Clarksville, Tennessee
“Tennessee’s Top Spot” Could Beat the Heat in 2023
By Carole VanSickle Ellis
Clarksville, Tennessee, might have been a “hidden gem” in the early 2020s, but now Tennessee’s self-proclaimed “Top Spot” market is making headlines both for meteoric appreciation and the potential for local home values to plummet by as much as 20% in 2023 according to a recent study released by Fortune magazine.
Interestingly, many local real estate professionals believe Clarksville will successfully circumnavigate the market softening that so many other markets that experienced similar pandemic-fueled booms are approaching. Christian Black, a local realtor and former president of the Clarksville Association of Realtors (CAR), insisted that many analysts like those on the team at Fortune fail to consider several factors that make the Clarksville market uniquely resilient to post-pandemic price declines.
“I don’t know that they are taking into account baby boomers moving here from higher-taxed states,” Black said, adding, “I don’t think they are taking into account the outside money that is coming in.”
He also said he expects millennials who “waited to join the housing market” will likely keep demand for housing in the affordable Clarksville market high. The city boasts a cost-of-living that is roughly 8% lower than the national average despite being about 4% higher than the average cost-of-living in the state of Tennessee.
Money magazine named Clarksville its top place to live in 2019, and the market was ranked sixth-most-attractive in the country to millennial homebuyers by the Nashville MLS using U.S. Census data in September of this year.
“With low cost-of-living and a highly educated population, Clarksville is poised to see quite a bit of growth in the near future,” opined Nashville MLS analysts. They added that data indicates homeowners are still “likely to see their home values rise quite steadily” thanks to major employers like nearby Fort Campbell and Austin Peay State University.
A Combustible Combination of Hot Housing, “Explosive” Growth
At the beginning of 2022, OpenDoor.com ranked Clarksville the hottest housing market in the country. The company’s research team cited an extremely low housing inventory (less than one month), extremely low volumes of new-construction homes available in the area, and low days-on-market counts.
OpenDoor.com head of city operations, Rob Reiling, noted Clarksville ZIP code 37042 was the “hottest” in the country at that time, and Travel Noire reporter Jasmine Osby added that proximity to Nashville (just under an hour) makes Clarksville “one of the trendiest places to live [that] still offers all the amazing amenities of a big city at an affordable price.”
Of course, with skyrocketing home prices comes an eventual lack of affordability. With the one-year price change in Clarksville hovering just under 25% and the five-year price change higher than $136,000, the city is certainly hovering on the brink of an affordability crunch. It remains to be seen if local professionals like Black, who believe the market can withstand the demand for the foreseeable future, or the Fortune analytics team, which predicted the market is too overvalued to sustain growth in 2023, will turn out to be correct.
Black’s argument that millennial buyers and renters from other areas of the country find Clarksville appealing certainly appears to hold water; according to U.S. Census Bureau data, more than one in six homeowners in Clarksville are younger than 35 (compared to one in 10 nationally).
Calling Clarksville’s recent growth “explosive,” the CEO of the Clarksville Economic Development Council, Buck Dellinger, cited local dedication to expanding the local business as a key component in bringing new residents into the city. “Clarksville- Montgomery County is a top-requested location for new companies to show interest and perhaps make their new home,” Dellinger said this past January. In 2021, the city’s Industrial Development Board (IDB) paid $18 million for 400 acres to be developed into an industrial park that is already attracting multiple companies that could bring thousands of job opportunities into the Clarksville region.
Dellinger said many of the companies currently considering Industrial Park East have requested nondisclosure agreements keeping their identities under wraps, but cited two potential projects that have given permission for their names to be released. Project Ocean, an electric vehicle technology company, could snap up the entirety of the industrial park and an addition 46 acres besides; Project Lisbon, a tech company, is interested in “at least half” of the park and “has the potential to bring $800.6 million in capital investments and 2,000 jobs with a $23/hour starting wage” to the area.
Dellinger also noted Clarksville is ideal for distribution companies because more than half of the U.S. population lives within one day’s drive of the metro area. “[It] makes distribution a good option,” he explained, noting that the park is close to the interstate and rail transport options.
A Strong Market for Rental & Fix-and-Flip Investors
Thanks to proximity to Fort Campbell, there is a strong military presence in Clarksville that keeps the economy resilient and the local rental market particularly strong. Slightly more than half (55%) of Clarksville residents are renters, and rents are still rising in the area although they appear likely to level off sometime in 2023 as the residential retail market softens nationally.
With the local population still growing (it rose by more than 6% between 2020 and 2021 and appears on track to do so again), the need for single-family residential housing is likely to be stronger than ever in 2023. Investors who can help meet this need will find a place for themselves quickly in the Clarksville market.
Justin Cory, a local broker and former combat medic who has been working in real estate in the area since 2008, observed, “The number of jobs and median salaries are higher in Clarksville compared to its rural surroundings, [and] the unemployment rate has been in alignment with the national average, demonstrating a low historical risk for rental owners.”
