KNOXVILLE, Tenn. — The price of living in the Knoxville area is continuing to get higher, according to a new report from the East Tennessee Realtors group.
They said the price of rent for Knoxville apartments grew higher by 9.6% compared to the previous year. During the same time period, rent growth was 2.3% nationally, showing Knoxville's rent grew by more than four times the national rate during the second quarter of 2023.
They also said that the rent for new leases rose by 11.4% during the previous year, showing a higher price for people looking to live in a new apartment. Renewal leases increased by 9.4%, according to the report.
At the same time, they said the city's occupancy rate was 96.3% — down by around 2.2% compared to last year. Nationally, the occupancy rate was 94.7%. The realtor group said 3,214 units were under construction in Knoxville during the second quarter of the year — an all-time high for the city.
"East Tennessee's apartment market is poised to soften over the next year as a wealth of new inventory becomes available in close proximity. New supply is likely to outpace demand, slowing the rate of rent increases and leading to lease-up challenges, especially for high-end Class A units in more urban areas," the report said.
It also said high-end units made up a sizeable share of the city's supply of apartments. They said despite some signs the rental market was poised to soften, demand for multifamily units would stay strong over the long run.
home sales decreased in June in East Tennessee, down by 6.2% compared to May and down by 16.2% compared to last year. The report said the median home sales price was $350,000 in June, up by 7.3% compared to last year.
The total number of homes available for sale stayed relatively unchanged compared to last year too. However, half of the homes sold were under contract in a week or less. Around 30% of those homes sold for more than the asking price, with 15% selling for at least $10,000 more than the asking price, according to the East Tennessee Realtors group.
They said declining home sales in the area were a reflection of higher mortgage rates keeping buyers out of the market. Despite the smaller number of buyers entering the market, they said competition stayed high between buyers already in it.
"Buyer and seller activity has normalized to a degree but overall housing market conditions are still far from normal. The lock-in effect, whereby homeowners are locked in with low mortgage rates and are reluctant to list their homes for sale, is likely to persist – keeping inventory low and competition high," the report said.
They estimated mortgage rates would hover between 6.5% and 7% through the end of the year.
