Tennessee's housing costs soar as demand outstrips supply
- Tennessee's population increased significantly from 2010 to 2024, with many new residents coming from states with higher incomes.
- A report highlights a substantial rise in housing costs, particularly in middle Tennessee, where prices increased by 5.9% from 2019 to 2023.
- The growing housing affordability crisis was evidenced by more than a quarter of households being cost-burdened as of 2023.
In Tennessee, the population saw a significant increase, growing by 541,000 between 2010 and 2020, followed by an additional 315,000 from 2020 to 2024. Much of this influx came from residents moving from other states with higher median incomes and home prices. The surge in new residents has put a strain on the housing market, leading to rising prices across the state. Between 2019 and 2023, housing prices in middle Tennessee rose by 5.9%, highlighting this trend. The report indicates that the increase in housing costs was not confined to larger counties; areas around Davidson County, which is home to Nashville, experienced population and wealth shifts following the departure of some residents. Many of those relocating to neighboring counties possessed higher average incomes than those moving out, resulting in a regional dispersal of both population and wealth. Davidson County recorded the highest percentage of cost-burdened residents at 33%, while Johnson County had the lowest at 14%. One significant contributor to the rising housing costs is the mismatch between supply and demand. Tennessee's housing supply has failed to keep pace with the growing population. The report noted that a healthy housing market typically maintains a six months' supply of homes; however, in 2021, the inventory reached a low of 1.7 months. This imbalance indicated that the number of interested homebuyers was strikingly similar to the number of homes available for sale, creating a competitive environment that pushes prices up. Despite an increase in housing production following a decline that bottomed out in 2011, the numbers indicate that the situation remains challenging. As of 2023, over a quarter of households in Tennessee were labeled cost-burdened, meaning they paid more than 30% of their income on housing. This burgeoning issue calls for a closer examination of the policies and developments that can help bridge the gap between housing supply and affordability in the state.