Like much of the rest of the country, the Tennessee Housing Market experienced a steady increase this past year in terms of home values. Housing market predictions see this trend continuing into next year. Harold Crye, the president of Tennessee’s biggest real estate firm, said that sales would rise about 5% in 2015. About the economy he stated, “The jobs don’t quite seem to be there” yet, but “they’re picking up.” You can compare this year’s predictions with the 2013 Tennesse housing market.
Although Tennessee has, and maybe always will, generated large amounts of tourism through its musical legacy (particularly Nashville and Memphis), the state’s manufacturing and services industry holds up the bulk of Tennessee’s economy. Tennessee ranks fourth in the nation for automobile production. Nissan and General Motors both have manufacturing plants in the state, and Nissan North America has its headquarters located in the Nashville area having relocated there in 2006. Other major corporations in the state include Federal Express, AutoZone, and the nation’s largest operator of private for-profit hospitals, Hospital Corp. of America (HCA). It’s safe to say that Crye’s prediction of job growth was not so much of a prediction as it was just foreseeing the inevitable; Tennessee has the jobs in place. Now does it have the housing to support the job growth?
At its lowest in May 2012 home value averages were $115,000. As of July, the 2015 housing market in Tennessee saw home value averages at their highest in recent years at $128,000. The real estate price medians in Tennessee’s three major cities are lower than national standards. However, these cities’ more prestigious suburbs are more expensive (sometimes double the median prices within their city’s limits). This means that real estate in sought after metropolitan areas are still attainable for first-time homebuyers. Tennessee enjoys a relatively healthy housing market due to low interest rates, stunning scenery, and major cultural and entertainment hubs.
Influencing Factors for the 2015 Tennessee Housing Market
- According to Zillow Tennessee has a median home value of $128,000. This is an increase of 3.3% in the past year. Zillow predicts this will rise another 3.1% in the next year.
- Median list price for TN real estate is $169,000.
- According to listings on sites like Zillow and craigslist Tennessee has a median rent price around $1,050. This is slightly above the average and shows that housing supply is slightly behind demand.
- Homes are listed on average for 107 days in the Tennessee real estate market.
- The Tennessee real estate market has a 3.8% mortgage delinquency. This is lower than the national average of 6%.
- Fannie Mae and Freddie Mac are offering 3% down payment mortgages instead of 5%. This allows first time homebuyers with good standing credit more opportunity to purchase a home.
- The Federal Reserve has indicated that interest rates on mortgages are expected to rise in the near future, making this the time to purchase a home.
- Builders have begun to ramp up new construction this year. This is a potential draw for first time buyers as an increase in inventory helps improve choices.
- Millennials (age 25-34) are starting to enter the housing market full force making it a prime time for young adults to enter the Tennessee housing market.
Best Places to Live in Tennessee
“Nashville is on fire,” said Crye. “It’s kind of a boom town over there to some degree.” According to Trulia Nashville housing has seen a sharp uptick in recent months. Why? There are a couple of reasons. One reason according to the Nashville Business Journal is that the newer generation of homeowners prefer walking to driving, thus changing the job market. No longer are people as interested in owning 40 acres and a mule; they just want to be close to the action! According to one survey, nearly half of Americans prefer to live in neighborhoods that are within walking distance of stores, restaurants, and entertainment than live somewhere that driving is required. And last year Downtown Nashville’s rental occupancy was close to 100% for the FOURTH consecutive year. “Downtown residential inventory is increasing as forecasted, but not at the rate necessary to keep up with demand,” according to the Nashville Downtown Partnership’s 2015 residential report.
The second reason that Nashville is the place to be is that it is a city of artists. The city has more artists (including designers, musicians, and people working in media) than 90% of the country. This helps shape the character of the city as one that is ethnically diverse, youthful, and entertaining. Because of these factors Nashville TN real estate has seen an increase of 2.7% in listing price since the beginning of July, and a 4.4% increase (about $10,000) in sale price since April of last year. The average home value in Nashville is $156,500. Some of the more popular neighborhoods in Nashville are Inglewood and West Meade.
Like Nashville, Memphis enjoys many of the same cultural qualities of being ethnically diverse, artistically driven, and sought after by young up-and-comers. Memphis is the state’s largest community. Memphis TN real estate has seen a very slight increase in listing price recently, but in the past year there has been a 1.1% decrease ($1,400) in the median sale price for homes. This has been a major cool down from years previous. Prior to this year Memphis had been attracting real estate investors who would snap up foreclosures and other cheap housing units. They would often rehab them and either flip or rent them out, both options bringing in huge profits.
One positive to this past influx of investors is that it lifted home values. The average listing price for a home in Memphis as of July 22 was $129,520. The median sale price for a home in the city is $123,500. The number of homes sold since last year (1,553) has increased 4.1%, showing that despite the slight decrease in sale prices homes are selling; Memphis is a buyers market. Popular neighborhoods in Memphis are Midtown and Frayser-Raleigh PD. The average listing price for a home in Midtown is $177,264, and $43,735 for Frayser-Raleigh PD.
According to Zillow Knoxville TN is the third largest community behind Nashville. Knoxville is big enough to offer many amenities to its residents in large thanks to the city’s large college student demographic. Knoxville also tends to retain a large number of its graduates, which helps the city to maintain a constant level of modernization and growth. The median list price for homes in the Knoxville TN real estate market is $236,044, an increase of 2.3% ($5,201) in recent months. Trulia reports that there have only been 5 reported home sales in the past year. This isn’t for lack of homes available. There are 3,341 homes for sale and 35 Open Homes. South Knoxville and Oakwood are some of the more popular neighborhoods in Tennessee. South Knoxville sees an average listing price of $125,515, and Oakwood’s average listing prices are roughly $65,200.
Although it is the fourth largest city in the state, Chattanooga TN real estate has seen some of the largest growth. The median sales price for Chattanooga homes in the past year is $152,000 based on 285 sales. This is an increase of $7,000. The number of home sales has recently decreased however, falling 62.2%. The average listing price as of July 22 was $206,234. Popular neighborhoods in Chattanooga are North Chattanooga and Lookout Valley Neighborhood Association with an average listing price of $417,538 and $282,725, respectively.
Despite having some of the most expensive land in the state Murfreesboro TN real estate has seen a large number of home sales in the past year at 893. The median sales price for these homes was $184,900. This is a 6.9% increase from a year ago, or $11,950. The average listing price for homes in Murfreesboro was $241,591. Murfreesboro has the distinct advantage of having both Household Income and Family Income averages higher than the rest of the state. Household Income in Murfreesboro is $39,705, nearly $3,500 higher than the state average, and the average family income is a whopping $9,000 higher than its fellow Tennessee cities. Like Knoxville, Murfreesboro is flooded every year by an influx of college students that descend upon the city in the fall. And like Knoxville, a lot of the college students tend to settle in the city. This makes Murfreesboro’s demographic consist of many young educated professionals.