Chattanooga Real Estate Market Outlook
Chattanooga is the fourth largest city in Tennessee. It is located in southeastern Tennessee, close to Knoxville and just across the river from Georgia. Chattanooga proper is home to nearly 200,000 people. However, the Chattanooga housing market includes its suburbs, meaning the Chattanooga real estate market actually includes around half a million people. According to realtor.com’s 2019 housing market forecast, Chattanooga comes in fourth position with balance high sales (5.2 percent) and price (4.3 percent) growth. Employment (1.2 percent) and income (3.3 percent) growth expected for 2019 are both slightly under the national average.
However, the Chattanooga economy is growing at about 6 percent a year and is expected to have one of the lowest median price levels for homes of the top 10. The real estate market in Chattanooga is getting the attention of other cities as well. Homes are selling so fast that some stay on the market only a few hours. The booming economy has made it more difficult for Hamilton county residents to find a home. This shows that the Chattanooga market will remain competitive for both buyers and investors in 2019. Let’s discuss top 10 reasons to invest in the Chattanooga housing market. But before that we shall take a look at some of the market data and trends in this area.

Chattanooga Real Estate Market Forecast 2019, 2020 & 2021
The Chattanooga real estate market is very hot. Home prices in Chattanooga during the second quarter already rose twice the rate of inflation. In the spring quarter of the year, the median price of the homes sold by Realtors in Chattanooga rose 5.8 percent from a year go to a record high of $188,600. Despite those gains, Chattanooga prices still average nearly 30 percent less than the U.S. average. However, Lawrence Yun, the chief economist for the National Association of Realtors, forecasts that the pace of rising home prices will likely slow in 2019 and 2020 but still increase by an average of 4 percent.
The median home value in Chattanooga is $146,600 on Zillow. Chattanooga home values have gone up 5.5% over the past year and Chattanooga real estate market prediction is that they will rise 7.1% in 2020. The median list price per square foot in Chattanooga is $140, which is higher than the Chattanooga Metro average of $131. The median price of homes currently listed in Chattanooga is $236,875. The median rent price in Chattanooga is $1,262, which is lower than the Chattanooga Metro median of $1,295.

LittleBigHomes.com publishes forecasts for the trend in home prices in 380 Metropolitan Statistical Areas. The forecast for the trend in the Chattanooga housing market for the 12 months ending with the 3rd Quarter of 2019 is up. According to them the probability for rising house prices in Chattanooga is 87% during this period. If this Housing Market Forecast is correct, home prices will be higher in the 3rd Quarter of 2019 than they were in the 3rd Quarter of 2018.
Chattanooga Housing Market Forecast 2020 – 2021
The forecast for the trend in the Chattanooga housing market for the 3 years ending with the 3rd Quarter of 2021 is up. According to them the probability for rising house prices in Chattanooga is 86% during this period. If this Housing Market Forecast is correct, home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018. Check this page each quarter for updates to the Chattanooga Real Estate Market Forecast.
You can check this page of LittleBigHomes each quarter for updates to the Chattanooga Real Estate Market Forecast.
Chattanooga Real Estate Market Trends
Chattanooga real estate market trends indicate an increase of $12,500 (8%) in median home sales and and a 4% rise in median rent per month over the past year. The average price per square foot for this same period rose to $115, up from $109. Trulia has 607 resale and new homes for sale in Chattanooga, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.
The median sales price for homes in Chattanooga for Nov 7 to Feb 6 was $168,000 based on 611 home sales. Average price per square foot for Chattanooga was $115, an increase of 6% compared to the same period last year. The median rent per month for apartments in Chattanooga for Jan 12 to Feb 12 was $1,250.

The median sales price of the single-family homes sold through the Greater Chattanooga Realtors multiple listing service this spring rose 5.8 percent from a year ago to $188,600. The increase was more than double the average 2.9 percent increase in income, according to the U.S. Bureau of Labor Statistics.
Chattanooga Housing Market Summary
- Median Sales Price: $168,000 (On Trulia)
- Price Per Sqft: $115
- Median Rent Per Month: $1,250
- Median Household Income: $38,256
- Home Owners: 58%
- Single Residents: 40%
- Median Age: 38
- College Educated: 29%
- Transportation: Car dependent
There are 1,061 homes for sale in Chattanooga, ranging from $3.5K to $2.7M on Realtor.com. 80 of which were newly listed within the last week. Additionally, there are 217 rentals, with a range of $50 to $7.8K per month. In December 2018 the housing market in Chattanooga, TN was a buyer's market, which means there were roughly more active homes for sale than there were buyers. Buyer's markets are generally more advantageous for buyers rather than sellers.

