The housing market is a dynamic ecosystem that plays a crucial role in the economy and people's lives. Whether you're a potential homebuyer, seller, or just interested in understanding the current trends, staying informed about the latest house prices and trends is essential. In this article, we delve into the house prices and trends in the Tennessee housing market. Let's delve into some trends that provide valuable insights for both buyers and sellers in navigating the dynamic housing market.
Current House Prices & Trends in Tennessee
The housing market in Tennessee is undergoing a noticeable shift in August 2023. Key indicators show that while home prices are still on the rise, the number of homes being sold and the available inventory are both decreasing. This scenario suggests an increasing level of competitiveness in the market, particularly for prospective buyers.
Home Prices
According to data by Redfin, the median home price in Tennessee for August 2023 stood at $381,800, reflecting a 5.8% increase from the previous year. Although this signifies significant growth, it's important to observe that the pace of home price appreciation is slowing down compared to the 7.5% increase witnessed in August 2022.
Homes Sold
In August 2023, the number of homes sold in Tennessee amounted to 8,026, indicating a 14.7% decrease compared to the same period in the previous year. This decline represents the first time in over two years that the number of homes sold has decreased year-over-year.
Homes for Sale
The inventory of available homes for sale in Tennessee reached 31,890 in August 2023, denoting a 3.4% decrease from the preceding year. This stands as the lowest number of homes for sale in Tennessee since 2019.
Market Competition
The Tennessee housing market is gradually becoming more competitive for buyers. In August 2023, only 21.8% of homes were sold below list price, marking a 6.8 point decrease year-over-year. Furthermore, the average days on the market increased by 7 days compared to the previous year, totaling 47 days.
Implications for Buyers and Sellers
For buyers: In this competitive market, being prepared to act swiftly and being flexible with your budget is crucial. Collaborating with a qualified real estate agent can significantly help in finding the right home and negotiating the best price.
For sellers: With the current housing market dynamics, sellers are in a favorable position to secure a good price for their homes. However, competitive pricing and ensuring the property is in optimal condition before listing are vital considerations.
Top 10 Metros in Tennessee with the Fastest Growing Sales Price
- Lenoir City, TN
- Pigeon Forge, TN
- Jefferson City, TN
- Sevierville, TN
- Jackson, TN
- Soddy-Daisy, TN
- Tullahoma, TN
- East Ridge, TN
- Goodlettsville, TN
- Greeneville, TN
Tennessee Housing Supply
The housing supply in Tennessee has been dwindling for several months. In August 2023, the available homes for sale numbered 31,890, a 3.4% reduction compared to the previous year. This represents the lowest inventory of homes for sale in Tennessee since 2019.
The average months of supply now stand at 3 months, reflecting a 0 change year-over-year. Essentially, this means it would take 3 months to sell all the homes currently on the market if no new homes were listed.
Tennessee Housing Demand
The demand for homes in Tennessee remains robust. In August 2023, the sale-to-list price ratio was 98.1%, indicating that homes are selling close to their asking prices.
Moreover, only 27.5% of homes experienced price drops in August 2023, a slight increase from 27.0% in the same period the previous year. This implies that sellers are generally not forced to reduce their prices significantly to secure a sale.
Overall, the Tennessee housing market is positioned well, yet it's essential to acknowledge the increasing competition for buyers in the current market landscape.
Tennessee Housing Market Forecast 2023-2024
The Tennessee housing market is displaying promising trends as of July 31, 2023, offering potential homeowners and investors valuable insights into its evolving dynamics. According to Zillow, the average home value in Tennessee has risen by 2.3% over the past year, reaching an average of $312,078. This positive trajectory speaks to the overall health of the market.
Market Strength and Stability:
The steady 2.3% increase in the average home value over the past year signifies a growing and resilient market. This rise indicates a consistent demand for homes, contributing to an overall sense of stability and potential for returns on investment.
Market Speed:
The Tennessee housing market's agility is evident as homes go to pending status in a median of just 12 days as of July 31, 2023. This rapid pace reflects the strong demand and quick turnover of properties, creating an environment where buyers and sellers need to act decisively.
Sales Dynamics:
The market's median sale-to-list ratio, recorded at 0.999 as of June 30, 2023, highlights that properties are generally selling close to their listed prices. This balance indicates a fair marketplace where negotiations are based on reasonable expectations.
Furthermore, the distribution of sales outcomes underscores the diversity of opportunities for both buyers and sellers. With 27.0% of sales happening above the list price and 49.9% under the list price, the market accommodates a range of strategies and preferences.
Regional Forecast for Tennessee:
The housing market in Tennessee is showing promising growth potential, with several Metropolitan Statistical Areas (MSAs) projected to experience significant increases in home prices by July 2024. Let's delve into the details of the top 10 MSAs and their anticipated growth trajectories:
McMinnville, TN MSA:
McMinnville is projected to see substantial growth, with a remarkable 12.5% increase in home prices by July 2024. This indicates a rapidly appreciating market, potentially driven by factors like local economic development or increased demand.
