KNOXVILLE, Tenn. — Housing prices in the Knoxville area continued to climb in November 2023, according to a report from the East Tennessee REALTORS group. It tracks housing market trends in the area, preparing monthly reports on prices, supply and more.
Its November 2023 report found rent prices were increasing far faster than the national average. It said in October, rents in the Knoxville area increased by 4.14% compared to the previous year. Nationally, that rate was 0.09%.
The report also noted University of Tennessee students were paying higher prices compared to the previous year. It said rents were up 15.9% in the UT student housing market in Fall 2023, compared to the previous year. The UT student housing market ranked 11th nationally for rent growth, according to RealPage, a property management software.
"Rent growth in purpose-built student housing hit record highs across the U.S. over the last year – and Knoxville was no exception," the report said. "The especially large rent increases among purpose-built student housing units can be attributed to robust enrollment growth at the University of Tennessee, which created a sizable gap between supply and demand evidenced by the 100% occupancy rate for Fall 2023."
Enrollment at UT is around 36,000 students, and university leaders expect the number to grow to around 41,000 by the end of the decade. The university currently has enough beds for around one out of every four students who want to live on campus. The Board of Trustees previously approved the construction of two new residence halls, expected to add around 1,900 beds.
The report also discussed rent control policies and the East Tennessee REALTORS group said implementing them may not solve the area's housing woes. It also said rent control policies would primarily help existing tenants in the short term while reducing long-term affordability.
"The cost of living crisis in East Tennessee cannot be overlooked. Knox County, for example, is a saturated market and was reported as the number one metropolitan area for rent increase in 2022. The lack of affordable housing in East Tennessee is largely due to an increased demand without a substantial increase in supply. As we are finally seeing rent growth begin to moderate and we have a historic number of rental units under construction, this positive direction could be halted with a policy such as rent control," the report said.
It encouraged changing zoning policies and land use policies to allow for increased development, increasing the supply of homes in the Knoxville area.
During a Knoxville City Council meeting in November in which leaders discussed the city's housing market, councilmember Amelia Parker said although the housing supply increased over the years, rental prices were still too high for many people. She encouraged city leaders to work towards acquiring properties and work with low-income developers to address housing affordability.
"We can actually work to intentionally develop the housing market that we want. Or, we can pretend that we have to rely on the market. We can pretend that we have to rely on the market," she said.
The Knoxville area also ranked high on reports about the growth of home prices in the third quarter of 2023. The report said home prices grew by around 11.6% compared to last year in the Knoxville area. In October 2023, the median home sales price was $350,000 — up by more than 11% from last year.
Knoxville ranked fourth on a federal list for rising home prices in the third quarter of 2023. It was beaten by Rochester in New York, Winston-Salem in North Carolina, and the Albany-Schenectady-Troy area in New York.
The amount of home sales also increased by around 1% compared to last month, but it was down by around 6.6% compared to last year and is down by around 16.1% compared to last year. Housing inventory is also down, according to the report, by around 2.6% compared to a year ago.
Half of all the homes sold in the Knoxville area were under contract after 12 days on the market. Around 11.5% of them were newly built homes, the report said.
"Home sales across East Tennessee rebounded in October as additional inventory hit the market, underscoring the persistent demand for homeownership. Despite the highest mortgage rates in more than two decades, home prices continue to rise at a strong pace. Though overall housing market activity remains relatively subdued due to limited inventory and low housing affordability, market conditions are likely to improve moving into 2024," the report said.