The peaks of home prices were higher than most people expected during the pandemic, and while recent increases in mortgage rates have helped those numbers dip back down, it still feels like a volatile time for those entering the real estate market.
Whether you’re hoping to buy a home at a more affordable price or you’re looking to sell, we’ve gone over the recent trends in pricing in the Tennessee housing market, as well as some tips for first time home sellers to help you understand how your home stacks up in the market.
Tennessee Housing Market
Housing prices have fluctuated wildly over the last year, creating a lack of stability for both potential sellers and buyers. While housing prices were alarmingly high during the pandemic, they dropped rapidly during 2022.
Nationally, homes in October 2022 are 2% less than in June 2022. Despite this decline, home values remain higher than they were the previous year. In Tenessee, housing prices are still nearly 12% higher than last year.
Despite this decline, Tennessee remains a seller’s market. If you were hoping to sell your home at the peak, you’ve likely already missed your chance, but as prices remain much higher than in previous years, it is still an excellent opportunity for sellers.
Real Estate in Tennessee
The median home price in Tennessee is $303,453, while the national median home price is $427,000. According to Zillow, more than 38,000 homes are for sale in Tennessee.
Farmland prices in Tennessee have increased more than 10% since 2018, far more than most other Appalachian states. The median cost for an acre of farmland in Tennessee is $4,700, while the median price across Appalachia was $4,620.
The median cost to build a new home in Tennessee (minus the land price) is $261,940 in 2022. The median cost to build a house in all states is roughly $300,000.
Average House Prices in Tennessee
Much like the average cost of living in TN, median home prices in Tennessee were lower than the national median in September. The median home price in Tennessee was $303,453 in September 2022. The average cost of a home in Tennesee is $200 per square foot.
Most homes close to large cities have much higher prices because of the convenience and opportunities they have to offer. For example, cash home buyers in Southaven may be looking for real estate in Nashville for more job opportunities, but these opportunities come with a hefty price tag.
Renters looking to become first-time home buyers will likely get better deals if they wait for interest rates to decrease and home prices to drop.
Nashville, Tennesee Housing Prices
Some of the most expensive homes in Tennesee are being sold in Nashville, the state’s largest city. The average home price in Nashville is $449,000. The most expensive home sold in Nashville in August 2022 was $50M.
As Nashville real estate remains more expensive than elsewhere in Tennessee, home buyers are looking for non-fixed mortgage rates to afford homes.
Memphis, Tennesee Housing Prices
The price of a home in Nashville sharply contrasts with home prices in Memphis, the state’s second-largest city. The median listing price for a home in Memphis is about $200,000, lower than the state median. The most expensive home sold in Memphis in August 2022 was just over $4M.
While most of the state is a seller’s market, Memphis is a buyer’s market. If you want to sell a house fast in Memphis, you should know that you will likely have a more difficult time than most people in other cities.
To get the best price possible for a home in Memphis, work with a professional seller and understand the market in which you’re operating. It does not match the market that most of the United States is experiencing.
Knoxville, Tennesee Housing Prices
Knoxville is Tennessee’s third largest city. The median sale price for a home in Knoxville was $319,000 in August 2022, just over the state median.
Like much of the country, Knoxville is a seller’s market, meaning homes will sell faster and for higher prices. The most expensive home sold in Knoxville in August 2022 was $8M.
Chattanooga, Tennesee Housing Prices
The median price for a home in Chattanooga for August 2022 was $329,900, higher than the state median. Chattanooga remains a seller’s market, so home buyers can expect to continue paying higher-than-average prices. The most expensive home sold in Chatanooga in August 2022 was more than $16M.
Murfreesboro, Tennesee Housing Prices
The median price of a home in Murfreesboro was closer to the national average than in most other metro areas of Tennessee. The median home value in Murfeesboro is $405,000, ranking much higher than the state median. The most expensive home sold in Murfreesboro in August 2022 was nearly $7M.
Franklin, Tennesee Housing Prices
Franklin, TN, is a wealthy suburb of Nashville. The median home price in Franklin is $875,000, more than twice the state median. The most expensive home sold in Franklin in August of 2022 was $36M.
The number of homes for sale in Franklin is low, contributing to the extremely high prices. According to Zillow records, in September 2022, only 216 homes were sold in Franklin.
Average House Sizes in Tennessee
Homes in rural areas are usually much larger than in urban areas. In Tennessee, about 30% of residents live in rural areas. Nationally, this number is closer to 14%. It should come as no surprise, then, that Tennessee has larger homes than the national median.
In the United States, the median home size is about 1,761 square feet. In Tennessee, the median home size is 1,848, the 14th largest in the country.
Average Costs to Sell a House in TN
The average cost to sell a home in Tennessee, like anywhere in the country, will vary greatly. The highest costs when selling a home are commissions (also referred to as brokerage fees), home repairs, closing costs, and utilities.
The average cost to sell a house in Tennessee is around 12%. If you’re selling your home around the current median price of $303,000, the cost will be around $36,000.
The brokerage fee for a seller is often 5% to 6%. On a $300,000 home, this adds up to about $18,000. The seller usually pays broker fees, not the buyer, though this may be negotiable in some extreme markets.
You will need to watch out for home repairs when selling. The seller usually pays these costs if the inspector comes up with any repairs. In some cases, this may mean installing a new roof or water heater, repairing drywall or foundation, or patching windows.
Determining the number of repairs that your home will need can be complicated. If you have an older home that you have not performed maintenance on, expect to pay a significant sum to get repairs before you sell.
If you have a new home or have done maintenance and repairs recently (such as installing a new roof or repairing a porch), you can expect your home repair costs to be much lower.
Minor repairs are often not worth fixing, as buyers will likely not mind repainting doors and walls or cleaning windows. Extensive repairs, however, often turn buyers off. Consider the cost of certain repairs and talk to a real estate agent about how much money you should put into non-essential maintenance.
The buyer of a home usually pays closing costs. In a buyer’s market, sellers are occasionally asked to pay some of the buyer’s closing costs. Regardless of the market, sellers are often in charge of HOA fees, taxes, and title insurance.
If you’re selling your home and are moving out before you sell, count on paying for utilities while the home is on the market. While the cost of utilities will likely be low, it’s best to keep the electricity on for agents and buyers touring your home.
Realtor Fees in Tennessee
The average real estate commission in the United States is 5.37%. The average in Tennessee is higher, at 5.44%. These fees are split evenly between the listing agent (seller’s agent) and the buyer’s agent.
While the average commission rate in Tennesee is 5.44%, the range of commission prices is 4.71%-6.17%, so it is possible for sellers to bring this price down.
Why do sellers pay the buyer’s commission fee in Tennesee?
Sellers paying the commission is the case across most of the United States. If sellers did not pay both commission fees, buying agents would more likely show their customers to other homes.
Even in a seller’s market, buyers do not pay the mission to realtors.
The Tennessee housing market has lower housing prices than most of the country, but many homes in cities tend to cost more. Despite being the second largest city in Tennesee, Memphis has lower home values than the state median.
Housing prices are dropping, so if you want to sell your house, now is the time to do so, especially in Memphis. We buy houses Tennessee owners are looking to sell, so don’t hesitate to contact us.