Knoxville, TN Real Estate Market Trends & Analysis [Updated 2020]

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It isn’t the least bit presumptuous to suggest the Knoxville real estate market may be one of the hottest real estate markets in the country. The city’s close proximity to Nashville and relatively affordable home prices are responsible for an influx of demand that few other cities can compete with. Investors, on the other hand, have enjoyed an incredible run for the better part of a decade. That said, there are very few markets with more promising fundamentals than Knoxville, and that’s even in the midst of the Coronavirus pandemic.

Knoxville Real Estate Market 2020 Overview

  • Median Home Value: $200,650

  • 1-Year Appreciation Rate: +7.2%

  • Median Home Value (1-Year Forecast): -0.4%

  • Average Days On Market (Zillow): 76

  • Median Rent Price: $1,250

  • Price-To-Rent Ratio: 13.37

  • Unemployment Rate: 3.5% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 187,500 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $37,703 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 9.58%

  • Foreclosure Rate: 1 in every 6,334 (1.5%)

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Knoxville real estate investing

2020 Knoxville Real Estate Investing

Investors have enjoyed what many are calling a resurgence in the local housing market. Thanks, in large part, to its close proximity to Nashville, the Knoxville real estate market has experienced an uptick in demand from those who want to escape the higher prices of its neighbor to the east. At the moment, buying real estate in Knoxville appears to be a good investment, as homes are still relatively affordable and there appears to be plenty of demand. At the very least, owners shouldn’t have any trouble finding buyers for their homes, even with the introduction of the Coronavirus.

The Knoxville real estate market is about as hot as anywhere else in the country, especially for local real estate investors. In addition to a relatively low “days-on-market” indicator, real estate in Knoxville has appreciated at nearly twice the rate as the national average over the last year—7.2% and 4.1%, respectively. Perhaps even more importantly, however, is the expected impact the Coronaries will have on each respective marketplace. While the national housing market expects to see an appreciation rate of -1.5% in the next year, Zillow expects the Knoxville housing market to appreciate -0.4% over the next 12 months.

Opportunistic Knoxville real estate investors shouldn’t see the expected drop in appreciation rates as anything but a positive sign. While home prices are expected to drop over the course of 2020, they are most likely going to return to today’s levels within the year, and perhaps even surpass them. If for nothing else, tempered pprecraiton rates may represent a great buying opportunity.

No more than a year ago, real estate in Knoxville was a hot commodity. The market was one of eleven where investors doubled their return on investment (ROI) in the first quarter of 2019. According to Attom Data Solutions, the markets with the highest average gross flipping ROI “were Pittsburgh, Pennsylvania (131.2%); Flint, Michigan (127.6%); Shreveport, Louisiana (112.5%); Scranton, Pennsylvania (112.0%); and Knoxville, Tennessee (105.0%).

Moving forward, investors should be able to capitalize on the current pandemic. For starters, interest rates are about as low as they have ever been. Anyone looking to secure a home with traditional financing can simultaneously secure a relatively affordable property with an even more affordable loan. Long-term investors, in particular, should see the current market for what it is: very attractive. With median rent prices hovering around $1,250, buy-and-hold investors should be able to easily justify today’s mortgage prices.

Rehabbers, on the other hand, may find themselves with a larger inventory of distressed homes by the end of 2020. While government assistance programs appear ready and able to keep homeowners in their homes for the foreseeable future, it’s only a matter of time until lenders will require borrowers to come current on mortgage obligations. When that time comes, homeowners unable to oblige may be at a greater risk of foreclosure. As a result, the latter part of 2020 could see an influx of foreclosures hit the market, not only in Knoxville, but also the rest of the country. Investors who line up funding now could be well positioned to land deals below market value when all of the dust settles. In turn, the Knoxville real estate market could remain one of the best places to invest in 2020 and 2021, not unlike it was as recently as last year.

2020 Foreclosure Statistics In Knoxville

According to RealtyTrac, a nationally recognized real estate data company that specializes in foreclosure data, the Knoxville real estate market has approximately 106 properties that fit the description of a distressed home (default, auction or bank owned). More specifically, a mere one in every 6,334 homes is distressed that equates to a 1.5% foreclosure rate. At that rate, the number of distressed properties is relatively low, and apparently dropping as the city distances itself from the last recession. According to RealtyTrac’s most recent data, the number of properties that received a foreclosure filing has dropped 71.0% from this time last year.

For some context, the national foreclosure rate has also declined in recent history, albeit slightly less. As recently as March, “the number of properties that received a foreclosure filing in U.S. was 3% lower than the previous month and 20% lower than the same time last year,” according to RealtyTrac. Following the drop, one home in every 2,893 homes in the entire country is considered distressed, or 3.4%.

To put things into perspective, the Knoxville housing market has a foreclosure rate which is less than half of the national average. The difference may be primarily attributed to a decline in local bank-owned homes. Down 81.1% from the previous year, bank-owned homes now make up 45.5% of the city’s distressed inventory. Not to be left out, however, auction inventory represents the largest distribution of distressed homes. At 54.5%, auction homes make up the majority of the city’s foreclosures.

