Chattanooga Housing Market Shows Signs of Stability

News Summary

The Chattanooga housing market is shifting towards stability after two years of rapid growth. Recent trends show an increase in housing inventory and more predictable sales times. Sellers are adjusting negotiations as the market cools, with average home prices rising despite the return to pre-pandemic conditions. Local economic factors and favorable tax policies contribute to this evolving landscape, offering opportunities for buyers in a more balanced market.

Chattanooga Housing Market Shows Signs of Returning to Normal After Rapid Growth

The Chattanooga housing market is beginning to stabilize after experiencing an unprecedented surge over the past two years. Following a period marked by rapid sales and competitive bidding, the market is shifting toward a more balanced and predictable environment, with average times on the market returning to pre-pandemic levels.

Rapid Sales and Market Dynamics

A notable example illustrating recent changes involves Sharon and Pete Butler, long-time residents of their Hixson home, which was in Sharon’s family for 70 years. The couple planned to stay in their home for life but decided to relocate to Ooltewah at their daughter’s urging. Their decision led to their home being listed and sold within just eight days—an unusually quick sale compared to the current regional average of 43 days.

During the heights of the pandemic housing boom, homes across the Chattanooga area sold much faster, with the average days on market decreasing from 43 days in 2020 to just 20 days in 2022. Recently, that figure has returned to approximately 43 days in 2024, signaling a cooling in market activity.

Market Transition and Inventory Levels

Real estate professionals suggest that the market is transitioning from a seller’s market—characterized by high demand and quick sales—to a more normal state. A key indicator of this change is the current inventory of approximately 3.7 months on the market, compared to the six months needed to define a buyer’s market.

In a seller’s market, properties often sell within days, with multiple buyers competing for the same home. During the pandemic, many first-time buyers participated in crowded open houses, escalating to bidding wars, sometimes with offers exceeding asking prices and waiving inspections or appraisals to secure a property. However, recent trends show a decline in such behaviors as the market stabilizes.

Price Trends and Property Preferences

The average sale prices in the Chattanooga region have steadily increased over the past year. The average sale price rose from $367,491 in 2023 to $390,133 in 2024, and the median sale price increased from $315,000 to $330,000 during the same period.

Additionally, certain neighborhoods such as Chattanooga’s North Shore and Signal Mountain are selling quickly due to their desirability, whereas areas like Ooltewah, which were heavily built out during the boom, tend to have properties lingering on the market longer.

Market Outlook and Regional Factors

Market analysts liken the local housing market to a pendulum swinging between extremes, with recent conditions reflecting an adjustment from overheated seller conditions to a more balanced state. Although the market’s recent trend is cooling, it does not always follow national patterns, which have shown varied recovery trajectories.

There is currently no expectation of significant market shifts within the next year unless interest rates are notably reduced. This stability makes Chattanooga’s housing market comparatively more predictable than markets in high-cost regions such as California.

Economic and Community Developments

Beyond real estate, Chattanooga’s economy and community infrastructure support the housing market’s stability. Starting salaries for first responders like police officers and firefighters are approximately $45,000 and $43,000 respectively, prompting local government efforts to retain personnel through salary increases and tax reductions.

The city council has proposed a supplemental budget aimed at raising salaries and cutting property tax rates, which may decrease property taxes from $2.25 to $1.99 per $100 of assessed value—the largest reduction in decades. Tennessee’s overall tax-friendly environment, including no state income tax and a lower cost of living, further enhances the city’s appeal.

Living in Chattanooga

The city’s attractions include a pleasant climate, abundant outdoor recreation opportunities, and a vibrant community at events and in neighborhoods. These qualities continue to draw residents and investors alike, supporting long-term stability in the real estate market.

Overall, Chattanooga’s housing market is demonstrating signs of return to typical activity levels, offering more opportunities for buyers and a calmer environment for sellers. Market watchers anticipate continued gradual changes over the coming year unless external economic factors change significantly.

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Additional Resources

• Times Free Press: Chattanooga Real Estate Sales Normalizing
• Nooga Today: Homes with Fireplaces in Chattanooga
• Citizen Tribune: How Much House $1 Million Buys You in Chattanooga
• Fox Business: Chattanooga Housing Market Heats Up
• Norada Real Estate: Chattanooga Real Estate Market
• Wikipedia: Real Estate in the United States
• Google Search: Chattanooga Real Estate
• Google Scholar: Chattanooga Real Estate Market
• Encyclopedia Britannica: Real Estate
• Google News: Chattanooga Housing Market