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East Tennessee Real Estate & Neighborhood Source

APRIL 2023 East Tennessee and Knoxville Housing Market UPDATE

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The Current Housing Market in East Tennessee: Rising Prices, Low Inventory, and High Demand

The Knoxville real estate market and the broader East Tennessee region are experiencing a significant surge in housing prices due to a combination of factors, including an incredibly low inventory of homes for sale and a high demand driven by an influx of people migrating from other parts of the country. As a result, both homebuyers and renters are feeling the impact of these market conditions.

One of the primary reasons for the rising prices in East Tennessee is the shortage of available homes. The inventory of houses for sale has reached historically low levels, creating a highly competitive market. With fewer homes on the market, potential buyers are faced with limited options, leading to increased competition and bidding wars for desirable properties. As a result, prices are being driven up as buyers vie for a limited supply of homes.

The region’s popularity as a destination for relocation is a key driver of the high demand in East Tennessee. Many people are choosing to move to this area due to its natural beauty, affordable cost of living, and growing job opportunities. This influx of new residents has intensified competition for housing, further fueling price increases.

Rents in Knoxville, specifically, have been significantly impacted by these market dynamics. According to recent data, apartment rents in Knoxville were up 12.75% in the first quarter of 2023, far surpassing the national average of 4.46% growth. The scarcity of available rental units has given landlords greater leverage, allowing them to raise rental prices to meet the soaring demand.

While the rising prices may pose challenges for renters, homeowners in the region are benefiting from the current market conditions. A recent report from the National Association of Realtors revealed that middle-income homeowners in Knoxville accumulated an average of $109,890 in housing wealth over the past decade as their homes appreciated in value. The sharp increase in home prices has provided homeowners with significant financial gains and enhanced their overall net worth.

The speed at which homes are selling in East Tennessee is remarkable. Statistics show that half of the homes sold were under contract in 16 days or less. Furthermore, 23.8% of homes sold for more than the asking price, with 12% selling for at least $10,000 over asking and 4% selling for at least $25,000 over asking. This data indicates a highly competitive market, with buyers willing to pay a premium to secure a property.

New construction has played a role in meeting the demand for housing, representing 15% of total home sales in the area. However, it is still not sufficient to offset the low inventory levels and escalating prices in the overall market.

Buyer competition remains fierce, although there has been a slight decline in the number of offers received on average. According to the Knoxville Area Association of Realtors’ Market Pulse Survey, the typical listing in the Knoxville area received 2.2 offers in the first quarter of 2023, down from 6.2 offers in 2022. Nevertheless, multiple offer scenarios are still extremely common, with half of all homes receiving at least two offers.

Affordability is becoming a growing concern in East Tennessee, particularly as mortgage rates have increased in recent weeks. Economic uncertainty has placed upward pressure on rates, with the current average rate for a 30-year loan standing at 6.69%. The higher interest rates are discouraging some homeowners from listing their homes for sale, as they are locked into lower rates below 4% or even below 3%. This further constrains the available housing supply and exacerbates the affordability problem in the market.

In conclusion, the housing market in East Tennessee, including Knoxville, is experiencing a surge in prices driven by a combination of low inventory and high demand.

MARCH 2023 East Tennessee & Knoxville Housing Market Update

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Knoxville Real Estate Market Shows Signs of Growing Beyond Its Affordable Reputation

The Knoxville real estate market has always been known for its affordability, but new data shows that the city’s median listing price is now higher than the national average. This suggests that the competitive advantage of Knoxville’s affordability may be slipping away, making it more challenging for homebuyers to find homes within their budget. In the fourth quarter of 2022, the median listing price in the Knoxville area was $426,633, compared to $412,743 nationally. By February 2023, the local median listing price had increased by more than $42,000 compared to the U.S. average, making Knoxville the 47th-highest among the top 150 U.S. housing markets. One of the significant issues contributing to the shortage of inventory is that fewer people are moving. Life event movers, who typically move up or down in the housing market, are staying in their homes longer, creating a “mortgage lock-in” group. With over 60% of outstanding residential mortgages in Tennessee having an interest rate of 4% or below, potential sellers are hesitant to list their homes for sale, given the prospect of trading out their current mortgage for a new one with a much higher interest rate. This has led to fewer homeowners putting their homes on the market, particularly those priced under $500,000, where new listings are down 19% year-over-year.

