Chattanooga neighborhood reflecting the stabilization in housing trends.
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.
The Chattanooga housing market is gradually shifting away from the rapid, often unpredictable growth seen in recent years, bringing signs of a more balanced and stable real estate environment. After experiencing an unprecedented surge during the COVID-19 pandemic, the market now appears to be heading toward a more typical, steadier state.
In an illustrative case, local residents Sharon and Pete Butler sold their Hixson home in just eight days, a remarkably quick sale that contrasts sharply with the average market timeframe. Currently, the typical home in Chattanooga is listed for around 43 days before finding a buyer. This indicates a significant slowdown from the peak times, when homes often sold within days or even hours.
Data comparing recent years shows a clear trend: homes spent an average of 43 days on the market in 2020, which decreased to roughly 20 days in 2022, reflecting a blistering seller’s market fueled by low-interest rates and rushing demand. By 2024, the average days on the market returned to approximately 43 days, signaling a stabilization in housing activity.
Real estate professionals suggest that the market is shifting from a seller’s market—characterized by multiple offers and bidding wars—toward a more balanced state. Currently, there are approximately 3.7 months of inventory on the market, which is below the six months generally needed to define a buyer’s market. This indicates that supply has increased relative to demand, giving buyers more options and reducing the fierce competition seen in previous years.
Experts attribute the earlier heightened activity to a combination of factors. During the COVID-19 pandemic, historically low interest rates and a migration of residents to Tennessee created a highly competitive environment. First-time home buyers faced intense competition, often participating in crowded open houses, making multiple offers, and waiving typical contingencies like inspections and appraisals to secure properties.
As market dynamics evolve, there has been a noticeable increase in seller concessions, where sellers provide additional incentives to attract buyers. This shift is part of a broader stabilization process as the market moves toward a more normalized state.
The average sale price of homes in Chattanooga has seen a steady increase, rising from $367,491 in 2023 to $390,133 in 2024. Meanwhile, median sale prices increased from $315,000 in 2023 to $330,000 in 2024. Some neighborhoods, such as North Shore and Signal Mountain, continue to sell quickly due to their desirability, while properties in overbuilt areas like Ooltewah are taking longer to sell.
Despite recent fluctuations, the local market remains resilient and less volatile compared to national trends. The market is described as resembling a pendulum swing, oscillating between extremes that characterized recent years’ seller-dominated conditions. Local real estate professionals note that upcoming changes are unlikely without significant interest rate cuts but emphasize ongoing opportunities for buyers given the increased inventory and more balanced conditions.
Chattanooga’s housing affordability and quality of life continue to attract residents. Entry-level salaries for police officers and firefighters are listed at $45,000 and $43,000 respectively, with the city council proposing measures to improve retention of first responders through salary increases and property tax reductions. The city is considering lowering property taxes from $2.25 to $1.99 per $100 of assessed value, representing one of the largest reductions in recent years.
Tennessee’s overall tax environment, marked by no state income tax and a lower cost of living, also contributes to the city’s attractiveness. Chattanooga’s climate, outdoor activities, and community events further bolster its appeal as a desirable place to live.
In summary, the Chattanooga housing market, which experienced extraordinary growth over the past few years, is now showing signs of stabilization. The increase in days on market, rising inventory, and evolving buyer-seller dynamics signal a return toward typical market behavior. While pricing continues to gradually climb, the market’s overall trajectory suggests increased opportunities for buyers and a shift toward long-term stability in the local real estate landscape.
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