Knoxville housing market shows slight cool down

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KNOXVILLE, Tenn. (WATE) – The Knoxville metropolitan area ranked 12th among the largest U.S. metro areas for net migration gains in the first half of 2021, According to the National Association of Realtors analysis of United States Postal Service change-of-address data. 

With that in mind, it’s no wonder the housing market across East Tennessee has been so hot. The big question, When will it cool down? The time to buy could be on the horizon.

“You’re actually still seeing prices move upward and that’s something we anticipated would happen, it’s just home sales have fallen down below the level that they were in 2020,” explained Hancen Sale, the Governmental Affairs & Policy Director for the Knoxville Area Association of Realtors.

Sale said while prices are staying high, buyers can expect homes to stay on the market longer and to be competing with fewer offers. “Earlier in the year, we would see like 15 offers,” Sale said. “I think we’ve gotten down to like three or four.”

He also said while housing market trends may change, he doesn’t see the influx of people migrating to Tennessee slowing down any time soon. “People have seen that we’re an affordable place to live, there’s no state income tax, and it’s a beautiful area,” he said. “We keep seeing people coming here from all over the country.”

Broker and Owner of LeConte Realty, Lane Shuler, agreed. Shuler said this cooled down period was expected. “They put house hunting on hold, they put it on the back burner,” Shuler began. “They are focused more on getting kids back to school. Nothing will ever be like springtime. I don’t care what the market is.”

Shuler also talked about why more homes are going back on the market than in the past. “People feel like they overpay in the bidding process, they win the house, then when they go to the inspection, they sort of feel like they need to get everything that they’ve asked for because they feel like they overpaid,” he said.

Shuler also said the biggest problem isn’t just people moving here, but also a lack of inventory and skilled workers. “An overall, societal shortage of people that work in labor and trades,” he said of there not being enough people to build homes.

Both Shuler and Sale also agreed that the sooner Knoxville’s inventory problem is resolved, the better. “We need to diversify our housing stock,” said Sale. “We need townhomes, we need triplexes, we need midsized multifamily housing.”

“I do think it’s a crisis and I think the sooner we treat is like a crisis the better off we’ll be prepared for this in the future,” added Shuler.

Seasonally adjusted home sales in the Knoxville Area declined 0.8% from the previous month, falling below sales numbers from last year but still well above 2015-2019 numbers. The typical home sold in July was 1,824 Sq. Ft with 3 bedrooms and 2 bathrooms.

Key Highlights:

  • Knoxville area home sales declined in July — down 0.8% from June and down 7.4% from one year ago
  • Median home sales price was $285,000 in July — up 21.1% from one year ago
  • Total housing inventory declined slightly and remains down more than 37% from a year ago and enough to last 1 month at the current sales pace.
  • Half of the homes sold in July were under contract in 4 days or less.
  • 68% of homes sold for over asking price with 30% selling for at least $10,000 over asking and 11% selling for at least $25,000 over asking.

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