What 2022’s Buyers Can Expect In Tennessee’s Real Estate Market
It’s no secret that the past couple of years has had their share of ups and downs. With the global pandemic and the unsureness of how the economy would respond, the thought was that the real estate market would be stuck in neutral or even experience a slowdown.
What has happened is actually quite the opposite. The real estate market has been hotter than ever this past year and it leaves homebuyers wondering: What can we expect out of the market in 2022?
This article is going to take a look specifically at what to expect in the coming year in some best small towns in Tennessee. We’ll cover three major areas that have become popular sell in the state: Nashville, Memphis, and Knoxville to give a good idea of what Tennessee homeowners are facing.
The Nashville real estate market has been booming for years! With plenty of new industries setting up shop in the city, ample job opportunities in many different fields, and lots of new housing being constructed, it’s no wonder why this area has become increasingly popular for new and experienced homebuyers alike.
Although the market has been hot in Nashville for the past few years–the average home price has increased by about 22 percent in 2021 alone–there’s one issue that’s hurting the industry: inventory. This is a common issue all across the country and Nashville is no different. Looking at December year-over-year, new listings decreased by about 34 percent and 2022 doesn’t look to show any improvement. This creates a very competitive real estate market and will continue to influence the cost of housing in the coming year.
In 2021, the average cost of a single-family home in Nashville was $437,362 and condos were selling for just under $300,000. This is a big jump from 2020, as the previous year saw averages of $345,000 for a single-family home and about $245,000 for condos. While 2022 may not see the same skyrocket of prices, experts predict that home values will not come down any.
Memphis had a great run all throughout 2021. In fact, Memphis was reported to be one of the hottest residential markets in the entire country! As with Nashville, Memphis home values rose significantly from 2020 to 2021. Not only that, but the quantity of home sales increased as well, by about 15 percent, compared to the previous year according to the Memphis Area Association of Realtors.
Looking ahead into 2022, it seems like the Memphis metro area is going to continue on its successful trend. Sales are projected to rise above the national average by about 7 percent in the coming year and the cost of homes will likely increase as well. This desirable area of Tennessee will remain one of the top-selling markets for residential real estate.
Affordability is one of the driving forces behind Memphis’ real estate success. Compared to Nashville’s average home value in the $400,000s, the median home value in Memphis has sat around $245,000 this past year. The rental rates in Memphis are also quite competitive and are expected to rise by about 7 percent in the next year. This will only increase the desire to buy in the city.
At the other end of the spectrum, it appears that Knoxville’s housing market is finally beginning to settle down. The past year saw unprecedented numbers in the city, with home prices up by 27 percent year-over-year in August. That being said, real estate experts predict that Knoxville will not see a major decrease in numbers, but the market will stabilize in 2022.
Interest rates are currently sitting at an all-time low and heavy competition combined with double-digit price growth has priced out many potential homebuyers in Knoxville. In 2021, first-time homebuyers made up just 28 percent of the real estate market compared to the national average of 40 percent, according to the National Association of Realtors.
Knoxville is also seeing tight inventory just like the rest of Tennessee and much of the U.S. Experts predict that this will not change by much by the end of 2022, although some growth may be seen, just not to the levels of pre-pandemic supply. This shortage of housing will continue to create a competitive market for residential buyers.
It seems that 2022 will be a year of continued growth for the Tennessee real estate market. With inventory slowly starting to climb, it’s likely that prices will cease the skyrocketing increase we’ve seen in the past year. Regardless, it seems that Tennessee will remain a top-selling market for a while longer.