One of the most common conversations taking place among small semi-custom and custom builders today is simple:
“Where is the housing market headed?”
While economists, analysts, and news outlets all have opinions, sometimes the best source of information comes from the people who are in the field every day—buying land, developing communities, meeting with families, and watching the market evolve in real time.
At Michael’s Homes, we’ve had a front-row seat to the transformation of Middle Tennessee’s housing market over the last several years.
Before COVID: Three Distinct Product Lines
Prior to COVID, we built homes across three primary price points:
- Starter Homes: $300,000–$400,000
- Move-Up Homes: $400,000–$600,000
- Semi-Custom & Custom Homes: $600,000 and above
Families had choices. We could offer quality homes at multiple price points while still building on larger lots and maintaining the level of craftsmanship our buyers expected.
Then COVID changed everything.
The Perfect Storm
Several things happened at once.
Building material costs increased dramatically.
Land prices climbed.
Supply chains slowed.
At the same time, thousands of people relocated to Tennessee from higher-priced states. Many of these buyers sold homes with significant equity, allowing them to pay well above asking price in Middle Tennessee.
The ripple effect was immediate.
When your neighbor sells their home for $50,000 over the asking price, suddenly every homeowner on the street believes their home is worth more—and in many cases, it is.
Home values rise.
Landowners increase their asking prices.
Developers pay more for property.
Before long, the market establishes a new normal.
The Big Builders Changed the Landscape
As demand increased, many of the nation’s largest production builders aggressively expanded into Middle Tennessee.
Builders such as Meritage Homes, Lennar, Ryan Homes, Ashton Woods, David Weekley Homes, Dalamar Homes, and Crescent Homes began purchasing large tracts of land, often paying premium prices to secure future communities.
For local builders like us, the landscape changed dramatically.
Finding affordable land inside Metro Nashville and the surrounding cities became increasingly difficult. As land values rose, so did the cost of every home built on that land.
Today, it’s incredibly challenging to build a quality home in the $400,000 to $600,000 price range within many city limits unless you significantly reduce lot sizes.
Why We Chose a Different Path
Many builders adapted by increasing density.
Smaller lots allow more homes to be built, helping offset rising land costs.
There’s nothing wrong with that strategy.
It simply isn’t ours.
At Michael’s Homes, we’ve always believed there are families who still want room to spread out.
Room for children to play.
Room for a garden.
Room for a detached workshop.
Room for chickens, a hobby farm, or simply the peace and quiet that comes with having some space between you and your neighbors.
That’s why our focus has gradually shifted toward larger homesites and acreage throughout Middle Tennessee.
Ironically, many acreage tracts now cost nearly as much as the 10,000-square-foot lots inside city limits. Because of that, the homes built on those properties often need to reflect the investment required to purchase and develop the land.
Even so, we believe many families would rather invest in land they can truly enjoy than sacrifice outdoor space simply to fit into a lower price point.
Build on Your Lot
One of the biggest opportunities we see today is helping families build on land they already own.
Many people have inherited family property, purchased acreage years ago, or are actively searching for the right piece of land. For these families, building on their own property can be an excellent alternative to competing for expensive subdivision lots.
In fact, we’re always looking for landowners throughout Middle Tennessee who are considering building a home.
Whether you already own property or you’re just beginning your land search, we’d love the opportunity to meet with you, walk the property, discuss what’s possible, and help determine whether it’s a good fit for your future home.
Sometimes the perfect homesite isn’t in a subdivision at all—it’s the piece of land that’s been in your family for generations.
Is Now the Time to Buy?
People often ask us whether they should wait for prices to come down.
Our answer is simple.
If you’re financially ready and planning to stay in your home for several years, history suggests waiting may cost more than buying.
Will home prices continue increasing at the pace they did during COVID?
Probably not.
But construction costs rarely move backward for long.
Labor costs continue to rise.
Land continues to become more expensive.
Development costs continue increasing.
The long-term trend remains upward.
A Real-World Example
Here’s a real example from our own experience.
In 2023, we built a 2,300-square-foot home that sold for $468,000.
Today, that same floor plan is being built and listed for approximately $549,000.
That’s roughly a 17% increase in just two years.
The house didn’t suddenly become larger.
The land became more expensive.
The labor became more expensive.
The materials became more expensive.
The cost of development increased.
Those increases eventually show up in the price of every new home.
Our Advice
Nobody can perfectly predict the housing market.
But after more than two decades of building homes in Middle Tennessee, one thing has remained remarkably consistent:
The cost of building continues to rise over time.
If you’re waiting for homes to become dramatically less expensive, you may be waiting a very long time.
You can refinance an interest rate.
You can’t go back and buy yesterday’s home at yesterday’s price.
If you’re financially prepared to purchase a home today, don’t let fear of tomorrow keep you from making a sound long-term investment.
And if you already own land—or you’ve been thinking about purchasing acreage—this may be the perfect time to explore building a home that’s designed specifically for your family.
At Michael’s Homes, we’re always happy to sit down with landowners, evaluate property, answer questions, and help determine whether building on your lot makes sense.
Whether it’s on one acre or one hundred, we’d love the opportunity to help you turn your land into the place your family calls home.
