The Sun Belt region has been seeing a lot of movement, not just population-wise but economics-wise, as well – and Tennessee is one of the states benefiting from this trend. With its wonderful warm climate, business-friendly environment, market diversity, unique tourist draws, and relative affordability of real estate here, the Volunteer State is a brewing pot of opportunity just waiting to be sipped by wise investors.
Find out the merits of doing business, particularly in real estate, in this colorful and vibrant state – where Elvis, country music, and rock ‘n’ roll live forever.
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TENNESSEE REAL ESTATE MARKET
Tennessee’s real estate market is showing remarkable resilience and potential, making it an exciting area for investors and home buyers alike. Here’s a snapshot of what’s happening in the Volunteer State.
Market Overview
Over the past five years, values in Tennessee’s real estate market have surged by an impressive 63.3%, essentially bucking lackluster national trends brought about by climbing inflation and mortgage rates. Although home sales dipped slightly by 1.6% in January 2024 compared to the previous year, this minor hiccup is overshadowed by the overall strength of the market.
Nashville, one of Tennessee’s key cities, has been seeing properties sold at a median price of $479,000 in June, a step up from the previous month’s $457,950 and last year’s $430,625. While this is already higher than the national median, properties for sale in Tennessee are still more affordable than those in major urban centers like Los Angeles and Chicago. That’s why it comes as no surprise that migration is shifting from these said urban centers to cities in emerging states like Tennessee. And with the rise in population comes the promise of a better economic atmosphere and a stronger demand for housing. This is where the real estate investment opportunities come in.
Notable Investment Properties
The beauty of Tennessee’s real estate investment landscape lies in its diversity: each key city has something unique to bring to the table due to its respective offerings.
- Multi-family housing remains a strong investment category in Tennessee, driven by the state’s growing population and the steady influx of new residents. Nashville and Memphis lead the way, with high demand for rental properties in both cities.
- Tennessee’s hospitality sector, for its part, has taken flight anew with the resurgence of tourist arrivals to the Volunteer State. New hotels and boutique accommodations have been springing up in Nashville to cater to the growing number of visitors. Investors will find profitable Tennessee real estate opportunities in both established tourist areas and emerging neighborhoods that offer unique experiences for travelers.
- Industrial properties in Tennessee offer robust investment opportunities, driven by the state’s thriving manufacturing and logistics sectors. Cities like Chattanooga and Knoxville are seeing increased demand for industrial spaces, fueled by the growth of e-commerce and manufacturing activities. Chattanooga, in particular, has become a prime destination for distribution centers and manufacturing plants. Meanwhile, industrial parks and logistics hubs are expanding in Knoxville, driven by companies looking to establish a presence in the region.
- Even with e-commerce rendering the brick-and-mortar store obsolete, Tennessee’s retail sector managed to evolve with mixed-use developments and experiential retail spaces gaining popularity. Nashville’s retail market is particularly vibrant, with high-foot-traffic areas like the Gulch and Downtown Nashville attracting significant investment.
Investment Outlook
Looking ahead, Tennessee’s real estate market is poised for continued growth and prosperity. Strong economic fundamentals, coupled with strategic infrastructure investments and population growth, create a fertile ground for real estate investing in Tennessee. Whether it’s the bustling urban centers of Nashville and Memphis or the serene landscapes of Knoxville and Chattanooga, Tennessee offers a diverse array of investment opportunities that cater to different investor profiles and strategies.
6 REASONS TO INVEST IN TENNESSEE’S REAL ESTATE MARKET
If you’re looking for compelling reasons to go investing in real estate in Tennessee, here are six of them.
- Affordability Tennessee offers a more affordable entry point into the real estate market compared to many other states. The median home prices in its major cities are lower than those of many prominent urban centers. This affordability makes it an attractive option for both first-time buyers and seasoned investors looking to expand their portfolios.
