KNOXVILLE, Tenn. (WATE) — The 2023 State of Housing Report released by the Knoxville Area Association of Realtors does not paint a great picture for potential home buyers in the area. It shows demand is still high and affordability is incredibly low.
The report looks at supply and demand, population trends, and economic conditions in East Tennessee and how that impacts the housing market in the area. This year’s report outlines three key takeaways. To read the full report, click here.
It shows that East Tennessee housing is increasingly unaffordable. First-time home buyers, the elderly, and disadvantaged groups are experiencing a shortage of options when it comes to housing. Another takeaway from the report shows that prices and inventory will likely remain the same while sales are expected to slow.
“This report really highlights how affordability is the name of the game in the housing market and right now it’s declining and deteriorating at a rapid pace. Even with higher interest rates and the slowing of the housing market nationally, Knoxville’s housing market continues to grow at a pace we’ve not seen before,” said Hancen Sale, policy directory for Knoxville Area Association of Realtors.
Knoxville is also becoming increasingly popular with more people moving to our region. That’s a good thing for the economy, but not for housing prices.
“Knoxville isn’t a secret anymore. People are wanting to move here at rates that we’ve really never seen before and it’s provoked one of the largest increases in home prices over the past three years that we’ve ever seen in Knoxville. Unfortunately, that’s led housing affordability to fall to the lowest level since at least the 1980s. So it is really hard to purchase a home, particularly for local Knoxvillians across the region,” said Sale.
There is good news for current homeowners, Knoxville is seeing record equity levels.
“Housing is the backbone of our region’s economy and key to achieving economic mobility and prosperity for so many families in our area,” Sale said. “Our region’s natural beauty and vibrancy are why so many choose to call East Tennessee home. Now, our challenge is to address the rising cost of housing within our market to make living, working and enjoying our region more attainable.”
The rental market is also still facing problems. The cost to rent is forecasted to go up by around 4% in the next year. However, the 2023 rental occupancy is estimated to decline to 95.5% from 98.86 in Q4 2021.