Nashville, Tennessee is the go-to city for people who love music.
Besides being the cultural birthplace of country music, it also has a vibrant bluegrass and rock scene.
Whether you plan on moving to Nashville or visiting, however, you’ll find that the prices there are quite expensive.
Considering Nashville isn’t as large as New York City or Los Angeles, you may wonder why it has such high prices.
Why Is Nashville So Expensive? (10 Reasons)
Nashville tends to be cheaper than big cities like New York City and Los Angeles, but it’s still expensive on its own.
Factors like a small developmental area, housing costs, and a large population boom are all to blame for its high costs.
Let’s look at these factors in more detail.
1. Tourist Hotspot
One of the main reasons Nashville is expensive is that it’s a tourist hotspot.
Several draws bring tourists to the Music City.
Its history with country music is one of its biggest.
Music fans consider Nashville the home of country music.
It has tons of museums, artifacts, and places to visit for those who love country music or music in general.
It also has a lively food scene and a small-town atmosphere to it.
The problem with it being such a big hit with tourists is that it drives up the prices in the area.
Tourists make places expensive because there’s more demand for certain aspects of the city.
Tourists that fly in, for example, need transportation around the city.
That means there are fewer transportation modes for residents.
Tourists also like to dine out at restaurants.
That means there’s less capacity for residents.
Tourists also stay in hotels and vacation homes.
That drives up the prices of housing.
Since many tourists like to visit and stay in downtown Nashville proper, it has become a hotbed for real estate.
Everyone wants to get tourist money.
Businesses have to compete with each other to get that money.
In terms of real estate, that means the price of renting a building in the downtown area is high.
With high property prices or rental prices, the cost of business goes up.
No matter what the business is, if they have to pay a high rental fee, they’re probably going to have higher prices on their goods and services.
2. High-Quality Restaurants
Another reason Nashville is expensive is that it has high-quality restaurants.
Whether it’s because of tourists or because of the kind of audience it attracts from the music industry, you can expect to find some incredible restaurants in Nashville.
You have your mix of fine-dining experiences as well as big steakhouses that serve large portions.
Many of the restaurants focus on providing southern hospitality which means big food and major flavor.
However, this also means the restaurants in Nashville tend to be on the expensive side.
For one, food costs are relatively high in the city.
Inflation and agricultural problems are the main reasons behind high food costs.
Besides feeling the price increases at the grocery store, those who eat out at restaurants are also seeing that increase reflected in their bill at restaurants.
Restaurants need to buy a lot of food to serve their customers.
Since many upscale restaurants focus on providing fresh food, they usually end up buying food that comes in fresh that day.
They don’t buy the food in bulk.
That makes it more expensive for them.
To make up for the cost of food, they have to charge their diners a higher price.
The type of staff the restaurant has also determines its costs.
If the restaurant has an experienced executive chef in the kitchen, they’re going to have a more expensive menu.
That’s because having a great executive chef is a marketing ploy.
People are going to visit the restaurant to try a famous chef’s food if they get the chance.
Finally, real estate costs also influence the price of a restaurant’s menu prices.
Since they need to pay more to have their restaurant in the downtown area, they charge their diners more.
3. Small Downtown Space
An underlying problem that is causing Nashville’s price increases is the fact that it has a small downtown area.
Like most cities, when you have a small downtown area, it means the competition is fierce for real estate there.
A lot of people want to live or work in the heart of the downtown area.
It’s convenient because it’s close to everything.
They can walk to work, they can walk to restaurants, and they have plenty of different activities to occupy their time.
The business, restaurant, or venue that gets a spot in the downtown area is more likely to have customers.
They’re close to where all the people live, so it’s good business.
However, the problem with having a business, restaurant, or some other building in the downtown area is that it’s expensive.
Because competition is so fierce, it makes the price of land extremely expensive.
Businesses might need to take out a large loan to pay for land to develop it.
Other businesses that are renting an existing building will likely face high rental costs.
That makes everything in the downtown area expensive because they need to cover those real estate costs and still make a profit.
There’s a limited amount of land in the downtown area, however.
Not all cities can expand past their borders to widen their downtown area.
As a result, everyone has to compete for the land and buildings that already exist.
Nashville is expensive because its downtown area is small and confined.
4. Expensive Renovated Hotels
One aspect of Nashville you’ll find expensive if you plan on visiting is its hotels.
There are a few reasons why the hotels in Nashville are expensive.
The first is, of course, real estate costs.
Hotels that want to have a thriving business need to be where the tourists want to go.
That usually means being close to all the music museums and venues.
The problem with that is a lot of those places are in the downtown Nashville area and having a hotel there is going to be expensive.
Besides real estate costs, hotels know that they’re going to attract tourists to them.
Tourists always need a place to stay.
That allows hotels to raise their prices since they know that most tourists are going to spend that money, regardless.
They don’t have much of a choice if they want to sleep in a hotel.
Finally, a lot of hotels have undergone renovations.
To try to make themselves more appealing to tourists, they’ve changed up the rooms and modernized themselves.
That brings costs to the business as well.
To cover all those costs, the hotel has to charge high rates for its rooms.
While you can always find cheaper hotels outside of the downtown Nashville area, not a lot of tourists have an interest in staying there.
They want to be close to the action.
For tourists who flew in and don’t have a car, being within walking distance of everything is important.