He also noted that out-of-state investors, like residents, will likely pay relatively low property taxes. “The average Tennessee property-tax bill is the fifteenth-lowest in the U.S.,” he said.
Of course, many of those renters would like to be homeowners if they could find a property to buy, which keeps the fix-and-flip market in Clarksville boiling as well. According to ATTOM Data’s “U.S. Home Flipping Report” for Q1 2022, Clarksville had the fourth-highest flipping rate in the country for metro areas with a population of less than 1 million.
Cash investors will see the most success in this market thanks to intense demand from investors and owner-occupant buyers. Rick Sharga, executive vice president of marketing intelligence for ATTOM, noted that nearly two-thirds of flipped homes nationwide were purchased by investors with cash in early 2022.
“As interest rates continue to go up, cash buyers should be in an even greater position of competitive advantage in the fix-and-flip market,” he said.
Sidebar 1
Top 10 Employers in Clarksville
(by Revenue)
AT & T
Wal-Mart
Verizon
Target
United Health Group
Lockheed Martin
State Farm
UPS
The Home Depot
Top 10 Employers in Clarksville
(by Job Numbers)
Clarksville-Montgomery County School System // 5,000
Agero // 1,700
Trane Company // 1,640
City of Clarksville // 1,100
Tenova Healthcare // 1,250
Montgomery County Government // 1,207
Hankook Tire Manufacturing TN // 1,000
Austin Peay State University // 860
Jostens, Printing & Publishing Division // 850
LG Electronics USA // 640
Sidebar 2
New Companies in Clarksville Make Big Promises
Clarksville, Tennessee, has a lot to offer companies considering moving to the area. Those companies often make big promises in return. For example, when the city’s Industrial Development Board (IDB) began recruiting deals for one of its developments, Corporate Business Park, the board did not wait for the deals to be done to start releasing information about the potential benefits to the community. The IDB happily announced that two major deals could bring in as many as 600 jobs and more than $100 million in investments if negotiations were successful.
IDB often assigns code names to potential projects so that it can alert locals and potential investors to pending deals. “That is standard practice,” noted Clarksville Now reporter Casey Williams. At that time, the IDB’s parks already hosted gunmaker Troy Industries, EV battery manufacturer Microvast, and distribution facilities for Wal-Mart and Nite Light. The park is also located in an opportunity zone and is eligible for new market tax credits (NMTC), a U.S. Treasury program designed to allow cities to attract new businesses and incentivize economic growth by offering tax credits to private investors in qualified communities.
CBE Group is another major player that has recently brought jobs to the Clarksville area. In 2020, CBE announced it would invest $1.2 million in the Clarksville market in order to expand its global call center operation into the area. The expansion has already brought in hundreds of jobs and will likely bring a total of about 500 jobs to the community by 2023. Frank Tate, 2020 executive director of the IDB, said, “The expansion of CBE to Clarksville-Montgomery County brings more opportunities for our citizens to thrive.”
However, not all projected growth comes to pass, as real estate investors know well. In August 2021, Amazon officially announced it would build a “state-of-the-art fulfillment center” in Clarksville. This project had been known by the code name “Project Alice/William” and touted as a source of “500 full-time jobs with comprehensive benefits at a new 1 million-square-foot fulfillment center.” The facility was projected to launch in 2022. However, one year later, Amazon had completed its new building but failed to start operations in the new facility. The company cited “supply chain issues” and told the Nashville Business Journal it would not fire up the new facility for “at least eight to 10 months.” The building, which is intended to house furniture, kayaks, appliances, and other large items, is still part of the company’s future plans,” said an Amazon spokesperson.
Other companies like FedEx and Microvast are actively hiring in the area as they promised to do in 2020 and 2021. FedEx, in particular, predicted an easy time filling about 250 new jobs in the coming months because about half of Nashville’s FedEx staff already live in Clarksville. The company is expanding into a new distribution center that promises to be open in time to support the holiday season with both temporary and permanent facilities. “[FedEx] leadership…anticipates having very little issues hiring,” said Clarksville-Montgomery County Economic Development Council spokesperson Michelle Hueffmeier. “They foresee many dropping their commute to work at the new Clarksville location.”
Sidebar 3
Fort Campbell: Flying High in Clarksville
Fort Campbell, a U.S. Army installation and home to the 101st Airborne Division and the 160th Special Operations Aviation Regiment, sits astride the Kentucky-Tennessee border between Clarksville, Tennessee, and Hopkinsville, Kentucky. The 101st is the only air assault division in the world and is known by its nickname, the Screaming Eagles. The presence of Fort Campbell has an outsized effect on the types of jobs and industries attracted to Clarksville due to a large military and former-military population. According to Fort Campbell’s regional plan, the top industry sectors in the region are:
» Manufacturing
» Retail Trade
» Healthcare
» Hospitality/Dining
» Education
Fort Campbell is the largest employer in the state of Tennessee. The U.S. Census Bureau estimated that Fort Campbell supported 58,000 jobs and had an annual economic impact of more than $10 billion in 2019. About 61,000 military retirees live in Tennessee.
