Not unlike every city in the country, the Knoxville housing market experienced severe setbacks following the recession. However, real estate in the area has been on an upward trend for years, and experts have already predicted a bright future for the area. In fact, the local housing market should continue to improve over the next five to 10 years – eventually surpassing its pre-recession sales numbers. For all intents and purposes, activity is improving in the Knoxville housing market. Both buyers and sellers have been increasing in number, and supply and demand looks to continue the trend.
The Knoxville housing market boasts a median home price of $150,800; suggesting that local real estate is still more affordable here than in most parts of the country. The national average, on the other hand, is nearly $60,000 more. Recent appreciation rates for Knoxville and the rest of the country are fairly comparable, at 4.2 percent and 5.7 percent respectively. Despite slower appreciation rates in Knoxville, prices continue to grow relative to last year. Gains have proven enough to remove real estate from a period of post-recession price weakness. As a result, Knoxville real estate investing should see a boost in activity.
Homeowners in the Knoxville housing market have heralded the return of equity. In fact, gains in home values have permitted more activity. The following highlights how much equity has been gained relative to the year of the home’s purchase:
- Homes purchased in the Knoxville housing market one year ago have appreciated, on average, by $8,307. The national average was $14,170 over the same period.
- Homes purchased in the Knoxville housing market three years ago have appreciated, on average, by $21,130. The national average was $53,857 over the same period.
- Homes purchased in the Knoxville housing market five years ago have appreciated, on average, by $22,054. The national average was $48,036 over the same period.
- Homes purchased in the Knoxville housing market seven years ago have appreciated, on average, by $10,122. The national average was $13,870 over the same period.
- Homes purchased in the Knoxville housing market nine years ago have appreciated, on average, by $20,887. The national average actually decreased $2,822 over the same period.
Economic and demographic fundamentals look to maintain a healthy balance between supply and demand. The job market, in particular, remains strong. With an unemployment rate below that of the national average, the city has more residents that can afford to either rent or own. However, strong fundamentals also make Knoxville real estate investing an attractive option as well. With more people employed, there should be a bigger buyer pool. What’s more encouraging, however, is the city’s job growth rate. Over the course of 12 months, Knoxville’s job growth rate increased 3.3 percent, easily outpacing the nation’s 1.9 percent average. That said, employment opportunities are more prevalent in Knoxville than in most parts of the country. The coming years should only see the trend move in a positive direction.
As if strong fundamentals and a trending economy were not enough; Knoxville continues to remain affordable. In fact, Knoxville real estate is more affordable than most markets across the country. Affordability is historically strong for the area and looks to improve by the end of the year. That said, Knoxville real estate owners spend about 8.4 percent of their income on monthly mortgage payments. Compared to the 15.1 percent national average, Knoxville affordability is very attractive for younger Americans and first-time buyers.
According to RealtyTrac, Knoxville real estate investing is in a good position. In particular, foreclosures offer a great opportunity for those looking to acquire assets at a discount. Knoxville has nearly 500 homes that are in some stage of foreclosure – be it default, bank owned or up for auction. The number of distressed properties alone should be encouraging to prospective investors. However, there is one factor that makes Knoxville real estate investing more attractive than most other cities: distressed discounts. Distressed properties can be purchased at a fraction of the price of non-distressed homes. In fact, non-distressed homes sell for an average of $138,000 in the city. Foreclosures, on the other hand, sell for an average of $67,000, more than 50 percent lower than non-distressed homes. That is an average savings of $71,000 for those getting into Knoxville real estate investing.
Of the foreclosures that are on today’s Knoxville housing market, 94.9 percent are to be placed up for auction. That represents an increase of 208.3 percent from last year’s numbers. The remaining foreclosures are considered to be bank owned. At 5.1 percent of the foreclosure market share, bank owned foreclosures actually dropped 20 percent year-over-year. This is great news for Knoxville real estate investing, as foreclosure auctions should serve as a steady source of deals.
Again, Knoxville real estate investing looks to be in a good position. However, that is not to say that there aren’t neighborhoods that stand out from the rest. Like any city, certain neighborhoods will outperform others. According to Trulia, the most popular neighborhoods in the Knoxville housing market are as follows:
- Island Home
- Old City
- South Knoxville
- Downtown Knoxville
For all intents and purposes, the Knoxville housing market is perfectly stable. If anything, the forecasted 2.8 percent increase in home values should only strengthen the entire market.
The Knoxville housing market is the beneficiary of strong fundamentals. Economic and demographic indicators are trending in a positive direction, and the job sector looks as if it will be able to support an influx of new talent. Supply and demand should, therefore, serve in favor of the real estate industry. On the other hand, the city’s affordability makes it that much easier for people to afford housing. Foreclosures, in particular have carved out a nice little niche in Knoxville real estate investing. Those interested in acquiring discounted properties need not look any further.
Knoxville Housing Market Summary:
- Current Median Home Price: $150,800
- 1-Year Appreciation Rate: 4.2%
- Unemployment Rate: 5.4%
- 1-Year Job Growth Rate: 3.3%
- Population: 183,270
- Median Household Income: $45,051