Volkswagen’s arrival in Chattanooga could mean the region’s real estate market will be shielded from further harm by the national housing crisis and economic slowdown, Realtors and builders say.
“With new opportunities for development coming up, it will help reduce short-term inventory” said Jason Farmer, former president of the Chattanooga Association of Realtors. “It really changes the game in Chattanooga.”
Volkswagen’s announcement last week that it has selected Enterprise South industrial park for a car assembly plant comes at a time when the local real estate market is challenged by slower sales. The Chattanooga Association of Realtors on Thursday reported selling 601 houses in June, an 18.9 percent decrease from 741 sales a year ago.
Some areas in the region will see more of an effect than others, said Phil Pryor of Coldwell Banker Pryor Realty.
High gas prices likely will mean that some of the first workers for Volkswagen will want to live nearby, helping revitalize neighborhoods near Enterprise South in Tyner, he said. It could take time for housing further out to come into high demand, he said.
Ooltewah and East Brainerd should immediately see a sales gain from Volkswagen workers, said Mr. Farmer, broker-owner of ReMax Renaissance Realtors.
Jay Bell of Bell Engineering Co. is the developer of Hamilton on Hunter near Enterprise South. The Ooltewah subdivision is starting a new phase with 200 lots, Mr. Bell said, and is preparing to develop a future section which has a view of the nearby lake.
“We expect to get a lot of Volkswagen workers because we’re only about a mile from Enterprise South as the crow flies,” Mr. Bell said. “This will get the county through what appears to be a national recession and a housing recession.”
Another real estate agent said Cleveland, Tenn., also should fare well since Enterprise South is only 10 miles away via Interstate-75.
“We’re so close and convenient to there,” said Alison Hamilton, residential broker of Coldwell Banker Hamilton & Associates. “Those people will see the benefit of schools in Cleveland and Bradley County.”
Areas north of the Tennessee River also should do well, Mr. Farmer said.
Staff Photo by Dan Henry
Luis Cortez, right, works with his brother Alex Cortez to erect the first of eight signs at the site of a new single level condominium neighborhood being built in Ooltewah off of Ooltewah-Ringgold Road Tuesday afternoon. The complex, which will contain 72 homes in its first phase, is expected to begin construction this August.
“I don’t think we’re going to see an area of Hamilton County that won’t benefit by the time all the supporting businesses come here,” he said.
In addition to selling existing houses, Mr. Farmer is building homes in St. Ives, a Signal Mountain subdivision. Signal Mountain should become a popular destination with the new high school, he said.
Soddy-Daisy should be a draw people who want to live in an area with less city hustle, said Tim McClure, developer of a subdivision there called Barrington Pointe.
“People like larger lots and less traffic,” said Mr. McClure, president of the Home Builders Association of Southern Tennessee.
The Volkswagen plant’s construction should create demand for temporary housing for workers building the site, said Mike Reed, a developer in East Ridge and Ringgold, Ga. Long-term, Volkswagen workers will migrate to the area, depending on home and gas prices, he said.
One real estate agent who specializes in new home sales said she agrees, adding that builders will benefit from increasing housing demand.
“People will want to live all over the county,” said Kaye Ivey of Keller Williams Realty. “It’ll clear out the inventory that builders are sitting on.”
The commercial real estate market stands to gain as well, some agents say.
“This shows we can do it, it shows we put the right incentives package together,” said David DeVaney, president of NAI Charter Real Estate.
Mr. DeVaney said he’s seen data suggesting that five jobs will be created for every position inside the Volkswagen plant. That means great potential for jobs making and shipping parts from car seats to radio components, he said.
WHAT THEY’RE SAYING
Byron Kelly, Prudential RealtyCenter: “We’ll see a slow and steady increase. It’s a shock absorber from the ups and downs of the national market.”
Michaela Driver, ReMax Properties North: “The hype alone will increase demand. There is a ‘slack’ in the market that it will definitely take up.
Alison Hamilton, Coldwell Banker Hamilton & Associates: “With all the bad economic news in the nation, we got Volkswagen and Whirlpool” jobs from Mississippi. “Our local economy is getting ready to see some good growth.”
Bill Raines, president of The Raines Group Inc.: “A lot of people will move up in their housing needs. With the population increase, consumer needs such as retail, schools and other services will increase in needs.”
Mike Reed, developer: “I don’t expect it to be a tidal wave like some propose. But for the Chattanooga economy, it will improve the level of optimism.”
Cindy Walker, Crye-Leike Realtors: “This will bring new people into the marketplace, people who couldn’t have bought before.”
There will be steady interest in commercial real estate properties in the short term, but in the long term there will be a significant effect, said Bill Raines, president of The Raines Group Inc.
“I was in Nashville when Nissan came to Smyrna and Saturn to Spring Hill,” Mr. Raines said. “All the projections were underestimated. It will have a very long-term positive impact for us.”
Demand will increase for warehousing and logistics sites, said Michaela Driver, commercial real estate director for ReMax Properties North.
Demand for other commercial properties will increase as well because the prospect of new jobs will lead people who had been thinking of buying to go ahead with plans, said Ms. Driver, a native of Stuttgart, Germany.
“The uncertainty that caused everyone to wait will be removed,” Ms. Driver said.
A positive attitude can help create good news for the commercial and residential markets, experts said, but could lead to unrealistic expectations.
Sellers have been calling and wanting to increase their asking prices, said Sabrena Turner, owner of Help-U-Sell Today Realty.
“People think it will escalate their values,” she said. “Will it? Slightly.”
Byron Kelly, a broker with Prudential RealtyCenter, said that sellers shouldn’t expect a spike in their property’s value. Instead, home prices will rise at a stable rate over the long term, and there will be more people who have the means to purchase.
“It will provide a shock absorber from the ups and downs of the national market,” he said.