Beyond home values, the cost of living in Tennessee is generally lower than in many other parts of the country and yet, the quality of life here is exemplary. For investors, lower property taxes and insurance rates further sweeten the deal, making Tennessee an economically sound choice for real estate investment. - Potential for value appreciation The Tennessee real estate market has demonstrated impressive growth, with home values increasing by 63.3% over the past five years. The rising population fuels the demand for housing, ensuring that property values are likely to keep rising. This means that properties purchased today are poised to appreciate significantly in the coming years. For those investing in real estate in Tennessee, now is the best time to enter the market for long-term returns and further growth in the state’s economy.
- Tourism appeal Tennessee is a major tourist destination, home to attractions like the Great Smoky Mountains, Graceland, and vibrant music scenes in Nashville and Memphis. Real estate investors will find investing in short-term rentals a lucrative option, particularly in tourist-heavy areas.The tourism industry is also contributing to a resurgence in the hospitality industry which was temporarily shuttered during the pandemic. Apart from hotels seeing increased bookings, retail and food spots are also benefiting from the visiting crowds. All these translate to more revenues for the state, an improved quality of life for its residents, and an engaging economic climate that attracts more investors.
- No state income tax One of the standout benefits of investing in Tennessee is the absence of state income tax. This translates to substantial savings for investors and homeowners alike. By keeping more of your earnings, you maximize your investment returns. This, in turn, compels you to reinvest those savings into additional properties for sale in Tennessee or other ventures.
- Quality of life Tennessee is renowned for its high quality of life. With its rich cultural heritage, lively music scene, and beautiful natural landscapes, the state offers a welcoming environment for residents and visitors. Cities like Nashville and Memphis are known for their vibrant communities and abundant amenities, making Tennessee a desirable place to live and invest.The state’s appeal extends beyond its urban centers. Tennessee boasts stunning natural attractions such as the Great Smoky Mountains, numerous lakes, and scenic rivers, providing ample opportunities for outdoor recreation. The mild climate, friendly communities, and a lower crime rate contribute to an overall high quality of life. This desirable living environment attracts new residents, ensuring a steady demand for housing and continuously increasing home values.
- Proximity to major areas Tennessee’s central location provides convenient access to major cities and economic hubs across the Southeast. Whether you’re looking at investment properties in Tennessee, in Nashville, Memphis, or smaller towns, Tennessee’s strategic position makes it an ideal base for reaching a broad market. Its well-connected transportation network further enhances its attractiveness for real estate investments.The state is served by several major highways, railroads, and airports, facilitating easy travel and commerce. This connectivity not only supports local businesses but also attracts companies looking for a strategic location with logistical advantages. For real estate investors, this means a more dynamic and accessible market, with properties that appeal to both residents and businesses seeking proximity to key regional markets.
BEST PLACES TO INVEST IN TENNESSEE
Tennessee offers a variety of vibrant cities and towns that present excellent opportunities for Tennessee real estate investment. Here are some of the best places to consider:
Nashville
WHY IT’S SPECIAL
A 2023 survey on US investor intentions by global commercial real estate investment firm CBRE ranked Nashville, TN as #5 among the top 10 high-performing markets preferred by investors. Fondly known as “Music City,” Nashville is the heartbeat of country music, drawing millions of tourists each year. Beyond its musical allure, Nashville is experiencing a population boom and a robust job market, making it an ideal spot for real estate investments. The city’s unemployment rate is consistently below the national average, supported by a diverse economy that spans the healthcare, education, technology, and entertainment sectors.
THE MARKET
With many companies declaring the return of their respective employees to the physical office, the office market has been on an upswing in Nashville, particularly in the downtown area and the Gulch. The rise of e-commerce and the state’s strategic location for logistics have also resulted in a thriving industrial real estate market in the city. Nashville’s retail sector saw challenges with the advent of e-commerce but, thanks to its remarkable tourism industry bolstered by its musical background, it is making a strong comeback. But Nashville’s strongest performers remain to be multi-family rentals and the hospitality market, with ongoing apartment constructions and more to come plus the return of tourists post-pandemic fueling their growth. The impressive growth in the state’s healthcare industry also translates to high demand for medical office buildings and healthcare facilities in Nashville.
