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Is Knoxville, Tennessee Still Affordable?

Eric Whitener

Eric is the drummer of our band...

Eric is the drummer of our band...

Sep 11 4 minutes read

Are you thinking of living in Knoxville, Tennessee, but wonder if it’s still affordable? In this video, we’re going to look at the numbers to see if Knoxville still has what it takes to be considered affordable. We’ll explore everything from home and rent prices to food costs so you know exactly what to expect.

Housing Costs

The Federal Housing and Finance Agency ranked Knoxville 13 out of the top 100 for home price growth in the second quarter of 2022. With 25% year-over-year growth and home prices, a lot of people are asking the question: is Knoxville still affordable?

Back around this time in 2019, the median sales price for a home in the greater Knoxville area was around $212,000—which was a pretty nice buy for buyers. Now, though, we're looking at a median sales price of $325,000. A typical home here includes three bedrooms, two baths, and about 1,800 square feet. While this new price is really attractive for sellers, it may not be for buyers.

The Rental Market

Let's look at the rental market, as you're either going to buy a place or you're going to rent an apartment. Effective rents are up nearly 30% from pre-pandemic levels. Per Rent Cafe, Knoxville’s average rent is $1,504 for an average size apartment of 973 square feet.

This is actually a deal compared to the 55 square foot apartment with a shared bathroom in New York going for $1,400 a month. At the end of the day, though, good luck finding one: Knoxville’s rental market is on fire. We have an occupancy rate of about 98%, which is well above the healthy market standard of 94 -95%.

Beating The Competition

The bottom line is that, just like everything else, housing in the Knoxville area is more expensive than it used to be. Compared to other metros and the national averages, though, Knoxville is still an affordable place to live. Here's why.

Realpage.com ranked Knoxville #2 out of the top five markets with the lowest rent-to-income ratios, coming in at about 19.6%. That means that the income of the average renter actually went up more than rent amounts. Not too surprising, four out of the top five markets with the highest rent-to-income ratios are all in California, running from 23.8% to 26%.

According to FRED, the US national median sales price is approximately $440,000 for the second quarter of 2022. Additionally, Redfin shows that Nashville, the fastest growing metro area in Tennessee, has a median price of over $455,000. When you compare those numbers to Knoxville, a median sales price of $325,000 sounds pretty darn affordable.

The Cost Of Living

Housing prices are only one aspect of the equation, as affordability is made up of a lot of other things. Let’s face it: you spend money on other things than just housing. Looking back over at Rentcafe.com, they show the cost of living in Knoxville to be 8% lower than the state average and 17% lower than the national average.

When you break it down, our monthly utilities are 4% lower, food is 12% lower, health care is 8% lower, transportation is 17% lower, and goods and services are 14% lower. We’re affordable in many aspects and, when you add that with the fact that we have no state income tax, it’s not surprising Kiplinger.com ranked Knoxville #7 for the most affordable places to live.

Add all that up with other great things this area has to offer, like mountains, lakes, and great weather, and I personally think Knoxville is a bargain.

Make Knoxville Your Home

I hope this helped you see that Knoxville is still affordable, especially when compared with other areas. If you have any questions, feel free to reach out to me and I’ll be happy to connect.

Don’t forget to subscribe to my channel so you never miss an episode of our show, all about the East Tennessee market. Stay tuned to see what I feature next!

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