A city in southeastern Tennessee is drawing in homebuyers.
That city is Chattanooga and, according to The Agency Chattanooga Managing Partner Becky Cope English, its real estate market is gradually getting hotter.
Chattanooga sits not far from the Tennessee-Georgia border and is home to some 187,000 residents, per the U.S. Census Bureau.
There were over 10,300 home sales closed in the area in 2024, according to Greater Chattanooga Realtors.
English noted Chattanooga saw a “little bit of a dip” last year but added that the market was “right in line with what I would call a more normal market” after previous years during COVID being “so much greater than the others.”
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She attributed that to the impact of interest rates on buyers. The rate for 30-year fixed mortgages averaged 6.9% in 2024, according to Bankrate.
“I feel like the election is behind us. I believe that consumer confidence is increasing,” English told FOX Business. “This is not meant to be a political statement at all, but when we have businesses and with less regulation, we tend to have an uptick in confidence. Businesses tend to start becoming more profitable, they’re doing more business so to speak and they’re hiring, and with hiring, you have more people moving from one job to the next. So I do think that we expect 2025 and 2026 to be strong years, especially in our market, but that’s probably going to affect the rest of the country as well.”
The Agency Chattanooga expects the area to see “some of our best years” in 2025 and especially 2026, according to English.
There is a lot of interest in Chattanooga and Tennessee overall thanks to multiple factors, she said.
“From the standpoint of where we are climate-wise, we have the seasons. We’ve got the scenery where we can get to the Gulf in six, six-and-a-half hours … and that makes us a very popular destination as well, not to mention close to Atlanta, Nashville, Knoxville and Asheville, North Carolina,” English told FOX Business.
Chattanooga and the state of Tennessee have “worked very hard to be the state where industry and businesses and entrepreneurs want to live and work and play,” according to The Agency Chattanooga managing partner.
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The state has “done very well to make this very tax-friendly,” she said, noting Tennessee “only has sales tax.” It does not levy a state income tax on residents.
The lower cost-of-living in comparison to other parts of the country has played a role – and so has the lifestyle the city provides, according to English.
“It is southern hospitality, and we are the Scenic City, and it is beautiful,” she said. “We have rivers, lakes, creeks and streams. We have the mountain, we’re on the southern part of the Cumberland Plateau, so we are just a naturally beautiful and blessed area because of our topography, so that means outdoor recreation.”
Chattanooga offers rock climbing, biking, hiking, white-water rafting and a slew of other outdoor activities, according to Visit Chattanooga.
The city also holds free musical festivals called “Block Parties” weekly between Memorial Day and Labor Day, English said, adding that Chattanooga is “just brimming with things to do.”
Chattanooga currently has about 2,800 residential properties on the market. Inventory in the area has “slowly, steadily increasing every single month” and is “getting back to what I would call normal inventory,” English said.
Homes sold in the Chattanooga area sold for $330,000 on average in January, according to the Greater Chattanooga Realtors. English projected that would go up 2-3% throughout the year.
In January, Chattanooga had nearly 560 closed sales and almost 790 pending sales.
Chattanooga’s real estate market has “always been strong and steady,” averaging an increase of 3% per year, according to English.
Looking ahead, she forecasted that the area was “looking at about a 3% increase” in 2025, with expectations that it will be stronger than that in the following year.
“Perhaps that’s because interest rates will have come down a bit more,” she said. “I think inflation will be, hopefully, a little more under control, and the consumer confidence will increase.”
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Mortgage rates will hit 6.5% by the end of 2025, the Fannie Mae Economic and Strategic Research Group predicted late January. By the end of 2026, they could be 6.3%.
Confidence is what has been holding the market back but “if everybody starts to take the steps in the right direction of ‘we feel confident and we’re going to get back into the market,’ we will all see a lot of things happen that are going to be positive,” according to English. That, she said, will cause “a lot of things to happen that are going to be very positive and that also will help what we all wrestle with, which is affordability.”