For a better idea of where to look for distressed homes, here’s a list of the neighborhoods in Knoxville with the highest distributions of foreclosures:

  • 37912: 1 in every 3,665 homes is currently distressed

  • 37931: 1 in every 4,020 homes is currently distressed

  • 37921: 1 in every 4,046 homes is currently distressed

  • 37923: 1 in every 4,676 homes is currently distressed

  • 37934: 1 in every 4,928 homes is currently distressed

It should be noted, however, that the “shelter in place” orders issued to combat the Coronavirus will most likely impact foreclosures moving forward. While government programs and mortgage forbearance initiatives will keep people in their homes for the foreseeable future, they are more of a temporary fix than a solution.

Once the allotted forbearance periods expire, those who weren’t able to keep up with their mortgage obligations may be expected to pay all of their missed payments in one lump sum, a feat that may prove impossible for those who were hit the hardest. Homeowners with loans backed by Fannie Mae, Freddie Mac and the FHA won’t be expected to make lump-sum payments, but even their mortgage obligations will need to be made current sooner or later. Regardless, future mortgage payments will eventually be compounded with past payments, which will be difficult for a lot of homeowners to comply with. As a result, the Knoxville housing market will most likely see an influx of foreclosures over the course of the next 12 months.

2020 Median Home Prices In Knoxville

In one year’s time (February 2019 to March 2020), the Knoxville real estate market saw median home prices increase by as much as 7.2%. Real estate has been on an incredible run to say the least. To put things into perspective, the median home value in the United States increased 4.1% over the last year. Despite the disparity in recent appreciation rates, however, the median home value is considerably less than the national average, $200,650 and $248,857 respectively. Nonetheless, expect local real estate to make up even more ground in the coming year. The Coronavirus will impact home values, which begs the question: Will house prices go down in Knoxville?

As things stand, appreciation rates appear as if they will drop more on a national level than in Knoxville. That said, prices may stall on a local level. Prices should drop, albeit slightly.

Knoxville Real Estate Market: 2016 Summary

  • Median Home Price: $167,700

  • 1-Year Appreciation Rate: 4.9%

  • 3-Year Appreciation Rate: 9.9%

  • Unemployment Rate: 4.7%

  • 1-Year Job Growth Rate: 2.8%

  • Population: 183,270

  • Median Household Income: $33,494

Knoxville Real Estate Investing 2016

Knoxville real estate news was generally positive in 2016. Home prices and appreciation rates achieved moderate gains during the first-half of the year, while supporting factors such as home affordability, the local economy and new housing construction gradually improved. Although prices were below the national average, gains in the previous three years extended the trend of positive growth since the recession. With gains benefiting both homeowners and investors alike, the Knoxville housing market captured momentum in recent years and got to where it is today.

One of the biggest supporters for the local market was the economy. Employment held up, as one-year job growth reached 2.8% during the second quarter. Additionally, the second quarter saw an unemployment rate of 4.7%, lower than the national average of 4.9%, and better than its unemployment the previous year. Compared to other markets, local employment growth was strong and faring better than the rest of the country.

Homeowners paid 8.6% of their income to mortgage payments in the second quarter of 2016, while the national average paid an astounding 15.8%. The ratio of price-to-income was much lower during the second quarter compared to its historical average of 11.5% at the time.

Knoxville Real Estate Market: 2015 Summary

  • 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

Knoxville Real Estate Investing 2015

Not unlike every city in the country, the Knoxville housing market experienced severe setbacks following the recession. However, it was pretty evident in 2015 that the market was on an upward trend. In fact, the local housing market has continued to improve to this day.

In 2015, the market boasted a median home price of $150,800, which was lower than the national average. The national average, on the other hand, was nearly $60,000 more at the time. Today, the difference isn’t as big. Appreciation rates for Knoxville and the rest of the country were fairly comparable—4.2% and 5.7% respectively. Despite slower appreciation rates, prices continued to grow relative to the previous year. Gains in 2015 were enough to remove real estate from a period of post-recession price weakness.

Economic and demographic fundamentals promoted a healthy balance between supply and demand in 2015. The job market, in particular, was really strong. With an unemployment rate below that of the national average, the city had more residents who could afford to either rent or own. However, strong fundamentals also made Knoxville real estate investing an attractive option as well. What’s more encouraging, however, was the city’s job growth rate. Over the course of 12 months, Knoxville’s job growth rate increased 3.3%, easily outpacing the national average.

Real estate was more affordable than most markets across the country. Affordability was historically strong for the area and only continued to improve as the years went on. That said, owners spent about 8.4% of their income on monthly mortgage payments.

Knoxville County Map:

Map of Knoxville neighborhoods

Knoxville Real Estate Market Summary

Real estate in Knoxville is amongst the most coveted assets in the country. Thanks to a unique combination of relative affordability and increasing demand, local real estate investors have found the Knoxville real estate investing environment to be incredibly welcoming. Few cities, for that matter, have been able to reward investors with a higher return on investment in recent history. As a result, the Knoxville housing market belongs in the conversation with today’s best places to invest.

Have you thought about investing in the Knoxville real estate market? If so, what are you waiting for? We would love to know your thoughts on real estate in Knoxville in the comments below:

*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either expressed or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.
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