While the housing market countrywide is expected to cool in 2020, the Chattanooga area is set to sizzle as the 4th best metro area in the country, a new ranking shows.
Realtor.com has the Chattanooga metropolitan area coming in behind only Boise, Idaho, McAllen-Edinburg-Mission, Texas, and Tucson, Arizona.
George Ratiu, Realtor.com's senior economist, said the city has a solid economy, a good manufacturing base, diverse employers and quality of life.
"It has strong underlying fundamentals," he said.
Also, Ratiu said, Chattanooga is part of a trend of people moving away from coastal cities to more affordable areas. Even with greater price appreciation, the median price of Chattanoga homes sold by local realtors in the third quarter of 2019 - $196,500 - was nearly 30% below the U.S. median of $280,200 in the same period, according to data released last month by the National Association of Realtors.
"Chattanooga plays into this," he said.
The ranking is based on Realtor.com's analysis of projected home sales and price data.
It has Chattanooga coming in with 2020 home prices growing 3.6% and with sales increasing by 2%. This contrasts with an anticipated 1.8% drop in home sales nationally and with a 0.8% increase in prices.
Darlene Brown, president of Real Estate Partners Chattanooga, said she's not surprised by the Realtor.com listing of the local market.
Brown said the market is seeing a healthy mix of home purchases by locals and out-of-towners.
"Probably this last year, so many of my sales were by people who accepted jobs here or chose to move here," she said. "That's always exciting."
A lot of buyers new to the city don't work for the big companies in Chattanooga such as Volkswagen, Brown said.
"They've chosen to come here," she said.
Doug Fisher, the Home Builders Association of Greater Chattanooga's executive officer, said that when there's a spike in the value of homes, that's an obvious indicator of a shortage.
TOP MARKETS FOR 2020
1. Boise, Idaho2. McAllen-Edinburg-Mission, Texas3. Tucson, Arizona4. Chattanooga5. Columbia, South CarolinaSource: Realtor.com
"The fewer inventory that's available, the more the demand," he said.
While the Realtor.com ranking is welcome, Fisher said the city and Hamilton County are at a critical period with potential regulatory measures over steep slopes and flood plains and difficulty in rezoning properties.
Also, Fisher said, the county is "at the threshold of an impending EPA consent degree" related to wastewater.
On Tuesday, a new employer survey indicated Chattanooga has the best hiring outlook of any major metro area countrywide heading into 2020.
Ratiu said Realtor.com looks at the Chattanooga metropolitan statistical area, which includes Hamilton, Marion and Sequatchie in Tennessee and Catoosa, Dade and Walker in Georgia.
He noted that Chattanooga was ranked fourth last year on the list as well.
"Two years running signals that the economy is strong enough to maintain that interest and activity in the [homebuying market]," Ratiu said.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.