KNOXVILLE, Tenn. (WATE) — Bad news for Knoxville renters as the city’s occupancy rate soars to nearly 99%.
At last report, the city’s occupancy rate sits at 98.6%, which leaves renters scrambling to find homes within their budgets and timeline. One of those renters include Julie Hartlett, who is no stranger to Knoxville’s rental and housing market.
“I’ve lived and grown up in Knoxville my entire life,” Hartlett told WATE.
But when her new landlord decided to increase her rent by $735, Hartlett and her daughter were forced to find a new home. The two quickly discovered the process was not easy.
“I moved to an apartment in Lenoir City,” said Hartlett. “I hated being pushed out of Knoxville into Lenoir City, but I had to do what I had to do.”
Today, Hartlett pays $815 dollars for her home. She told WATE she was shocked to find something within her means.
Market Pulse 2022 Takeaways, according to KAAR
But Hartlett is not the only renter who has struggled. According to the Knoxville Area Association of Realtors (KAAR), rent prices in Knoxville have increased by nearly 20%, while its occupancy rate has also grown to 98.6%, meaning the city is nearly 99% full.
“Virtually nothing is on the market or available and so people are having a really hard time finding an affordable unit,” explained Hansen Sale, Governmental Affairs and Policy Director for KAAR.
Those who are having the most trouble? People with lower incomes.
“We’re squeezing at the bottom end,” explained Sale. “Lower end jobs or people who are going to demand the lower end of the rental market except that’s precisely where we have the least amount of supply.”
Effective rents in the Knoxville MSA were up 19.31% year-over-year in Q2-2022, outpacing the annual rent growth of 14.49% nationally. On average, effective rents are nearly 30% – or $366 – higher than pre-pandemic levels across the metro area.
Another important measure of rental costs is trade-out rent growth, which is the percentage change between the previous lease rent and the new lease rent for the same unit. Trade out effective rents were up an average of 13.48% year-over-year for renewal leases, compared to 31.74% annual growth for new leases. This disparity helps to explain why the percentage of residents choosing to renew their current lease is at the highest level on record. By unit type, annual rent growth was highest for single-bedroom units (21.6%) followed by two-bedroom (18.3%) and three-bedroom (17.5%) units.
Knoxville’s rental occupancy rate was 98.6% in Q2-2022, ranking #2 among 66 markets in the South and #7 among the top 150 U.S. metros. Occupancy was higher among Class B (99.2%) and Class C (99.0%) units relative to Class A (97.5%) units.
Approximately 1,000 new units were delivered in the year ending Q2-2022, expanding the local inventory base by 2% over the past year. Competitions are slated to remain around the same level with the scheduled addition of another 1,000 units over the coming year. As of Q2-2022, there were 1,617 units currently under construction.
Advice from a local broker
What does that leave renters searching for non-luxury units to do? According to Michael Yarbrough, a broker with Asset Realty Management, renters should exercise advanced planning and saving.
“If you can pay six months or twelve months in advance, that’ll definitely make you more attractive to a landlord,” said Yarbrough.
People who don’t have those resources, or time, may find themselves living outside your initial target area, but living within their means.