Additionally, some homeowners who have to move are opting to keep their existing house with their sub-3% mortgage, rent it out, and buy a new home without selling their current one, which further exacerbates the inventory problem.

Investors represent another group that has not contributed much to the inventory. While institutional investors with Wall Street money have slowed their purchasing, none of them are selling, creating no discernible inventory coming from investors at this time.

Distressed homeowners represent the third potential source of inventory, but as of now, essentially none of these people are selling homes either. With the US still having record employment and the big layoffs in the tech sector generally finding work quickly, there are no indications of this group selling homes at this time.

According to experts, homeowners in Knoxville can see that they have a really good deal where they currently live. Therefore, unless something dramatically changes, the current environment is expected to remain.

The Knoxville real estate market’s challenges are not just about inventory, however. Tennessee’s population surpassed seven million residents in 2022, marking the largest year-over-year population increase since 2007, according to the Tennessee State Data Center. This growth is driving up rent prices, with Knoxville experiencing the second-fastest rent growth of any US metro area in 2022, according to a report from the National Association of Realtors®.

As Knoxville continues to grow, it will be essential to address the inventory shortage and affordability issues to ensure that the city remains an attractive place to live for both current residents and newcomers.

Have questions? Comments? Want to talk about the market? Want to talk about buying or selling a home in East Tennessee? Contact Troy Stavros at CornerStone Realty Associates today at 865-999-0925. My team and I look forward to serving you!

Why A Smaller Home in East Tennessee May Be The Best Fit

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When it comes to buying a home in East Tennessee, bigger isn’t always better. In fact, there are many advantages to purchasing a smaller home that can make it a wise financial decision.One of the most significant benefits of buying a smaller home is the cost savings. Smaller homes in Knoxville generally have lower utility costs, lower property taxes, and a smaller mortgage payment. This means you can save money on your monthly housing expenses and have more money to allocate towards other areas of your life, such as saving for retirement or investing in your education.

Smaller homes in East Tennessee are also easier to maintain. With less square footage, you’ll spend less time cleaning and maintaining your home, leaving you with more time to focus on the things you enjoy. This can also save you money on maintenance and repair costs, as there are fewer areas of the home to upkeep.

Another advantage of purchasing a smaller home in Knoxville is the potential for a more sustainable lifestyle. With less space, you’ll be more mindful of your consumption and will likely accumulate less clutter over time. This can lead to a more simplified and intentional way of living, which can be both rewarding and fulfilling.

Finally, a smaller home can offer a sense of coziness and comfort that larger homes may lack. With fewer rooms and less space to spread out, you’ll likely spend more time in the shared spaces of your home, which can foster a sense of community and togetherness among family members.

Overall, buying a smaller home in East Tennessee can be a smart financial decision with a host of additional benefits. If you’re in the market for a new home, consider the advantages of a smaller living space and weigh your options accordingly.

Have questions? Want to get the process started in looking for a smaller home? Need to sell your current home before buying? Contact the Troy Stavros TEAM at CornerStone Realty Associates today at 865-999-0925.

Baby Boomers Are Taking The Lead In The Current Knoxville Housing Market

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The Knoxville real estate market has been on a wild ride over the past year, with prices skyrocketing and inventory at record lows. However, one generation has remained relatively insulated from the volatility, and they are now proving to be the biggest movers in the market: baby boomers.

According to the National Association of REALTORS®’ 2023 Home Buyers and Sellers Generational Trends Report, baby boomers, defined as people between the ages of 58 and 76, made up 53% of sellers and 39% of buyers between July 2021 and June 2022. This makes them the largest group of buyers and sellers in the market.