Memphis
WHY IT’S SPECIAL
Memphis, located along the mighty Mississippi River, is renowned for its rich cultural history and vibrant music scene. It’s also the home of blues and birthplace of rock ‘n’ roll, thanks in part to its adopted son: the rock ‘n’ roll legend himself, Elvis Presley. The city’s economy is robust and diverse, with significant contributions from the transportation, healthcare, and manufacturing sectors. This economic diversity provides a solid foundation for real estate investments.
THE MARKET
Memphis’ rental market is strong, characterized by competitive rent prices that ensure a stable income stream for property owners. Additionally, Memphis has grown to become a logistics hub, with FedEx at the forefront of operations. This, as well as its ongoing urban revitalization projects, continues to enhance its appeal, particularly among investors.
Chattanooga
WHY IT’S SPECIAL
Chattanooga is experiencing significant population growth, which is fueling its local economy and increasing the demand for housing. The city’s strategic location along the Tennessee River and its robust transportation infrastructure make it an attractive place for businesses and residents alike.
THE MARKET
Chattanooga offers a wide range of investment opportunities, especially in the industrial and multi-family housing sectors. E-commerce and its impressive network of roads and bridges connecting areas separated by the Tennessee River make it a strong location for logistics and distribution centers. Additionally, Chattanooga’s emphasis on sustainability and innovation, exemplified by its gigabit internet infrastructure, further enhances its attractiveness to tech-savvy professionals and businesses, driving up housing demand and property values.
Johnson City
WHY IT’S SPECIAL
Johnson City, home to some of Tennessee’s fastest-growing universities, boasts a strong job market and a steady influx of new residents. The presence of institutions like the East Tennessee State University contributes to a dynamic and youthful population, fostering a vibrant local economy.
THE MARKET
The demand for housing in Johnson City has led to rising property values, presenting excellent long-term appreciation potential for investors. The rental market is robust, with competitive median rents providing a stable income opportunity. A variety of property types, including student housing, single-family homes, and multi-unit residential buildings, presents opportunities for profit and passive income. The city’s affordable housing market, coupled with its expanding economy and high quality of life, makes Johnson City a compelling choice for real estate investments. The ongoing development projects and infrastructure improvements further boost its investment appeal.
Knoxville
WHY IT’S SPECIAL
Knoxville, nestled near the Appalachian Mountains and along the Tennessee River, offers stunning natural beauty and a wealth of outdoor recreational activities. The city’s economy is driven by a diverse range of industries, including manufacturing, education, and technology, which contribute to its stability and growth.
THE MARKET
Knoxville’s key centers of growth are found in its retail, hospitality, office, and industrial sectors. New shopping developments are popping up in the city, its stunning nature attractions and cultural festivities are driving tourist arrivals up and fueling the hospitality industry, the emergence of startups in tech and professional services is resulting in stronger demand for office spaces, and its location along vital transportation routes make it a promising venue for industrial investments. Add to all of these the ongoing revitalization efforts in the downtown area and surrounding neighborhoods and you have a city ripe for aggressive real estate investment.
MAKE THE RIGHT REAL ESTATE INVESTMENT DECISIONS WITH THE LCT TEAM
If you’re ready to take the next step in your real estate investing journey in Tennessee, let us – the LCT Team – help you. Led by top-notch Tennessee Realtor Lisa Culp Taylor, we are committed to providing the very best experience for our clients. We offer in-depth market analysis, personal evaluations, and cutting-edge marketing strategies to make the buying and selling process as smooth and enjoyable as possible.
Whether you’re interested in residential resale, new construction, lot sales, or development, we have the expertise to help you navigate the fast-paced and competitive Tennessee real estate market.
Allow us to guide you to the most lucrative real estate investment opportunities in the Volunteer State. Contact us at 615.595.5883 or via email.