Newport, TN MSA:
Newport is expected to experience a robust 11.5% surge in home prices by July 2024. Such growth suggests an area that might be undergoing positive changes, making it an attractive prospect for buyers and investors.
Greeneville, TN MSA:
The Greeneville market is predicted to grow by 11.2% by July 2024, showcasing a consistent upward trajectory. This level of growth might reflect a strong local economy and increasing demand for housing.
Tullahoma, TN MSA:
Tullahoma is expected to experience an 11.0% increase in home prices by July 2024. This could be due to factors such as its location, amenities, and potential for economic growth.
Sevierville, TN MSA:
Despite starting with a lower growth rate, Sevierville is projected to see a 10.5% increase in home prices by July 2024. This could indicate a market that's gaining momentum and becoming more attractive to buyers.
Knoxville, TN MSA:
Knoxville is set to experience a 10.0% rise in home prices by July 2024, showcasing a steady growth pattern. The city's strong economy and cultural amenities might be driving this upward trend.
Crossville, TN MSA:
Crossville is anticipated to have a 9.8% increase in home prices by July 2024. This growth might be attributed to factors such as its natural beauty and appeal as a retirement destination.
Johnson City, TN MSA:
Johnson City is projected to grow by 9.7% in home prices by July 2024. The city's educational institutions and amenities could be contributing to its attractiveness.
Dayton, TN MSA:
Dayton is expected to see a 9.7% increase in home prices by July 2024, indicating a positive trend that might be driven by factors such as job growth and quality of life.
Morristown, TN MSA:
Morristown is forecasted to experience a 9.6% growth in home prices by July 2024. This suggests a market that's gradually appreciating due to local factors such as economic development and amenities.
In summary, the Tennessee housing market is exhibiting signs of steady growth and dynamic sales patterns. With a 2.3% increase in average home value, rapid sales, and diverse sales outcomes, the market offers a range of opportunities for potential buyers and investors seeking to navigate this evolving landscape.
Other Factors That Can Impact the Housing Market in Tennessee
When the housing market is booming, it is partly caused by job growth and decreases in unemployment. The housing market is inextricably linked to the economy. The health of the economy and job growth affects real estate buyers' purchasing power. Tennessee has seen the job market increase by 1.8% over the last year.
Future job growth over the next ten years is predicted to be 41.6%, which is higher than the US average of 33.5%. Tennessee was ranked as the 11th best economy in the country in an analysis from WalletHub. The rankings included the 50 states and the District of Columbia, which ranked just ahead of Tennessee at 10th.
The state ranked fourth in terms of economic activity, fifth in terms of economic health, and 38th in terms of innovation potential. It topped the chart in terms of change in GDP from 2020 to 2021, a key factor in its economic activity ranking. Tennessee experienced 8.6% real GDP growth, trailing only New Hampshire (8.5%) and California (7.8%).
More people require housing as the population grows. This means that, in the long run, population growth drives increased demand for housing and, as a result, a strong real estate market. Population growth has a positive impact on the housing market. Middle Tennessee is an area that is constantly growing and according to the United States Census Bureau, Spring Hill in the region was among the top 10 cities for population growth.
Spring Hill was named the tenth fastest-growing city in the nation between 2020 and 2021. According to The Boyd Center for Business and Economic Research, Tennessee could grow by nearly a million people over the next 20 years and reach a total population of 7.87 million by 2040.
The number of people in their prime working years, ages 25 to 54, is projected to increase at a slower pace than the state’s population as a whole. Population growth in the state will slow over the next two decades. Between 2010 and 2020, Tennessee's population increased by 8.9 percent. It is expected to fall to 7.7 percent between 2020 and 2030. Between 2030 and 2040, it could slow even more to 6.2 percent.
The Tennessee Quarterly Business and Economic Indicators report, released by state leaders, illustrates the health of the state's economy. According to the report, 21,353 new businesses filed for the first time in the first quarter of 2022. This was an increase of more than 8% over the same quarter last year.
According to the report, 9,454 of those new businesses were registered in the state's four largest counties: Shelby, Davidson, Knox, and Hamilton. Knox County saw the greatest increase in new filings compared to last year, with 1,366 initial filings, a 14.2% increase. The report also says nominal personal income was $382.8 billion in the state during the fourth quarter of 2021, an increase of 7.4% compared to the previous quarter.
Sources:
- https://www.neighborhoodscout.com/tn/real-estate
- https://www.zillow.com/nashville-tn/home-values/
- https://www.newsweek.com/house-prices-falling-these-five-overvalued-cities-1739363
- https://fred.stlouisfed.org/series/TNSTHPI#
- https://www.bestplaces.net/economy/state/tennessee/
- https://tnsdc.utk.edu/2022/03/09/tennessee-could-add-nearly-1-million-new-residents-by-2040/
- https://www.wbir.com/article/money/economy/tennessee-economic-report-q1-2022/51-58fb9599-f0db-47ad-9316-94b102a1df54
