Knoxville, Tennessee, is a vibrant city with a thriving housing market. These housing market 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. Knoxville, TN, offers a dynamic and competitive housing market.
With rising home prices, limited inventory, and homes selling close to their listing prices, sellers can take advantage of the current conditions. Buyers and renters can also find a wealth of options to suit their needs and budgets. Whether you're looking to invest, settle down, or explore the rental market, Knoxville presents an exciting opportunity in the real estate landscape.
Median Listing Home Price vs. Median Home Sold Price
In April 2023, the median listing home price in Knoxville was $399.9K, showing a significant increase of 17.7% compared to the previous year. This upward trend in home prices indicates a strong market for sellers in the area. The median listing home price per square foot was $204, while the median home sold price stood at $351.5K. This data suggests that homes in Knoxville are selling close to their listing prices, with a sale-to-list price ratio of 100%.
Knoxville is a Seller's Market and High Demand
Knoxville, TN, is currently experiencing a seller's market. This means that there are more prospective buyers in the area than there are homes available for sale. The high demand is contributing to the upward trajectory of home prices, as buyers compete for limited housing inventory. If you're considering selling your home in Knoxville, this is an opportune time to do so.
Median Days on Market
On average, homes in Knoxville spend approximately 42 days on the market before being sold. This figure represents a decrease compared to the previous month, indicating that homes are selling at a faster rate. When compared to the previous year, the median days on the market have slightly increased, suggesting a steady demand for housing in the area.
The abundance of Homes For Sale
Currently, there are 1,881 homes for sale in Knoxville, TN. Within the last week alone, 348 new listings have entered the market, providing buyers with a range of options to choose from. In addition to the homes for sale, there are also 260 rental properties available, with monthly prices ranging from $617 to $7K. Whether you're looking to buy or rent, Knoxville offers a diverse selection of properties to suit various budgets and preferences.
Newest Listings in Knoxville, TN
3 bedrooms, 2 bathrooms, 1,344 sqft – 724 Green Meadows Dr, Knoxville, TN 37920
3 bedrooms, 3 bathrooms, 1,816 sqft – 4773 Stoneyhurst Ln, Knoxville, TN 37918
1.7 acres lot – E Red Bud Rd, Knoxville, TN 37920
These are just a few examples of the newest listings in Knoxville. The city provides a range of options, including single-family homes, townhouses, and vacant lots for those looking to build their dream home.
Q1 2023 Knoxville Housing Market Pulse Survey
The Q1 2023 Market Pulse Survey, conducted by the Knoxville Area Association of REALTORS®, provides valuable insights into the local real estate market conditions based on interactions with clients and transactions over the previous three months. This blog post will delve into the key findings of the survey, including buyer and seller trends, market indicators, and the market outlook for the coming months.
Buyer and Seller Traffic
The survey indicates a positive trend in buyer traffic, as 55% of respondents reported seeing less buyer traffic compared to the previous year, a decrease from 68% in the previous quarter. Conversely, seller traffic continued to decline, with 59% of respondents observing less seller traffic than the same period last year.
Looking ahead, 44% of respondents anticipate lower-than-usual buyer traffic in the next three months. The expectations for future seller traffic were split, with 37% expecting it to remain the same and 39% expecting a decrease.
Number of Offers and Home Sales
In Q1 2023, respondents reported receiving an average of 2.2 offers on homes sold, which remained unchanged from the previous quarter but decreased from 6 offers in Q1 2022. Regarding home sales, 42% of REALTORS® expect a decrease in sales over the next year, down from 56% in the previous quarter. Meanwhile, 31% anticipate sales to remain stable, and 28% foresee an increase.
Home Prices and Cash Sales
The survey reveals that 71% of respondents expect home prices to either stay the same or increase over the next year. Among them, 52% anticipate an increase in home prices. All-cash sales accounted for 28% of all home sales in Q1 2023, showing no change from the previous quarter and the same period last year.
Relocation and Appraisals
Buyers relocating from another area represented only 8% of all home sales, a significant decline compared to 24% in the first quarter of 2022. The survey also indicates improvements in appraisal-related issues, as only 5% of homes sold in the past three months had an appraised value lower than the purchase price, down from 15% a year ago. Additionally, 47% of buyers waived at least one contingency in their purchase contract, down from 63% a year ago.
Market Outlook
Comparing the market outlook for Q1 2023 with the previous quarters, there has been a shift in expectations. Only 17% of respondents anticipate a year-over-year increase in buyer traffic in the next three months, a decrease from 21% in Q4 2022 and a significant drop from 62% in Q1 2022. Similarly, 20% of respondents expect a year-over-year increase in seller traffic in the next three months, slightly higher than 17% in the previous quarter but considerably lower than 36% in Q1 2022.
While the outlook for buyer and seller traffic is somewhat conservative, the majority of respondents remain optimistic about home prices. 53% of respondents expect home prices to increase over the next year, indicating positive sentiment. However, this projection represents a slower pace of growth compared to previous surveys. It marks a substantial change from six months ago when over 44% of respondents expected home prices to decrease.
Knoxville Housing Market Forecast 2023
According to the forecast by Knoxville Area Association of REALTORS®, in 2023, the Knoxville housing market is expected to undergo a period of receding growth following the exceptional boom experienced over the past two years. The market's impressive performance was primarily driven by a significant supply-demand imbalance and fundamental market forces, including favorable demographic trends, migration patterns, and shifting household compositions.
Additional factors such as pandemic-induced migration, fiscal stimulus, and historically low borrowing costs also played a role, although their influence is diminishing as the pandemic subsides.
As mortgage rates have reached their highest levels in over a decade, coupled with concerns surrounding inflation, the housing frenzy induced by the pandemic has naturally come to an end. However, the market is anticipated to retain most of the gains accrued during the previous two years.
While the pace of home price growth is decelerating, it remains above the historical average. According to the Federal Housing Finance Agency House Price Index (FHFA HPI), home prices in the Knoxville, Tennessee, metropolitan area rose by 18.3% in Q3 of 2022 compared to the previous year.
Rent growth in the Knoxville area remains high, although the rate of increase has moderated in recent weeks. In Q3 of 2022, rents in the Knoxville metropolitan area were up by 19.6% compared to the previous year, surpassing the national rent growth rate of 10.5%.
Home sales are expected to decline between 10% and 12% in 2023 compared to the previous year. Despite the anticipated decline in home sales due to worsening affordability conditions, the persistent lack of inventory will continue to exert upward pressure on prices. Consequently, home prices are forecasted to increase by approximately 3% to 5% in 2023.
In the rental market, Knoxville is expected to experience moderate growth in 2023, with rents forecasted to rise by approximately 4% compared to the previous year.
However, the rental occupancy rate, which reached an all-time high of 98.86% in Q4 of 2021, is forecasted to decline to an average of 96.5% in 2023. This decline suggests a slight easing in rental demand, providing some relief for tenants seeking housing options.
Overall, the Knoxville housing market in 2023 is projected to enter a period of stabilization following the previous years' robust growth. While home sales are expected to decline, home prices and rents are still anticipated to see modest increases. The market will continue to be influenced by factors such as affordability, inventory levels, and broader economic conditions.
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.
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.kaarmls.com/2023/04/05/market-pulse-survey-q1-2023/
- https://www.realtor.com/realestateandhomes-search/Knoxville_TN/overview
- https://www.neighborhoodscout.com/tn/knoxville/real-estate
- https://www.kaarmls.com/market-outlook/
- https://www.zillow.com/home-values/25428/knoxville-tn/