In December 2018, the median list price of homes in Chattanooga, TN was $179.9K, trending up 12.5% year-over-year. The median listing price per square foot was $109. The median sale price was $178.2K. Homes in Chattanooga, TN sold for 1.88% below asking price on average in December 2018. Chattanooga, TN is a buyer's market in December 2018, which means that the supply of homes is greater than the demand for homes.
On average, homes in Chattanooga, TN sell after 62 days on the market. The trend for median days on market in Chattanooga, TN is flat since last month, and flat since last year.

There are 113 schools in Chattanooga, TN. There are 39 elementary schools, 22 middle schools, 19 high schools and 33 private & charter schools.
The median list price in Chattanooga is $259,900 on Movoto.com The median list price in Chattanooga was less than 1% change from January to February. Chattanooga's home resale inventories is 738, which increased 0 percent since January 2019. The median list price per square foot in Chattanooga is $132. January 2019 was $131.
Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in February.

Chattanooga TN Single Family Homes
As per the data from the real estate company called Neigborhoodscout.com, single-family detached homes are the single most common housing type in Chattanooga, accounting for 60.05% of the city's housing units. Other types of housing that are prevalent in Chattanooga include large apartment complexes or high rise apartments ( 22.23%), duplexes, homes converted to apartments or other small apartment buildings ( 12.03%), and a few row houses and other attached homes ( 3.99%).
People in Chattanooga primarily live in small (one, two or no bedroom) single-family detached homes. Chattanooga has a mixture of owner-occupied and renter-occupied housing. Vacant housing appears to be an issue in Chattanooga. Left unchecked, vacant Chattanooga homes and apartments can be a drag on the real estate market, holding Chattanooga real estate prices below levels they could achieve if became occupied. Currently, Zillow has 763 single family homes for sale in Chattanooga, TN. Additionally, there are 130 single family homes for rent in Chattanooga.
Chattanooga TN Foreclosures And Bank Owned Homes
Mortgage delinquency is the first step in the foreclosure process. The percent of delinquent mortgages in Chattanooga is 0.6%, which is lower than the national value of 1.1%. The percentage of millennial mortgage takers in Chattanooga is 43.9.
On RealtyTrac, there are currently 87 properties in Chattanooga, TN that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 909. In January, the number of properties that received a foreclosure filing in Chattanooga, TN was 27% higher than the previous month and 20% lower than the same time last year.
Home sales for December 2018 were up 0% compared with the previous month, and down 100% compared with a year ago. The median sales price of a non-distressed home in Chattanooga was $0. The median sales price of a foreclosure home in Chattanooga was $0, or 0% higher than non-distressed home sales.
- Foreclosures in Chattanooga = 87 (RealtyTrac)
- Homes for Sale = 909
- Recently Sold = 787
- Median List Price = $179,000 (1% increase vs Dec 2017)
Chattanooga Home Prices And Appreciation Rates
Appreciation rates for homes in Chattanooga have been tracking above average for the last ten years, according to NeighborhoodScout data. The cumulative appreciation rate over the ten years has been 25.75%, which ranks in the top 30% nationwide. This equates to an annual average Chattanooga house appreciation rate of 2.32%. Appreciation rates are so strong in Chattanooga that despite a nationwide downturn in the housing market, Chattanooga real estate has continued to appreciate in value faster than most communities.
Looking at just the latest twelve months, Chattanooga appreciation rates continue to be some of the highest in America, at 7.73%, which is higher than appreciation rates in 80.57% of the cities and towns in the nation. Based on the last twelve months, short-term real estate investors have found good fortune in Chattanooga. Chattanooga appreciation rates in the latest quarter were at 3.96%, which equates to an annual appreciation rate of 16.82%.
10 Highest Appreciating Chattanooga Neighborhoods Since 2000: By Neigborhoodscout.com
There are 41 neighborhoods in Chattanooga. North Chattanooga has a median listing price of $350,000, making it the most expensive neighborhood. East Lake is the most affordable neighborhood in Chattanooga, with a median listing price of $53,500. These are top 10 neighborhoods in Chattanooga for real estate investment.

