Knoxville Real Estate Trends: A Thriving Market in East Tennessee
East Tennessee’s real estate market, particularly in Knoxville, has demonstrated remarkable resilience and growth in recent times. In Q3 2023, Knoxville’s home price growth ranked an impressive No. 4 among the top 100 metro areas. This surge reflects a significant 11.6% increase from the previous year, as reported by the Federal Housing Finance Agency (FHFA). Such robust growth showcases Knoxville’s burgeoning appeal in the East Tennessee real estate landscape.
Anticipating 2024: Knoxville’s Housing Market Projections
A recent survey from Fannie Mae shows that 23% of consumers think prices will fall over the next 12 months. That’s nearly one in four people who are dealing with that fear – maybe you’re one of them. To help ease that concern, here’s what the experts say will happen with home prices not just next year, but over the next five years. Looking forward, 2024 holds a blend of challenges and opportunities for Knoxville real estate. While Realtor.com’s 2024 forecast predicts a 5.9% dip in home sales, it concurrently anticipates a promising 7.2% rise in home prices. These projections, coupled with the East Tennessee REALTORS®’ forthcoming annual forecast, paint a picture of a market adjusting to evolving economic conditions.
Apartment Rent Growth and Student Housing Market
The rental market in Knoxville is also witnessing notable trends. October saw a continuation of accelerated apartment rent growth, with a 4.14% year-over-year increase across the Knoxville Metropolitan Statistical Area (MSA), significantly outpacing the national average. Additionally, the University of Tennessee’s student housing market ranked No. 11 nationally for rent growth in Fall 2023, marking a substantial 15.9% increase from the previous school year.
Knoxville’s Housing Market: Speed and Pricing
In the fast-paced Knoxville market, homes are selling swiftly. In October half of the homes sold were under contract in 12 days or less, indicating a slight fluctuation from previous periods. Remarkably, 26% of homes sold for more than the asking price, underscoring Knoxville’s competitive real estate environment.
Housing Market Dynamics and Inventory Trends
Despite challenges like limited inventory and affordability, the East Tennessee housing market is adapting. November witnessed a seasonal rise in housing inventory, with an 8.7% year-over-year increase in active listings across the region. This trend indicates a gradually improving market landscape as we move into 2024.
Knoxville’s Labor Market and Economic Factors
The economic backdrop of Knoxville’s real estate market remains strong, despite broader uncertainties. Knoxville’s labor market, as per the Bureau of Labor Statistics (BLS), continues to outperform, ranking among the top U.S. metros for job growth. RealPage Analytics reports a 3.7% increase in Knoxville’s employment base in the year ending October 2023, well above the metro’s long-term average.
Mortgage Rates and Economic Outlook
The mortgage landscape has seen dramatic shifts, we saw rates over 8% earlier in the year and as of today, according to Mortgage News Daily, the 30-year fixed mortgage rate is at 7.02% (UPDATE! One day later we are down to 6.62%!). This rate, while higher than last year’s average, reflects recent market adjustments. The Federal Reserve’s decision not to pursue another rate hike further shapes a cautiously optimistic economic outlook for the National, Knoxville and East Tennessee real estate markets. Many experts believe the FED will cut rates in 2024 leading to mortgage interest rates dropping as well. If that does happen, and you are a homebuyer, there is a Catch 22. Should interest rates fall, inventory will fall along with it, and competition will rise. That may seem counterintuitive but here is what the data shows. (show graphic). When looking at the data since 2016, you can clearly see that when we are in an environment of rates falling, inventory falls and vice verse. Therefore lower rates will stimulate increased demand from buyers leading to more competition, and lower supply… and what does the law of supply and demand tell us about what low supply and high demand will do to home prices? That’s right, it will make them rise. So if that’s the case, is it better to wait until that happens to buy a home, or buy now when competition is lower and there is more inventory available to choose from? We remember what it was like a few years ago when competition was fierce. I don’t think anyone wants that again, but rates dropping could bring it back.
Comment below or contact me, Troy Stavros, directly with questions or if I can help in any way. Call or text 865-999-0925.