All those details make hotels in Nashville expensive.
5. Housing Costs
Perhaps one of the biggest reasons Nashville is expensive is because of its housing costs.
The median sales price of a home in Nashville is $445,000.
That’s incredibly expensive.
There are a ton of reasons behind rising housing costs.
The first is the influx of people moving to Nashville.
There has been a lot of interest in moving to Nashville.
Whether it’s for the food, the music, or the community, people have an interest in living there.
This has led to rising housing costs because it means there’s more demand but with little supply.
Not everyone is looking at selling their home every year.
As such, it’s often the case that more people are moving into Nashville than those moving out of the city.
People coming into Nashville need a place to live.
They end up competing with one another for the small number of available homes.
Real estate agents know that demand is high for Nashville homes while supply is low.
They suggest certain prices to their clients to reflect that dynamic.
The other main factor leading to high housing prices is the fact that Nashville’s downtown area is small.
Since you can’t build more houses in a small area, it means the demand for the houses that are already there is going to be extremely high.
If people want to live in a far more affordable home, they’re going to need to look outside of the downtown Nashville area.
Since housing costs can impact the rest of your finances, it’s important to buy a home that you can afford.
6. Rental Costs
Houses aren’t the only thing impacted by a high price.
Renting an apartment or vacation property is also expensive.
That’s because there’s a lot of interest in opening up rental properties in Nashville.
People who want to get started in real estate see an opportunity in the city since it’s attracting a lot of people and tourists.
Those who want to open a vacation property will get the money they need to buy a home.
Then they’ll turn it into a vacation property.
This becomes a problem because a residential family could have bought that house otherwise.
Now, the family gets bought out and has to find somewhere else to live.
The competition ends up being between different real estate investors.
Since the investor had to pay a lot of money to turn the property into one for vacation rentals, the renting price is usually expensive.
The investor needs to make back their money as quickly as possible.
Apartments are expensive, too.
Many apartments want to be in the right heart of the downtown area.
Since there’s a lot of demand for living there, apartment complexes know that some residents are going to be willing to pay the extra price.
They’ll buy land or rent out a property and turn it into apartments.
Since buying the land or renting the property is so costly, they have to make up for those costs through high rental prices.
As such, residents end up paying high costs on their rent, too.
It becomes difficult to live in Nashville because of the high housing and rental costs.
7. High Gas Prices
Visiting or living in Nashville is expensive because of its high gas prices.
Nashville doesn’t have a great public transportation system.
It isn’t as extensive as residents may prefer.
Because of that, a lot of Nashville residents still have to drive their cars to get from one place to another.
This becomes expensive because Nashville also has high gas prices.
There are several reasons behind high gas prices.
Refinery shutdowns, a problem with supply chains, and inflation have all impacted the price of oil.
When the price of oil increases, the price of fuel increases.
This makes living in Nashville expensive because you have to pay more to get around.
Unless you live in the downtown area, chances are you probably have to drive to get places.
You end up spending a good amount of your paycheck on fuel alone.
Another factor that impacts the price of gas in Nashville is the sheer demand.
Because Nashville has a large population, it means there are a lot of people who need to buy fuel for their cars.
With public transportation only serving a few people, the rest have to get gas.
This makes living in Nashville expensive because it means you have less money to use elsewhere.
8. Expensive Childcare Services
Nashville is expensive because of its childcare services.
A lot of people work and live in Nashville.
A lot of those people are also families with young children.
To go to work, those families need childcare services.
The problem is that a lot of people are moving to Nashville.
That means there’s even more demand for childcare services.
This is a problem because childcare services can only take care of so many children at a time.
There are also only so many childcare facilities in the city.
When those facilities have reached their maximum capacity, they’re unable to take on any more children.
It becomes a situation in which parents who have the most money are the ones who get their children into those facilities.
That’s because childcare facilities will raise their prices.
When there’s high demand and low supply, the price of the service increases.
Having to pay higher childcare services means families have less money to spend elsewhere.
9. Music City Population Draws
Nashville has the nickname Music City.
Its history with country music has encouraged many musical artists to move to the city to try and make it big, too.
It’s a draw for both music lovers and musical artists.
However, much like Los Angeles is for struggling actors, Nashville is a place for struggling musical artists.
Not everyone will make it big.
The sheer number of people that move to the city looking to make it big is part of the problem that’s making Nashville expensive.
While many people come to the city looking for new jobs, one of the biggest groups of people coming to the city is musicians.
They want to join the ranks of past famous musical artists who got their start in Nashville.
The problem with that is until they make it big, they’re driving up the competition for places to eat and sleep.
They’re making it more expensive for the residents who already live there.
10. Low Salaries
A final reason why Nashville is expensive is that the majority of people there have low salaries compared to the cost of living in the city.
The average salary in Nashville is $66,750.
However, to live comfortably in Nashville, you really need a salary of $85,000 or more.
A large part of that is housing and rental costs.
It should only ever be 30% of your total income.
However, with prices as high as they are, that isn’t the case for many people making $66,750 a year and lower.
Since they’re not getting paid enough, they’re struggling to live in Nashville.
Nashville is a city best known for its ties to music.
However, visiting and living in Nashville has become quite expensive.
The factors listed above all contribute to how expensive the city is to live in and visit.