KNOXVILLE, Tenn. (WATE) — The prices of homes in Knoxville have gone up nearly 11% since the start of 2021. Housing experts and economists in the area have some predictions for the future of the Knoxville market.
“I think it’s fair to say that home prices probably won’t continue to rise as quickly as they have in the past year,” stated Hancen Sale, the Government Affairs and Policy Director for the Knoxville Area Association of Realtors. “They will slow down, and the rate of home sales will slow down.”
Sale said while the price hikes may cool off, he warned potential homebuyers to not get their hopes up for major price cuts. He said the supply will still not meet the demand, an issue more than a decade in the making.
“Following 2008, the homebuilding community basically collapsed and there were very few new constructions going on at that point,” said Hancen. “We’ve been underproducing homes for almost a decade now.”
A new report from the National Association of Realtors shows the United States is short nearly two million single-family homes.
The shortage of homes, especially entry-level homes priced below the $200,000 mark, was an issue that the pandemic only exacerbated. So, how does the issue get fixed?
“Builders will need to get creative and start thinking about more duplexes, triplexes, and townhomes that can fit seamlessly into a single-family home neighborhood and don’t change the character,” said Sale.
Another thing he thinks will help make up ground is the cost of building materials going down.
“We had stopped building homes that are below $200,000 because the material prices, the labor shortage were making it financially unfeasible for builders,” he said. “Those rising lumber prices were definitely a factor here.”