62 townhomes planned for Chattanooga site in hot market

Chattanooga area homes overvalued by 35%, study shows

Staff photo by Mike Pare / A plan to build 62 townhomes is proposed for a tract on Standifer Gap Road near Walker Road in Chattanooga. The intersection is shown in this March 24 photo.

More than 60 townhouses are planned on a tract in east Hamilton County even as a new study shows Chattanooga area buyers are overpaying by about 35% for homes in a red-hot market.

The 62 townhomes would go on a 7.8-acre parcel on the 7500 block of Standifer Gap Road, near its intersection with Walker Road, according to a rezoning request to the Chattanooga-Hamilton County Regional Planning Agency.

The townhomes all would have two-car garages on the site, the request by ASA Engineering said. It's seeking a rezoning from single-family dwellings to a medium-density product.

Rezoning on the tract is expected to come before the regional planning commission next month. Efforts to reach ASA Engineering for comment on the proposed project Wednesday were unsuccessful.

Bill Robinson, an attorney representing a trust that owns the land, said there are parties interested in buying the property.

"If there is any proposed action before the planning commission, it would be on the part of any potential buyers of the property," he said in a telephone interview.

But that proposal and others for new homes in recent weeks come as a new housing study shows the Chattanooga metro is the 37th overpriced nationally.

Chattanooga area homes are overvalued by 35%, up from a 24.8% premium about six months ago, according to the study. Still, at that time, Chattanooga was ranked 34th nationally.

In all of the 100 top markets surveyed by researchers at Florida Atlantic University and Florida International University, buyers continue to pay higher premiums - or the difference between where home prices should be based on historical trends and where they are now.

The Chattanooga area falls just ahead of Denver; Greenville, South Carolina; and Cincinnati in percent overvalued and just behind Seattle and Cleveland, Ohio, according to the study.

Boise, Idaho, tops the survey with homes selling for 76.3% more than they would historically, the survey showed. It's followed by Austin, Texas, at 64.8% and Ogden, Utah at 61.2%, results show.

Ken H. Johnson, an economist in Florida Atlantic's College of Business, said in a news release that consumers could be taking big risks if they jump into the U.S. housing market now.

"We are near the peak of the current housing cycle, and you never want to buy near the top of the market," he said. "Prices are high now, but they always moderate back toward a long-term pricing trend."

Other Tennessee cities also are in the top part of the survey along with Chattanooga. Nashville is 16th, Memphis at 17th and Knoxville at 28th.

Johnson cited a low housing inventory in Tennessee and the state's popularity for people who are relocating.

"The inventory shortage will persist, and Tennessee should remain very popular in terms of a relocation destination," he said in an email last year.

Also in Hamilton County, a landowner said this week he wants to green light an expansion of a plan to build new single- family homes off Snow Hill Road that are slated to start at $500,000 each.

Rick Stern, who owns a tract at 7712 Snow Hill Road, is seeking to add 15 more homes to a planned development that already had approval for 42 residences, he said by phone Monday.

Last week, a developer said he's planning a high-end condominium complex that would be one of the largest such projects to go up on Chattanooga's waterfront.

The four-level, 45-unit structure is proposed on property near the Boathouse Rotisserie & Raw Bar at 1497 and 1521 Riverside Drive, according to documents filed with the Regional Planning Agency.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.