Chattanooga has 4,483 'zombie homes,' vacancy rate 60 percent above U.S. average

Chattanooga has 4,483 'zombie homes,' vacancy rate 60 percent above U.S. average

October 30th, 2018 by Dave Flessner in Business Around the Region

States with highest home vacancies

1. Tennessee, 2.65 percent

2. Kansas, 2.5 percent

3. Oklahoma, 2.49 percent

4. Mississippi, 2.47 percent

5. Indiana, 2.45 percent

Source: ATTOM Data Solutions

Chattanooga homes are selling as fast as they have in decades, but some of the outside investors buying into the market are finding that renovating and renting residential properties can take some time, keeping vacancy rates here above the U.S. average.

The share of vacant homes in Chattanooga rose in the past year and was more than 60 percent above the U.S. average, according to a study of property listings by ATTOM Data Solutions released Tuesday. The study found Tennessee had the highest vacancy rate for single-family homes, condos and townhomes of any state, primarily due to vacancies among properties owned by investors and used as rental homes. The vacancy rate in Memphis, the highest in Tennessee, was double the U.S. average.

Chattanooga ranked in the top 20 percent of all U.S. cities in its share of vacant homes. In metro Chattanooga, 4,483 homes are vacant, or 2.44 percent of all households. That's up from 4,002, or 2.25 percent of all homes, in 2017.

Daren Blomquist, senior vice president for ATTOM, said 84 percent of the home vacancies in Tennessee are rental properties.

"What is pushing up the vacancy rates in Tennessee are the rental properties," Blomquest said. "These areas like Memphis, Chattanooga and Knoxville (with the highest vacancy rates) are becoming popular with a lot of out-of-state investors who are coming into the market because home prices are much cheaper than in many parts of the country. One side effect of that trend is we seem to be seeing more properties end up vacant for longer periods of time."

Although the home sales market remains strong and continues to push up prices and quicken sales, the rental property market has shown some weakness after the addition of more than 2,000 more apartment units in the local market in the past 12 months and additional complexes soon to come on the market.

The online apartment tracking service REIS said the vacancy rate for apartments rose in 45 of the 79 metro markets REIS followed during the summer quarter this year. Chattanooga had the highest vacancy rate increase at 0.9 percent, up to 6.2 percent, for apartments in the local market in the third quarter of 2018.

Geoff Ramsey, president of the Greater Chattanooga Association of Realtors, said the flood of new apartments built in the market over the past couple of years has pushed up rental vacancies, but Ramsey said homes are still selling as quickly as any time in his career.

"We have a lot of homes selling in a day or less," he said. "The market is as strong as I have seen it in long, long time."

The 42-day average sales period for homes on the market in Chattanooga is the quickest in modern times.

In response, home prices in Chattanooga continue to gain traction. The median sales price for homes sold in Chattanooga during September increased 3.9 percent from a year ago to $187,000.

The share of owner-occupied homes that were foreclosed upon and then left vacant because the debt exceeded their value or no one wanted to buy the property has rapidly declined since the end of the Great Recession.

"The number of vacant foreclosures (nationwide) is now less than one fourth of the more than 44,000 in 2013 when we first began tracking these zombie homes," Blomquest said. "A booming housing market in many areas of the country is lifting all boats."

Nationwide, home vacancy rates fell slightly this year to 1.52 percent of all homes, according to ATTOM.

Contact Dave Flessner at dlessner@timesfreepress.com or at 423-757-6340.


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