people who live somewhere else.
The income data is consistent with that mix. Davidson County median household income is $77,853, against $105,768 in Wake County, $95,292 in Fulton and $87,005 in Mecklenburg, though above Hamilton County at $76,183 and Harris County, Texas at $74,983. Per capita income is $50,640. This is a fast-growing labor market that is adding a large share of its jobs at the bottom of the wage distribution.12
For an owner that has a direct consequence. A renter base weighted toward hospitality supports the current rent roll but supports rent growth less well, and it is more exposed if visitor spending softens. We would underwrite a Nashville asset with an explicit view on which payrolls its tenants actually draw from, and we would not treat metro-level job growth as evidence that rents can be pushed.
- Leisure and hospitality: 147,200 jobs, up 6.1 percent, the fastest-growing sector in this metro.1
- Davidson median household income $77,853, below Wake, Fulton and Mecklenburg counties.2
- Hospitality is the most cyclical major sector and depends on visitor spending.
Nashville is adding jobs faster than almost anywhere and adding a large share of them at the bottom of the wage distribution. Both things are true and the second one prices the rent roll.
A deep renter pool, and the least attainable ownership in our Southeast set
Sources 2 U.S. Census Bureau
Davidson County is 52.8 percent owner-occupied, leaving 47.2 percent renting. That is the deepest renter pool of any Southeast market we have researched, ahead of Fulton County at 45.7 percent, Mecklenburg at 44.9 percent, Durham at 44.5 percent and Wake at 35.9 percent.2
The reason is affordability rather than preference. Median home value is $417,400 against that $77,853 median household income, a ratio of roughly 5.4 on our arithmetic. That is the least attainable ownership of any Southeast market in this series: Mecklenburg runs about 4.7, Wake about 4.4 and Fulton about 4.8. Nashville has Carolina-level home prices on materially lower incomes.2
Median gross rent is $1,582 and median owner cost with a mortgage is $1,910, a gap of about $328 a month. That gap is wider than Mecklenburg’s $266 but narrower than Fulton’s $641, so the Nashville renter sits in the middle of the range on captivity while sitting at the top of the range on price-to-income.2
The practical read is that the renter pool here is deep and getting deeper for structural reasons, which supports occupancy. It does not by itself support aggressive rent escalation, because the same affordability pressure that keeps households renting also limits what they can absorb.
Manufacturing is growing here, and that is unusual enough to matter
One line in the employment table runs against the pattern in every other market we have researched. Manufacturing employment in this metro is 89,300 and grew 2.5 percent over twelve months.1
For comparison, manufacturing fell 3.0 percent in Charlotte, 1.7 percent in Raleigh, 1.7 percent in Los Angeles and 0.6 percent in Atlanta. Nashville is the only metro in the series where it expanded, and Middle Tennessee’s automotive and supplier base is the reason.1
That matters to a rental thesis in two ways. Manufacturing wages are meaningfully higher than hospitality wages, so this partly offsets the income concern raised above, and manufacturing employment is geographically anchored to plant locations that cannot be relocated on short notice. Both are favorable for a workforce housing owner, and they are concentrated toward Rutherford County and the southeastern side of the region rather than the tourism core.
The counterweight is that manufacturing is itself cyclical and, in the automotive segment specifically, exposed to a long capital-investment cycle and to trade policy. A concentration that helps in an expansion is still a concentration.
Two sectors are contracting and are worth naming. Financial activities fell 2.7 percent to 80,100 and government fell 1.7 percent to 117,900. Neither is large enough here to change the overall picture, but both cut against the "everything is growing" version of the Nashville story.1
Under Section 66-35-102 of the Tennessee Code, published by the Tennessee General Assembly, "A local governmental unit shall not enact, maintain or enforce an ordinance or resolution that would have the effect of controlling the amount of rent charged for leasing private residential or commercial property."4
The preemption is comparable to North Carolina and Georgia in effect, with one feature worth noting: the section provides that a person who suffers an ascertainable loss of money or property as a result of a prohibited practice may bring an action to recover actual damages. That is a stronger deterrent than preemption alone, because it gives an owner a remedy rather than only a defense.
The statute also preserves voluntary, incentive-based affordable housing programs, including local tax incentives and infrastructure assistance, provided zoning and land use authority is not used to compel below-market rents. So an owner may encounter voluntary programs in this market. What an owner will not encounter is a mandatory local cap on rent.
As in the Carolinas, that removes regulatory risk from the underwriting and concentrates the question into demand, supply and tax. Tennessee levies no state income tax on wages, which supports household disposable income and is part of the in-migration story here, and property is assessed at the county level with each county on its own reappraisal cycle. Davidson, Rutherford and Williamson do not move together, so a regional tax assumption is wrong somewhere by construction.4
One statewide tax provision matters more to a multifamily buyer than anything in this section, and it is set out in full in our Chattanooga guide rather than repeated here. The Tennessee Constitution and Code define residential property as containing not more than one rental unit, and classify any property with two or more rental units as industrial and commercial property. That moves the assessment from 25 percent of appraised value to 40 percent. Every Nashville acquisition of a duplex or larger should be modeled at 40 percent.4
Tennessee protects the short-term rentals that compete with you
Sources 3 Tennessee Attorney General
Our market note on Nashville has always said that short-term rental conversion distorts comparable rents in some submarkets. That is the kind of observation that gets repeated in this industry without anyone establishing what the law actually permits, so we went and established it.
