Knoxville Housing Market Trends
If you're looking to invest in the Knoxville real estate market, you'll want to keep an eye on the current trends and future forecasts. In January 2023, the Knoxville housing market saw an increase in median sale prices and the sale-to-list price ratio, while home sales volume decreased. So, what does the future hold for the Knoxville real estate market in 2023 and beyond? Let's dive into the details and explore the latest trends and forecasts for the Knoxville housing market in 2023.
Competitive Market with Moderate Competition
According to Redfin, the Knoxville housing market has a moderate competition level with a Redfin Compete Score of 52 out of 100. This means that the market is relatively competitive, but not excessively so. In terms of migration and relocation trends, 0.61% of homebuyers searched to move into Knoxville from outside metros.
Los Angeles homebuyers searched to move into Knoxville more than any other metro, followed by Chicago and Washington. About 73% of Knoxville homebuyers searched to stay within the Knoxville metropolitan area. Bend was the most popular destination among Knoxville homebuyers, followed by Pensacola and Jackson.
Increase in Median Sale Price and Sale-to-List Price Ratio
The median sale price for a home in Knoxville increased by 9.4% compared to the previous year, bringing it to $290,000. Meanwhile, the sale-to-list price ratio was 97.9%, indicating that homes sell for almost the same as the listed price.
Decrease in Home Sales Volume
In January 2023, 197 homes were sold in Knoxville, down from 342 homes sold in the same period last year. However, multiple offers are rare in Knoxville, and the average home sells for about 2% below the list price.
Stable Future with a Slight Increase in Home Prices
Overall, the Knoxville housing market is expected to remain stable in the future, with a slight increase in home prices and continued low competition.
Supply and Demand are Balanced
According to Realtor.com, the Knoxville housing market is considered to be a balanced market, with the supply and demand of homes being about the same. This indicates a healthy housing market in Knoxville.
Upward Trend in Home Values
The median listing home price in Knoxville is currently $365,000, representing a 17.7% YoY increase. Homes in Knoxville are selling after an average of 56 days on the market, which is slightly up from the previous year. These trends are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded.
Impact of COVID-19 & Future Challenges
The COVID-19 pandemic has affected the Knoxville housing market, as it has in many other areas of the country. However, the Knoxville market has remained relatively stable despite the pandemic. While the demand for housing is expected to remain strong in Knoxville, the supply may be limited due to a shortage of construction labor and materials.
This shortage may lead to higher prices for new construction homes, which may affect the overall affordability of housing in Knoxville. Hence, the Knoxville housing market is experiencing growth, with a slight decrease in home sales volume and an increase in median sale prices, and the sale-to-list price ratio.
The market is considered to be balanced, with steady demand for housing and a limited supply due to a shortage of construction labor and materials. The COVID-19 pandemic has affected the market, but it has remained relatively stable, indicating a healthy housing market in Knoxville. In the future, the market is expected to continue to grow, albeit at a slightly slower pace than in 2022, due to challenges related to the shortage of construction labor and materials.
Knoxville Housing Market Forecast
The Knoxville housing market has been experiencing robust growth in the past year with the average home value increasing by 13.0% to $306,133. This report will provide an overview of the current Knoxville housing market, key takeaways, and a forecast for the market in 2023. The Zillow Home Value Index (ZHVI) captures changes in property level Zestimates, providing a comprehensive measure of the level and changes in home values across various geographies and housing types.
The following are key takeaways from the Knoxville housing market:
- Typical home values in Knoxville are $306,133
- The 1-year value change is +13.0%
- The median sale-to-list ratio is 0.993
- 53.3% of sales are over the list price
- 11% of sales are under the list price
- The median days to pending is 11 days
Market Forecast
Based on the current trend, the Knoxville housing market is expected to continue its growth trajectory in 2023. While the exact growth rate is difficult to predict, it is expected that the market will continue to see a steady increase in home values. Therefore, homeowners and potential buyers can expect the market to remain favorable for the foreseeable future.
Forecasting the Knoxville housing market trends for 2023, it is important to consider the current average 30-year fixed mortgage interest rate, which is at 6.94%. This rate is up 15 basis points over the last seven days. This rise in interest rates has led to a decrease in demand for homes, as buyers are less likely to purchase a home at a higher interest rate. This has potentially led to a slowdown in the housing market.
In conclusion, the Knoxville housing market is experiencing robust growth, with the average home value increasing by 13.0% over the past year. This growth is expected to continue in 2023, making the market favorable for both buyers and sellers. However, it is important to note that the exact growth rate is difficult to predict and may vary based on various factors such as economic conditions and housing demand.
Should You Invest In Knoxville Real Estate Market?
There are several reasons why investing in Knoxville's real estate market could be a good choice:
- Strong appreciation rates: Knoxville has experienced significant home appreciation rates in the last ten years, with an average annual appreciation rate of 8.18%. Additionally, Knoxville's appreciation rates over the last 12 months have been higher than almost all other cities in the United States.
- Diversified economy: Knoxville's economy is diverse, with several industries such as healthcare, education, and technology contributing to its growth. This diversity helps to stabilize the housing market and makes it less vulnerable to economic downturns. The region is also home to the Oak Ridge National Laboratory, which is a major research facility and employer in the area. This mix of industries helps to create a stable economic environment, which can provide opportunities for real estate investors.
- Affordable housing market: Compared to other metropolitan areas, Knoxville's housing market is relatively affordable. This makes it an attractive option for investors looking for affordable entry points.
- Strong rental market: Knoxville has a strong rental market, with a vacancy rate that is consistently lower than the national average. This means that investors have a good chance of finding tenants quickly and maintaining a steady rental income. The Knoxville military and retiree market can be another potential factor to consider for real estate investment, especially for rental properties. Knoxville is home to several military bases and has a large retiree population, which can create a steady demand for rental properties. This can provide investors with a reliable and stable tenant pool, which can help reduce vacancy rates and ensure consistent rental income.
- Landlord-friendly environment: Knoxville is known to have a landlord-friendly environment, with laws that are generally favorable to landlords. For example, landlords have the right to evict tenants for non-payment of rent, and the eviction process is generally considered to be quick and efficient. In addition, Tennessee has no state income tax, which can be beneficial for real estate investors looking to maximize their profits.
However, there are also some potential drawbacks to investing in Knoxville's real estate market:
- Slow population growth: While Knoxville has a diversified economy, its population growth has been slow in recent years. Slower population growth could limit the potential for housing demand, which could impact the appreciation rates in the long term.
- Limited job growth: Although Knoxville's economy is diverse, job growth has been slower than the national average in recent years. This could limit the demand for housing in the long term, which could impact appreciation rates.
- Climate risks: Knoxville is located in an area prone to natural disasters such as tornadoes and floods. These climate risks could impact the value of the real estate in the area and lead to higher insurance costs for investors.
Overall, investing in Knoxville's real estate market could be a good option for investors looking for affordable entry points and strong appreciation rates. However, investors should also consider the potential drawbacks, such as slow population and job growth, and climate risks, before making a decision.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
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, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
Sources:
- https://www.redfin.com/city/10200/TN/Knoxville/housing-market
- https://www.realtor.com/realestateandhomes-search/Knoxville_TN/overview
- https://www.zillow.com/home-values/25428/knoxville-tn/
- https://www.neighborhoodscout.com/tn/knoxville/real-estate
