Are You Prepared for Tennessee's 2021 Real Estate Market?
When COVID-19 hit the scene, economists weren’t sure what to think. After all, economies can be fickle, complex beasts, but the Tennessee real estate industry has remained strong — and that’s great news for this year. In 2021, markets across the Volunteer State are forecasted to continue their upward trend. With demand steadily increasing, low-interest rates motivating buyers, and rapidly rising home sale prices, real estate agents all across Tennessee should gear up for a year that could be as hot as Nashville hot chicken.
2021 Tennessee Real Estate Outlook: Heating Up
In December 2020, the average home in Tennessee was valued at $203,134, an 8.7% increase year-over-year. That figure is expected to increase as Zillow predicts the market will accelerate and rise another 10.3% within the next year. Surging prices, despite 2020’s challenges, are a promising sign that 2021 could be profitable for agents and sellers alike.
Additionally, home sales across the Nashville metro grew 17.0% year-over-year in November 2020. The number of days properties spent on the market also fell to 40 days during that same period. Thanks to interest rates that are the lowest in history, which have even fallen a point lower than last year, and continued strong demand, Tennessee will likely err on the side of the seller as 2021 unfolds.
Rent prices, on the other hand, have jumped 5.8% year-over-year statewide but still remain 16.7% less than the national average. Meanwhile, a total of 7.3% of Tennessee mortgages were reported as delinquent, just slightly below the national average of 7.7%. So, while new transactions continue to boom and mild weather draws more and more people to Tennessee, current homeowners will thrive as well.
2020 Tennessee Real Estate Market Data
|Zillow Home Value Index||$203,134|
|1-Year Change on Home Values||+8.7%|
|1-Year Change on Rent Prices||+5.8%|
|Homes With Negative Equity||2.9%|
|Delinquent on Mortgages||7.3%|
|Buyer’s or Seller’s Market||Seller’s|
Market Insights for Tennessee
In November 2020, the Bureau of Labor Statistics reported that Tennessee's unemployment rate was 5.3%, down from 9.7% in July. As it sits, Tennessee is comfortably below the national unemployment rate of 6.9%, and that’s likely to improve as the tourism and hospitality industries return to normalcy. Economic activity often correlates with growth in the real estate industry, and narrowing unemployment rates along with low-interest rates are a positive sign for agents the year ahead. Since 2018, Tennessee has attracted some major employers including Amazon and AllianceBernstein to the area. In total, Tennessee is home to 18 of the country’s largest companies.
Tennessee also sports other very attractive features that could positively impact its market. The Volunteer State, as it turns out, is a hot spot for those with new work-remote positions looking to escape the high taxes, hustle and bustle, and harsh winters of large northeastern cities. Notably, more New Yorkers are eyeing Nashville so expect inventory to remain low, higher sale prices, and bidding wars. Tennessee real estate, while still a great investment that affords homeowners a high quality of life, will play out to be a strong seller’s market in 2021.
With a robust 2021 economic forecast for Tennessee, local real estate agents will need to be at the top of their game and prepare clients for the likelihood of bidding wars. However, these out-of-state buyers are looking to make Tennessee their permanent residence and are thus likely willing to pay more, which could push the market to new heights. With a myriad of opportunities on the horizon, there has never been a better time to help your fellow Tennesseans sell their current digs and find the property of their dreams.
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