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.
Latest Knoxville, TN Housing Market Trends
1. Median Listing Home Price Soars
According to Realtor.com, as of October 2023, Knoxville, TN boasts a thriving real estate scene with a median listing home price of $440K, marking a significant 14.7% year-over-year increase. This surge in home prices reflects the robust demand in the market, positioning Knoxville as an attractive destination for homebuyers.
2. Price Per Square Foot
For those scrutinizing the finer details, the median listing home price per square foot stands at a noteworthy $212. This metric provides valuable insights into the cost efficiency and spatial considerations for potential homebuyers in Knoxville.
3. Sale-to-List Price Ratio
The market dynamics in Knoxville reveal a strong equilibrium, with a sale-to-list price ratio of 99.72%. This implies that, on average, homes in Knoxville were sold for nearly the asking price in October 2023, showcasing a well-balanced negotiation landscape between buyers and sellers.
4. Seller's Market Dominance
Knoxville, TN stands firmly as a seller's market in October 2023, indicating a scenario where the demand from prospective buyers surpasses the available housing inventory. This imbalance places sellers in a favorable position, emphasizing the need for potential buyers to act swiftly and strategically in their home search.
5. Median Days on Market
The median days on market, a crucial metric influencing buyer decisions, averages 33 days in Knoxville, TN. This indicates that, on average, homes sell within a month of being listed. The stability in this figure over the past month and the slight decrease from the previous year suggests a consistent and competitive market environment.
Q2 2023 Knoxville Housing Market Pulse Survey
The real estate landscape in Knoxville, Tennessee, is subject to the ebbs and flows of market dynamics, and staying informed about these changes is crucial for industry professionals and potential buyers and sellers. The Q2 2023 Market Pulse Survey, conducted by the Knoxville Area Association of REALTORS®, sheds light on key findings and trends that are shaping the local real estate market.
The survey offers a comprehensive look at the current state of the Knoxville real estate market, and here are some of the key findings:
- Buyer Traffic: Buyer traffic saw a slight decline in the second quarter, with only 12% of respondents reporting more buyer traffic compared to the previous year. This figure was down from 17% in the previous quarter. On the other hand, seller traffic decreased further, with only 11% of respondents noting an increase compared to the previous year.
- Expectations: REALTORS® anticipate relatively stable buyer traffic in the coming three months, with 40% expecting lower-than-usual buyer activity. Expectations regarding seller traffic were more varied, with 39% anticipating it to remain the same and 42% expecting it to decrease.
- Offer Activity: Respondents reported an average of 3.0 offers on homes sold in Q2 2023, showing an increase from the previous quarter's 2.2 offers.
- Home Sales Outlook: A positive sentiment regarding home sales emerged, with 33% of REALTORS® expecting an increase in home sales over the next year, up from 28% in the previous quarter. Additionally, 42% anticipate sales to remain steady, while 26% expect a decrease.
- Home Prices: Expectations surrounding home prices remained robust, as 83% of respondents anticipate either stable or rising home prices over the next year, with 64% expecting an increase.
- All-Cash Sales: In Q1 2023, all-cash sales constituted 30% of all home sales, showing a decrease from 37% in the previous quarter but an increase from 29% a year ago.
- Appraisal Concerns: REALTORS® reported fewer issues with appraisals, with only 9% of homes sold in the past three months having an appraised value lower than the purchase price, down from 20% a year ago.
- Contingency Waivers: Buyers displayed more confidence, with 48% waiving at least one contingency in their purchase contract over the past three months, down from 62% a year ago.
The survey's findings highlight the evolving nature of the Knoxville housing market. Economic uncertainties and mortgage rate fluctuations have impacted both buyers and sellers, but the overall outlook is cautiously optimistic. Notably, a majority of local REALTORS® expect home prices to rise in the coming year, indicating a significant shift in sentiment from the previous year.
As the Knoxville real estate market continues to evolve, staying informed about these trends and insights can help individuals make informed decisions in this dynamic industry.
“The housing market is still facing headwinds as economic uncertainty and higher mortgage rates have slowed buyer and seller activity alike,” said Hancen Sale, Government Affairs and Policy Director at East Tennessee REALTORS®. “However, our latest survey suggests Realtors® remain cautiously optimistic, and their outlook on the housing market is improving, especially as it relates to prices.”
Knoxville Housing Market Forecast 2023-2024
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.
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