Should You Buy Chattanooga Rental Homes For Sale?
In Chattanooga home prices are rising as the inventory of houses on the market continues to shrink with more people moving into Chattanooga than the number of new homes being built. Homes are selling so fact that some stay on the market only a few hours. Days on Market was down 22.9 percent to 54 days in 2018. The booming economy has made it more difficult for buyers to find a home. Today we’re going over the top 10 reasons to invest in the Chattanooga real estate market.
If you are thinking of buying Chattanooga rental homes for sale, you must read this. These things make Chattanooga market stand out when it comes to choosing a place to invest in 2019 and beyond.
1. The Cheap Real Estate
The median property in the Chattanooga real estate market costs around $150,000, a little more than the average home in the state of Tennessee but thirty thousand less than the national average. You can find three and four bedroom homes in Chattanooga for half the price of a condo in hotter real estate markets. Interestingly, housing supply is slow to develop, so housing prices are going up 3% to 5% a year – higher than the rate of inflation and the population growth rate.
2. The Known Areas Poised for Growth
Chattanooga is redeveloping its downtown. The city wants to change the fact that only 3% of their population lives downtown, while comparable cities have around 10% of the population living downtown. An estimated billion dollars worth of projects are on the drawing board for downtown. For example, they’re working on a number of multi-family developments to help meet pent up demand.
These projects also include hotels, student housing, and retail developments. The goal of moving at least ten thousand people downtown won’t hurt the downtown Chattanooga real estate market. Instead, the new retail, entertainment, office and factories will increase the value of properties in the surrounding area. One hot area would be the 14th street development that is intended to be home of festivals and events. The City Center project is seeking to capture startups and foster high tech companies. Chattanooga is trying to nurture its entrepreneurial “ecosystem”.
3. The Large Rental Market
Given the median income of just over $40,000 a year and average personal income of around $25,000-30,000, many renters can’t afford to buy these properties. This explains why home ownership rates are just over 50%, whereas about a third of the population rents nationwide.
4. It Is a Low Tax Jurisdiction
One reason to buy Chattanooga rental homes is the low overall tax burden. Tennessee has the lowest overall tax burden in the United States, and it has the lowest tax burden of any state in the South. For those considering investing in the Chattanooga real estate market will appreciate its very low property tax rate. The state of Tennessee has a low property tax rate, and the average taxes owed on Chattanooga rental homes is around $1100.
5. And It Is Becoming More Tax Friendly
The state of Tennessee is phasing out its income taxes. It will be income-tax free by 2021. Nor is the state planning on increases its property taxes to offset the decline in income taxes. If you’re buying Chattanooga rental homes, the high sales taxes don’t affect you. The city has been promoted in a number of articles as a great place to retire, and that is only made more so by their tax freeze for seniors.
6. It Is Landlord Friendly
The Chattanooga real estate market like the rest of Tennessee benefits from its landlord friendliness. For example, you don’t have to have a written rental agreement if the lease is less than three years, though it is wise to have one. Late fees don’t have to be spelled out in the rental agreement, though this is wise to do, and there are limits on the late fees you can charge.
That is set at 10% of the past due amount. There is no limit on deposits. The state does have pet laws but not re-keying laws. The tenant must request to renew the lease in writing thirty days before the end of the lease. If someone doesn’t pay their rent, residents of Chattanooga rental properties receive a 14 day notice at which point they can be evicted.
7. The Decently Sized Student Market
The Chattanooga housing market is bolstered by the relatively large student market thanks to the University of Tennessee at Chattanooga and Chattanooga State Community College. UTC has more than twelve thousand students, a disproportionately large number for a city of less than 200,000 people. Nor is this the only university. For example, Tennessee Temple University has almost a thousand students.
Covenant College is only ten miles for Chattanooga and has around a thousand students. Southern Adventist University is home to around three thousand students. These schools create diverse student demand for Chattanooga rental homes.
8. The Military Market
Chattanooga isn’t home to a military base itself. However, downtown Chattanooga is roughly a one hour drive via I-24 to Arnold Air Force Base. Homes in the Chattanooga suburbs are within commuting distance of the military base, and the military overwhelmingly consists of renters. There are several reserve centers and training facilities in Chattanooga itself. All of this creates a permanent population of renters seeking Chattanooga rental properties.
9. The Strong Job Market
Unemployment in Chattanooga is paralleling the unemployment rate for Tennessee as a whole. And the Chattanooga unemployment rate hit a twenty year low in 2018. Unemployment dropped to 3%, and that’s low compared to the rest of southeast Tennessee. This leads many people to move from the surrounding rural area to the city, buoying the Chattanooga housing market. On top of this, Chattanooga is trying to create more jobs so that they can continue their strong growth and attract more people.
10. Positive Demographic Trends
