East Tennessee residents have struggled to find or finance homes and apartments in recent years. These challenges are likely to remain in 2024, but pressures may be easing.
East Tennessee Realtors released its 2024 Knoxville Housing Market Forecast on February 1, showing that home buyers and renters in the Knoxville area will see lower interest rates, more homes on the market, and higher price increases than last year. is expected to be smaller than.
“This is actually an optimistic outlook for once. Things are turning around in the housing market,” Hansen Sale, director of government affairs and policy at East Tennessee Realtors, said in a Feb. 1 presentation. said. “Personally, I believe that although we have hit rock bottom, things are looking up.”
Here are five things that could shape Knoxville's housing market in 2024.
Lower mortgage rates mean more Knoxvillians can afford to buy a home
Mortgage rates have a huge impact on housing affordability, how many people are looking for a home, and how many homes they can actually buy.
With inflation slowing, the Fed could cut interest rates as early as March.
In 2023, the average interest rate on a 30-year fixed mortgage nationwide was 6.8%, and East Tennessee Realtors expects it to fall to 6.2%, or below 6%, in 2024. This could be a game-changer for many potential homebuyers.
East Tennessee Realtors estimates that if 30-year interest rates were to fall below 6.5%, an additional 16,734 households would be able to afford the average home in Knoxville.
In 2023, two-thirds of households in the Knoxville area could not earn enough to buy a typical home, which costs at least $94,191 a year.
housing prices will rise again
Home prices will rise, but don't expect the double-digit increases that defined Knoxville's housing crisis in 2022.
East Tennessee Realtors predicts home prices will increase 3.6%, which is considered a typical increase. If that happens, the median home price will go from $338,000 in 2023 to $350,168 in 2024.
Home prices have steadily slowed since rising 16.7% in 2022 and 5.3% in 2023.
Homebuyers looking for affordable options are struggling. The number of homes priced under $300,000 decreased by 21% from October 2022 to October 2023. Sale told Knox News that finding homes under $300,000 will continue to be difficult in 2024.
More Knoxville homes expected to sell in 2024
Housing supply is expected to recover after two years of fewer homes on the market.
East Tennessee Realtors predicts home sales will increase 11.1% in 2024, the region's largest increase in more than 20 years.
Home sales fell 9% in 2022 and 15% in 2023.
However, supply remains 50% below pre-pandemic levels. More than 56% of Tennessee homeowners have mortgage rates below 4%, so if interest rates remain high, many will be discouraged from selling their homes.
Rent is expected to rise, but not as much as last year.
Like house prices, rental prices are expected to rise again in 2024, but not as much as in previous years.
Rent prices are expected to increase by 3.1% in 2024 to an average of $1,487 per month for units of all sizes.
Rent increased by 17% in 2022 and 7.7% in 2023.
More Knoxville Apartments Coming Soon
Knoxville's rental scene has become incredibly competitive in recent years, making it difficult to find a place to live. However, the occupancy rate was 96.5% in 2023 and 98.2% in 2022, but is expected to decline to 96.4% in 2024.
This is because builders are adding more units, with 2,529 apartments under construction by the end of 2023. About 71% of them are expected to be available next year.
cyrus sloan I am a growth and development reporter. Emailsilas.sloan@knoxnews.com.twitter@Cyrus Sloan. Instagram@knox.growth.
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