Jessica Lautz, NAR’s deputy chief economist and vice president of research, notes that baby boomers have the upper hand in the homebuying market. “The majority of them are repeat buyers who have housing equity to propel them into their dream home, be it a place to enjoy retirement or a home near friends and family. They are living healthier and longer lives and making housing trades later in life.”

One reason for the boom in baby boomer real estate activity is their desire to downsize and move closer to family. Many are selling their larger homes in East Tennessee and using the equity to buy smaller homes in areas where they can be closer to loved ones. Additionally, they are drawn to newer Knoxville homes that require less maintenance and fewer potential problems with household systems, like plumbing or electricity.

On the other hand, millennials, who were once the leading drivers of the East Tennessee housing market, are now playing second fiddle, comprising about 28% of buyers. They were the largest homebuying force from 2014 to 2022 but have now been overtaken by baby boomers.

First-time home buyers in Knoxville have also faced headwinds in the latest housing cycle, with higher mortgage rates making it harder for them to enter the market. 70% of younger millennials, ages 24 to 32, and 46% of older millennials, ages 33 to 42, were first-time home buyers, according to the report.

In conclusion, baby boomers are proving to be the driving force behind the East Tennessee real estate market, with their equity and motivation making them the most active buyers and sellers in the market. While other generations are still active, baby boomers are leading the charge and are likely to continue doing so in the years to come.

Have questions? Ready to get the process of buying or selling a home started? Contact Troy Stavros with CornerStone Realty Associates today at 865-999-0925. We look forward to serving you!

Almost Half of the Homes Sold in Farragut in March were CASH or At or Above List Price!

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Almost 1/2 (45%) of the homes sold so far in March in Farragut have been for cash or at/above their listing price (some both). We saw some sell for over $100K above their list price! I go over these sales in the video along with the breakdown of the sold prices and subdivisions. Lack of inventory and consistent demand is still pushing prices higher both in Farragut and most of East Tennessee. Don’t believe what you are hearing on the national news. For example, the national news reported that data through the end of February showed the first Year over Year reduction in the median sales price of homes nationally. However, in Knoxville, we saw a $30,000 increase in the median sales price compared to the end of February last year. Always remember, real estate is LOCAL and sometimes HYPER-LOCAL.

Have questions? Wondering what your home might be worth in today’s market? Contact the Troy Stavros TEAM with CornerStone Realty Associates today at 865-999-0925. We look forward to serving you!

Homes for sale in East Tennessee : MAY Knoxville TN Housing Market Update

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All of the data is in through the end of May. Let’s take a look at what’s happening in the East Tennessee housing market.

In today’s video we dive into the East Tennessee real estate data for the month of May 2022 to see how the East Tennessee housing market is doing compared to one year ago. We will look at the inventory of active homes for sale in East Tennessee. Homes for sale in Knoxville TN, homes for sale in Farragut TN, homes for sale in Knox County TN, homes for sale in Loudon County TN, homes for sale in Anderson County TN, homes for sale in Roane County TN, homes for sale in Blount County TN, and homes for sale in Sevier County TN. We will also at what has happened to the median sales price of homes over the last year in those areas of East Tennessee. We will discuss the real estate data and how it affects buyers and sellers in today’s East Tennessee housing market.

Here is some basic real estate data and news in regards to the East Tennessee housing market not covered in the video:

  • Mortgage rates continue to rise as financial markets anticipate U.S. monetary policy changes amid higher-than-expect inflation. The 30Y FRM finished 2021 at 3.11% but remained well above 5% throughout the month of May.
  • Knoxville’s rental market occupancy rate hovered around 98.8% in Q1 2022, more than a full percentage point above the 97.5% occupancy rate nationally. Effective rents in the Knoxville metro area (MSA) were up 19.21% year-over-year as of April 2022, significantly higher than the 15.23% rate nationally.

  • Have questions or need help in today’s crazy East Tennessee housing market? Contact the Troy Stavros team at CornerStone Realty Associates at 865-999-0925 today. We are here to serve you!