Its population growth has been a steady nearly 1% a year for almost a decade. The strong job market and relatively young population explains why the Chattanooga area saw population grow roughly 1.1% in 2017. And since the 2010 Census, the city has been the second fastest growing big city in the state. If it is successful in cultivating local high tech startups and new businesses, it will see even faster growth as it attracts people to work here that then buy homes in the Chattanooga real estate market and start their families here.
Chattanooga Real Estate Investment Properties
Maybe you have done a bit of real estate investing in Chattanooga, Tennessee but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. If you invest wisely, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate.
Most investors naturally gravitate to residential property investment. When looking for the best real estate investments, you should focus on markets with relatively high population and employment growth. Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.
You must also learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Chattanooga, TN. Chattanooga is a small city seeing significant growth. It is attracting people from around the state, and they stay due to the excellent quality of life and strong economy.
Buying investment property is different than buying an owner-occupied home. The investment properties are designed to make money as rentals, which means you must look at it solely as an income producing entity just like any other business.
Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor is your ability to find great real estate investments.
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Apart from the Durham real estate market, you can also invest in Durham, NC. There are many reasons to buy investment properties in the Durham real estate market. An unusual combination of features makes Durham attractive to real estate investors, since it creates a large population of renters willing and able to pay more per month to live here because they cannot necessarily find their dream home.
While redevelopment downtown is converting industrial real estate into rental units to meet demand in the Durham real estate market, it isn’t enough. This helps explain why rents are increasing faster than the rate of inflation. However, you’re not going to see a ton of new apartments and condos because the city’s zoning laws continue to favor single family, detached houses.
Since the city is running out of large vacant areas near utilities to build new tracts of single family homes on, building out is not going to help the area meet demand for new housing. NIMBY movements can fight the rezoning of property to be able to build multi-family housing. All of this guarantees strong future growth of rental rates for anyone holding Durham rental properties.
Another market that we suggest is the housing market in Louisville, KY. The Louisville housing market provides a steady rental market made up of several, independent populations. It combines slow population growth with healthy market turnover to yield a number of opportunities for redevelopment or rent. The Louisville rental market is stellar one.
Louisville has a nearly one billion dollar, twenty year plan to redevelop west Louisville. About a third of that money will be spent in the Russell neighborhood. This means that investors in the Louisville real estate market know where new infrastructure, amenities and housing will be built. They can buy up properties now to renovate and flip later or rent out at a premium.
The Louisville real estate market isn’t as open to short term rentals as some places, but Louisville is making concessions to tolerate AirBnB and other short-term rentals where it can help both local property owners and area tourism. For example, their plan is to allow short-term rentals in industrial and commercial neighborhoods like Butchertown.
Let us know which real estate markets you consider best for real estate investing! If you need an expert investment advise, you may fill up the form given here.
One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.
*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References:
Low taxes
https://www.knoxnews.com/story/news/2018/03/13/tennessee-state-tax-rates-one-lowest-united-states-lowest-south/420535002
https://www.investopedia.com/walkthrough/guide-buying-house-us/property-tax-assessment-state/southern-region-property-taxes/tennessee-property-tax-guide
Taxes are getting better
https://www.usatoday.com/story/money/taxes/2018/06/18/states-that-have-no-income-tax/35708055
https://www.timesfreepress.com/news/local/story/2018/nov/29/city-tax-freeze-offers-help-seniors/484051
Student market
https://en.wikipedia.org/wiki/University_of_Tennessee_at_Chattanooga
Jobs
https://www.timesfreepress.com/news/breakingnews/story/2018/may/24/chattanooga-jobless-rate-falls-18-year-low/471650
Demographic
https://www.timesfreepress.com/news/local/story/2018/may/29/growth-curve8230citys-populatigrowth-rate-top/471907
http://worldpopulationreview.com/us-cities/chattanooga-population
Military market
https://en.wikipedia.org/wiki/Arnold_Air_Force_Base
Real estate prices
https://datausa.io/profile/geo/chattanooga-tn
Known areas of growth https://noogatoday.6amcity.com/downtown-projects-by-the-numbers
https://www.timesfreepress.com/news/edge/story/2018/jan/01/top-builds/460050
https://livability.com/tn/chattanooga/business/why-entrepreneurs-and-tech-startups-are-flocking-to-chattanooga-tn
Landlord friendly https://www.avail.co/education/laws/tennessee-landlord-tenant-laws
Market Data, Trends And Forecast https://www.zillow.com/Chattanooga-tn/home-values https://www.realtytrac.com/statsandtrends/foreclosuretrends/tn/hamilton-county/chattanooga https://www.neighborhoodscout.com/tn/chattanooga/real-estate https://www.movoto.com/chattanooga-tn/market-trends https://www.trulia.com/real_estate/Chattanooga-Tennessee https://www.realtor.com/realestateandhomes-search/Chattanooga_TN/overview https://www.realtor.com/realestateandhomes-search/Chattanooga_TN/housing-market https://www.realtor.com/research/housing-market-predictions-2019-top-ten https://wdef.com/2018/04/17/real-estate-boom-makes-hard-find-house-now https://www.timesfreepress.com/news/business/aroundregion/story/2018/aug/14/despite-prospects-higher-mortgage-rateshousin/476979