Chattanooga should be one of the top markets for real estate sales in 2020 with gains in both sales and home prices expected to outstrip the national average, according to the largest website in the U.S. for real estate listings.
Realtor.com ranked Chattanooga as the fourth best market among the nation's biggest cities for U.S. home sales and price appreciation in the new year.
In contrast to a projected nationwide drop of 1.8% in residential real estate sales in 2020, Chattanooga home sales are projected by Realtor.com to rise by 2% in the new year over 2019.
Average home prices in Chattanooga also are projected to rise faster than most markets. Realtor.com economists forecast Chattanooga home prices will increase an another 3.6% this year, far outstripping the projected 0.8% gain in home prices nationwide.
Javier Vivas, director of economic research for Realtor.com, said most U.S. markets will face "a more challenging 2020" after the U.S. economic recovery entered its 10th year in 2019 for the longest period of sustained economic growth in modern U.S. history.
Chattanooga and other top markets identified by Realtor.com for 2020 are generally more affordable than most of the country. Although home prices continue to rise more than wages in Chattanooga, the median price of homes sold in Chattanooga are still priced nearly 30% below the U.S. average and Tennessee boasts one of the lowest tax rates for state and local governments. That helps make Chattanooga more affordable than most U.S. cities for home buyers.
Top housing markets for 2020
1. Boise City, Idaho, 0.3% gain in sales and 8.1% rise in prices 2. McAllen-Edinburg-Mission, Texas, 4.4% rise in sales and 4% increase in prices 3. Tucson, Arizona, 3..4% increase in sales and 3.3% rise in prices 4. Chattanooga, 2% increase in sales and 3.6% rise in prices 5. Columbia, South Carolina, 5.5% gain in sales but 0.2% drop in prices 6. Rochester, New York, 4.7% increase in sales and 0.4% rise in prices 7. Colorado Springs, Colorado, 1.4% drop in sales but 6.3% rise in prices 8. Winston-Salem, North Carolina, 3.6% rise in sales and 0.5% increase in prices 9. Charleston-North Charleston, South Carolina, 1.2% increase in sales and 1.9% rise in prices 10. Memphis, 0.1% increase in sales and 3% gain in prices Source: Realtor.com
In November, the most recent month for which the Greater Chattanooga Realtors multiple listing service has data, the median home sold for $215,000, up 13.2% from a year earlier. But that was still well below the U.S. median sales price of $271,300 in the same month, according to the National Association of Realtors.
Among Tennessee's biggest cities, Memphis is the most affordable city for home buyers and Realtor.com ranked Memphis No. 10 among the top 100 markets for overall sales and price gains in 2020.
"In years to come, the big draw to the top 10 markets will continue to lie in their absolute levels of affordability, even more so than in years past," Vivas said in his forecast for 2020. "Despite recent price acceleration, both asking and closing prices still sit at attractive levels and below U.S average (in the top 10 ranked markets), thus allowing for extra room to grow."
Despite the Realtor.com projection of a slight dip in home sales nationwide in 2020, most housing economists are not expecting a recession this year.
"The U.S. is in need of more new housing," said Lawrence Yun, chief economist at the National Association of Realtors. "Historically, anytime that we have needed to build, there was never a recession. This is an incentive for builders to start more construction. If they do, I think we will have at least 12 consecutive years of economic expansion."
Realtor.com is a real estate listings website operated by the News Corporation subsidiary Move, Inc. and based in Santa Clara, California.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.