The COVID-19 pandemic that has kept more Chattanoogans in their homes over the past year has also increased the cost of where they live.
Chattanooga residential rental rates have increased almost twice as fast as the national average in the past year, according to a new apartment rental study by the online real estate site Zumper.
The average rent for a one-bedroom apartment in Chattanooga has increased 10% over the past year to reach $ 1,100 per month, while that for a typical two-bedroom apartment in Chattanooga has increased by an average of 12.7% to hit $ 1,150 per month, Zumper said.
Although rental rates in Chattanooga remained slightly below the average for the top 100 US cities, local rent increases exceeded the national increase, which ranged from 4.9% for a one-bedroom unit to 6.5. % for two-bedroom accommodation.
âPeople find Chattanooga a place to live and we get a lot of people to move here, happily or unfortunately depending on your perspective,â said Robert Backer, president of the Greater Chattanooga Association of Realtors and owner of several duplex residences. rented. âThere has also been tremendous interest among investors to buy into our rental market, often at prices much higher than those paid by previous owners, and this has also tended to drive up rental rates. “
Over the past five years, out-of-state investors have collectively spent more than $ 500 million to purchase apartments and other rental units in Chattanooga, including a purchase of $ 63.1 million. Blue Bird apartments last year and a $ 57.2 million acquisition of Integra Vistas in Hixson earlier this month. Also this month, a Knoxville real estate company bought the Riverview Grande Apartments in North Chattanooga for $ 41.7 million, $ 10.7 million more than the property sold just two years ago.
In many cases, like the $ 9.1 million purchase of the Rainbow Creek Apartments on Standifer Gap Road in late 2019, new owners are sprucing up properties and increasing rental rates or even abandoning their affordable leases under section 8 with their tenants.
Murat Arik, director of the Business and Economic Research Center at Middle Tennessee State University, which tracks the state’s housing industry, said Tennessee attracted more residents to the state during the pandemic and the number Housing units has not always kept pace with the growing population, especially in rapidly growing urban areas.
âThe housing industry has been the engine of growth in Tennessee, particularly during the pandemic,â Dr. Arik said. âWe have an influx of people from places like California, New York and other states where housing costs are often higher and where they are used to paying higher rents. This has tended to drive up. rental rates in Nashville, Memphis, Knoxville and Chattanooga where we tend to see more growth. “
In a new housing analysis prepared for the Tennessee Housing Development Authority, Arik said rental housing has fallen to some of the lowest levels in recent years across the state, although vacancy rates vary by local markets and real estate sites. According to the MTSU study, the overall vacancy rate of 6.4% in Tennessee was lower than the US vacancy rate of 6.8% in the first quarter.
The inventory of homes for sale on the market also fell to all-time lows this spring as sales continued to grow with fewer homes for sale on the market. Last month, the typical home listed on the real estate agent’s multiple listing service in Chattanooga sold in just 22 days – half the time it took to sell a home a year earlier and less than half the time it took to sell a home a year earlier. ‘a quarter of the time it took to sell a house a few years ago.
The number of homes on the market in May stood at 934, down 58.4% from a year ago. Despite the more limited listings, the number of home sales closed last month increased 26.4% from the previous year to 1,059.
With leaner inventory and higher demand, the median price of homes Chattanooga Realtors sold in May jumped 17.6% from a year ago to a record high of $ 260,000.
The higher price of home purchases has prompted more people to rent homes and this, in turn, has helped drive up rental rates, Backer said.
Nationally, after a year of stagnant growth, “rents are rising significantly,” said Jeff Andrews, Zumper data analyst.
âRents nationwide are showing amazing growth over last year,â he said. âWhen the pandemic struck in March 2020, it sparked an unexpected explosion in migration that made local housing markets hyper-competitive and led to unprecedented growth in home price appreciation.
Chattanooga last month ranked as the 51st most expensive rental market in the country among the top 100 US cities.
Chattanooga rents are still only about 40% of rents billed in San Francisco, the most expensive US city in Zumper Stud, and on average less than in Atlanta or Nashville. But Chattanooga’s rental rates were on average higher than those in other southern markets like Knoxville, Memphis and Louisville.
Contact Dave Flessner at [email protected] or 423-757-6340