Knoxville's housing market has been attracting attention compared to other Tennessee cities. With a strong job market and a growing reputation, it's no wonder more people are considering Knoxville in their home buying journey. However, diving into any market requires understanding its trends.
This article explores Knoxville's housing market, including current home values, trends to watch, and insights to help you navigate your decision. While Knoxville offers affordability compared to some national markets, be prepared for a competitive market.
Trends in the Knoxville Housing Market
The Knoxville housing market is experiencing a period of transition in 2024. While traditionally known for affordability, the city is attracting growing interest, leading to a dynamic market with both opportunities and challenges for buyers and sellers. Here's a breakdown of key trends to consider:
Rising Prices and Seller's Market:
Median Listing Price and Sales Price: While the median listing price for a home in Knoxville sits at $429,900 as of April 2024, a relatively flat trend compared to the previous year, the median sales price tells a different story. Homes are actually selling closer to their listing price, with an average sale-to-list ratio of 100%.
This indicates a seller's market, where demand is outpacing available inventory. This trend suggests that while the initial growth spurt may be tapering off, Knoxville's housing market remains attractive to buyers, and sellers are able to command strong prices for their properties.
Inventory: Unfortunately, data on inventory levels wasn't provided. However, understanding inventory is crucial for a complete picture of the market. A decrease in available homes can contribute to a seller's market and quicker sales.
If you're considering buying in Knoxville, be prepared for some competition, especially for properties in desirable neighborhoods or within specific price ranges. Conversely, if you're a seller, this is a positive sign, indicating a market where your property is likely to generate significant interest.
Speed of Home Sales:
- Median Days on Market: The good news for sellers is that homes are moving quickly. In April 2024, the average home sold within 29 days of being listed. This is a positive sign for sellers who want a smooth and efficient transaction.
- Trend Analysis: It's important to note that the median days on market has fluctuated slightly year-over-year. While it's currently faster than last month, a longer-term view is needed to understand the overall trend.
What Does This Mean for You?
- Buyers: Be prepared for a competitive market. Research pre-approval options and be ready to act quickly on properties that meet your needs. Consider offering close to asking price, especially for desirable homes.
- Sellers: Take advantage of the current climate. Price your home competitively based on market data and recent sales in your area. Consider minor renovations or staging to increase curb appeal and attract more buyers.
Knoxville Real Estate Appreciation Trends
Knoxville has become a magnet for real estate investors in recent years, and for good reason. The city has experienced impressive appreciation rates over the past decade, making it a lucrative market for those looking to build long-term wealth. Here's a closer look at Knoxville's real estate appreciation trends:
Stellar Long-Term Performance
Knoxville boasts an impressive 141.4% appreciation in home values over the last ten years (Neighborhoodscout), translating to an average annual growth rate of 9.21%. This positions Knoxville among the top 10% nationally for real estate appreciation.
Here's a breakdown of appreciation rates for different timeframes:
| Time Period | Total Appreciation | Average Annual Rate | Compared To (TN) | Compared To (America) |
|---|---|---|---|---|
| Latest Quarter | 0.66% | 2.66% | 8 | 5 |
| Last 12 Months | 10.48% | 10.48% | 10 | 10 |
| Last 2 Years | 30.63% | 14.29% | 9 | 10 |
| Last 5 Years | 85.00% | 13.09% | 10 | 10 |
| Last 10 Years | 141.40% | 9.21% | 10 | 10 |
| Since 2000 | 221.22% | 4.98% | 9 | 9 |
Understanding the Data
Consistently Strong Performance: It's important to acknowledge that Knoxville's appreciation rates have remained robust across various timeframes. This indicates a market with consistent growth potential, which is reassuring for long-term investors.
National Benchmarking: Knoxville's performance stands out when compared to both Tennessee and the nation as a whole. Consistently ranking among the top 10 positions for appreciation showcases Knoxville's attractiveness as a real estate investment.
Recent Trends: While the latest quarter shows a modest appreciation of 0.66%, the past year reflects a healthier growth rate of 10.48%. This suggests some potential for market stabilization, but long-term data is necessary to confirm this trend.
Factors Fueling Appreciation
Several factors contribute to Knoxville's strong appreciation trends:
- Thriving Job Market: Knoxville's economy is booming, attracting businesses and professionals from various sectors. This influx of new residents fuels housing demand and pushes prices upward.
- Relatively Affordable: Compared to other major metros, Knoxville offers a relatively affordable cost of living, making it an attractive option for homebuyers. This affordability factor likely adds to the demand and appreciation.
- High Quality of Life: Knoxville offers a desirable quality of life with a blend of urban amenities, outdoor recreation opportunities, and a strong sense of community. This overall livability makes Knoxville even more appealing to potential residents.
Knoxville's real estate market presents a compelling opportunity for investors seeking long-term wealth creation. The city's consistent appreciation, coupled with a strong economic outlook, makes it a market worth considering. However, it's crucial to conduct thorough research, consider market conditions, and factor in your investment goals before making any decisions.
Knoxville Housing Market Predictions 2024
According to the forecast, after a prolonged downturn spanning nearly two years, East Tennessee's housing market is poised for a rebound in 2024. The forecast paints a picture of a market on the brink of recovery. The anticipated rebound in home sales, coupled with continued upward pressure on prices due to a housing shortage, reflects a resilient real estate landscape.
Home Price Growth and Market Forces
Home prices in the Knoxville metropolitan area have experienced noteworthy growth, rising by 11.3% in the third quarter of 2023, according to the FHFA House Price Index (HPI). Despite the deceleration in price growth, the market remains above the historic average. The anticipated rebound in home sales in 2024 is attributed to the expected decline in mortgage rates and improving affordability conditions, facilitating the return of buyers previously priced out of the market. Additionally, long-term market forces such as favorable demographic trends, migration, and changing household composition are expected to stimulate further market activity.
Anticipated Rebound in Home Sales
After facing a downturn with a 9% and 15% year-over-year decrease in home sales in 2022 and 2023, respectively, the East Tennessee housing market is set to rebound in 2024. Forecasts indicate a substantial 11.1% increase in total home sales, bringing the market back to pre-pandemic levels. This resurgence is fueled by the improved affordability conditions and the decline in mortgage rates, offering prospective buyers a renewed opportunity to enter the local real estate market.
Upward Pressure on Home Prices
While affordability conditions remain near record lows, a chronic undersupply of housing persists, exerting upward pressure on prices. Home prices are anticipated to increase by 3.6% in 2024, driven by the ongoing supply-demand imbalance. The market dynamics suggest that despite the rebound in home sales, the shortage of available housing will continue to support price growth in the East Tennessee region.
Deceleration in Rent Growth
Rent growth, after experiencing double-digit increases in 2022, slowed considerably in the latter half of 2023. In the Knoxville metro area, rents rose by 3.9% in the fourth quarter of 2023. The deceleration is expected to persist, with apartment rent growth forecasted to slow to an average of 3.1% in 2024. This shift in the rental market reflects a more stabilized and sustainable growth pattern compared to the previous years.
Apartment Occupancy Rates
Knoxville's apartment occupancy rate, despite experiencing a decline throughout 2023, remains among the highest in the country. The rate is expected to continue falling as new units become available, with the forecast projecting an average occupancy rate of 96.4% in 2024. This indicates a dynamic rental market with ongoing demand even as new housing units are introduced.
As the region navigates changing market forces and economic conditions, stakeholders in East Tennessee can expect a dynamic and evolving real estate market in the coming year.
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 8.26%, putting Knoxville in the top 20% nationally for real estate appreciation.
- 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.
