Housing affordability remains a challenge in Knoxville
Home sales, prices, and inventory are up in the Knoxville metro area, but fewer people are able to afford what's out there.
Can you afford to buy a house right now? A lot of people would say no.
Modeled after the National Association of REALTOR’S Housing Affordability and Supply Report, a new analysis by East Tennessee REALTORS shows Knox County’s housing crunch is most severe for low- and moderate-income homebuyers, driven by an acute shortage of less expensive homes.
In other words, even at existing inventory levels (which are historically low), housing affordability would be greatly improved if the price distribution of available homes was more balanced.
In its latest Market Pulse report, East Tennessee REALTORS explains that Knox County homebuyers earning $75,000 annually can currently afford to buy 12.5 percent of active listings compared to 60.6 percent of active listings in a balanced market. Those earning the median household income ($64,894 as of 2021) can currently afford to buy 7.0 percent of the available inventory.
As of June 2023, no income bracket met or exceeded the balance market affordability threshold – yet another indication of the affordability challenges across income groups.
In sum, Knox County has the largest shortage of homes in the price range that middle-income households can afford to buy – a trend that limits upward economic mobility for many long-time residents in addition to hampering the region’s ability to attract and retain workforce talent.
Other data points of note regarding the Knoxville and Knox County real estate market include:
- East Tennessee home sales increased in May — up 12.2 percent from the previous month but still down 10.2 percent from a year ago. Home sales are down 16.5 percent year-to-date.
- The median home sales price was $335,000 in May — up 0.9 percent from the previous year.
- Apartment rents in Knoxville were up 9.2 percent from the previous year in May 2023, compared to 2.3 percent growth nationally.
- Total housing inventory continued to increase – up approximately 20 percent from a year ago but still around 60 percent below pre-pandemic levels.
- Half of the homes sold were under contract in 8 days or less, down from 9 days in the previous month.
- 32 percent of homes sold for more than the asking price, up from 30 percent the previous month, with 16 percent selling for at least $10,000 over asking and 6 percent selling for at least $25,000 over asking.
- New construction represented 12 percent of total home sales.
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