Chattanooga home prices, which already have seen a steep climb in recent years, are projected to rise faster in 2022 than any other metro area in Tennessee, a new report shows.
Realtor.com has home prices growing 6.9% in the Chattanooga area in 2022 over the current year.
That rate of growth puts Chattanooga among the top three metros in the South, with the other two located in fast-growing Florida, the forecast shows.
Robert Backer, the Chattanooga Association of Realtors president, said the coronavirus put Chattanooga on the map as a destination city, and that's helping drive the growth in home prices.
Backer cited the city's cost of living, proximity to Nashville, Atlanta and the Carolinas, and that Tennessee is a no-income-tax state.
"We're on the radar," he said.
Backer said many people found they can work from home amid the pandemic.
"You can live in Chattanooga much cheaper than you can do it in San Diego or Phoenix," he said. "People realize what a gem of a city Chattanooga is."
The median price of homes sold in October in Chattanooga was $275,000, or 10% above the median price for homes a year ago, according to local figures. The median price of homes sold in the Chattanooga area has more than doubled in the past decade, far outpacing the growth in average household earnings.
2022 HOME PRICES
Projected price growth in Tennessee metros versus 2021:— Chattanooga — Up 6.9%— Memphis — Up 6.6%— Knoxville — Up 5.9%— Nashville — Up 5.6%Source: Realtor.com
Despite the higher home prices in Chattanooga, Chattanooga's median home sales price of $275,000 in October still was 22.3% cheaper than the U.S. median of $353,900.
Doug Fisher, the Home Builders Association of Greater Chattanooga's executive officer, said the gains in home prices show the area is starting to emerge and find its place in the marketplace.
"We're finally seeing the value of homes creep up to the national average at least," he said.
Fisher said housing in the area is still 24% below most of the larger cities in the Northeast and West.
"That's a lot of headroom left to grow into the market," he said.
Danielle Hale, Realtor.com's chief economist, said the Chattanooga area's strong demand for homes is driven by local shoppers and those from outside the area, who made up nearly 65% of recent views.
She said home price gains in 2022 in Tennessee's big metros are ranging from Chattanooga's high of 6.9% to the Nashville area's 5.6%. That range is down from 10% to 12% in 2021, Hale said.
Still, the 2022 gains are on top of the increases in 2021 and will mean new highs for home prices in all four metros, she said.
Realtor.com said affordability issues become increasingly complex in 2022. Mortgage rates are expected to climb to 3.6% and listing prices are to rise nationally to new record highs. Also, rents are expected to surge 7.1% across the nation next year while incomes increase by 3.3%, the forecast reported.
Meanwhile, Realtor.com projected that the growth in 2022 home sales in the Chattanooga area and in the other three Tennessee metros will fall below the national average of 6.6%.
The Chattanooga area is to projected see home sales rise 3.7% next year over 2021, according to Realtor.com. Memphis is to lead the state at 7.7%.
Hale said homebuyers generally are shifting to less crowded areas of the nation. For example, home sales in the 1oo largest metros are to grow 5.2% next year, less than the 6.6% figure nationally, she said.
Still, Memphis and Nashville are to see home sales grow above 5.2%, while Chattanooga and Knoxville are to be below the 100 market average, Hale said.
"Nevertheless, the projected 2022 growth comes on top of strong home sales growth in 2021 that will mean new highs for home sales in these markets," she said.
Contact Mike Pare at firstname.lastname@example.org or 423-757-6318. Follow him on Twitter @MikePareTFP.