Tennessee enacted the Short-Term Rental Unit Act, at Tennessee Code Annotated Section 13-7-601 and following. Its operative feature for an investor is a continued-use provision at Section 13-7-603(a)(1), under which a local rule or regulation does "not apply to property if the property was being lawfully used as a short-term rental unit by the owner of the property" before that rule was enacted. In other words, a city cannot regulate an existing, lawfully operating short-term rental out of existence.3
The protection is not unlimited. The Act does not disturb local rules and regulations enacted before January 1, 2014 that expressly limit the period of time a residential dwelling may be rented, though it does not preserve pre-2014 rules that generally prohibited commercial activity or renting to transients. Tennessee Attorney General Opinion 18-10 considered whether treating local governments differently by that 2014 date amounted to impermissible class legislation under the Tennessee Constitution and concluded that it did not, finding the distinction rationally related to legitimate state interests.3
For the Metropolitan Government of Nashville and Davidson County, which has revisited short-term rental rules repeatedly, the consequence is that its regulatory reach runs forward and not backward. Units already operating lawfully when a rule takes effect keep operating.
That matters to a conventional multifamily owner in a way that is easy to underrate. Short-term rental inventory is shadow supply. It competes for the same buildings and, in the submarkets where it concentrates, it sits inside the comparable set that appraisers and brokers use to establish market rent. Because state law shields the existing stock of it, that competition is durable rather than a policy risk that a city council can remove. An underwriting that assumes Nashville will eventually regulate this inventory away is assuming something the state has legislated against.
The practical instruction is to find out, for the specific submarket, how much of the nearby stock is operating as short-term rental and when it began, because units that predate the applicable rule are the ones that are protected. It is also worth checking whether any of the subject property’s own units have been operated that way, since the rent roll and the comparable set can both be distorted by it.2
- A local rule does not apply to a property already lawfully used as a short-term rental.
- Local rules enacted before January 1, 2014 limiting rental duration are preserved.
- The Attorney General found the 2014 distinction constitutional in Opinion 18-10.
- Existing short-term rental inventory is therefore durable competing supply, not a temporary condition.
An underwriting that assumes Nashville will eventually regulate short-term rentals away is assuming something Tennessee has legislated against. The existing stock is protected.
What we ask before we buy in Nashville
Sources 1 U.S. Bureau of Labor Statistics2 U.S. Census Bureau
Nashville is a market we would transact in, and of the five we have researched it has the most favorable supply and demand alignment. Our reservations are about the wage mix rather than about the setup, and they are addressable at the asset level by choosing which payroll a property actually serves. Our method is in how we evaluate a market, the fee structure is on the fee page, and the mechanics are in how to invest.
- Which payrolls do the tenants at this asset actually draw from, and what share is hospitality?
- What does the rent roll look like if visitor spending falls for four consecutive quarters?
- What remains to deliver within three miles, and does the local pipeline reflect the metro-wide construction contraction?
- Is the asset in Davidson, Rutherford or Williamson County, and when does that county next reappraise?
- Is the post-close tax line modeled from the purchase price under the correct county schedule?
- What renovated rent does the plan assume, and what share of median household income does that represent at $77,853?2
- What share of the projected return comes from operations rather than the exit?
Ask what share of the tenant base draws a hospitality paycheck. In this market that single question does more work than any metro-level growth figure.
Employment by sector
Nashville-Davidson-Murfreesboro-Franklin, TN Metropolitan Statistical Area. Figures are as published for July 2026, preliminary.
| Sector | Jobs | 12-month change |
|---|---|---|
| Trade, transportation and utilities | 226,400 | +0.7% |
| Professional and business services | 199,200 | +2.7% |
| Education and health services | 186,000 | +3.0% |
| Leisure and hospitality | 147,200 | +6.1% |
| Government | 117,900 | -1.7% |
| Manufacturing | 89,300 | +2.5% |
| Financial activities | 80,100 | -2.7% |
| Mining, logging and construction | 65,300 | -2.8% |
| Other services | 52,600 | +2.1% |
| Information | 32,200 | +1.9% |
Source: U.S. Bureau of Labor Statistics, Economy at a Glance, Nashville-Davidson-Murfreesboro-Franklin, TN. Retrieved September 2, 2026.
The demand base
Population, tenure, incomes and housing costs for the county. These are the figures that decide whether a renter household exists, and whether it could buy instead.
| Measure | Value | As of |
|---|---|---|
| Population, Davidson County | 745,904 +4.2% since April 2020 | July 1, 2025 estimate |
| Households | 324,907 | ACS 2020-2024 |
| Housing units | 389,379 | July 1, 2025 |
| Owner-occupied rate The remaining 47.2 percent rent. | 52.8% | ACS 2020-2024 |
| Median gross rent | $1,582 | ACS 2020-2024 |
| Monthly owner cost with a mortgage $328 above the median rent. | $1,910 | ACS 2020-2024 |
| Median household income | $77,853 | ACS 2020-2024, in 2024 dollars |
| Median home value About 5.4 times median household income, the least attainable in our Southeast set. | $417,400 | ACS 2020-2024 |
| Building permits 2025 About 1.4 percent of existing stock. | 5,632 | 2025, Davidson County, all residential |
| Per capita income | $50,640 | ACS 2020-2024, in 2024 dollars |
| Bachelor’s degree or higher | 48.4% | ACS 2020-2024, age 25+ |
| Mean travel time to work The shortest of any metro we have researched. | 24.7 min | ACS 2020-2024 |
Source: U.S. Census Bureau, QuickFacts, Davidson County, Tennessee. Retrieved September 2, 2026.
