Chattanooga Housing Market: Will It Crash Anytime Soon?

I was chatting with a neighbor recently, and he mentioned that his son was eager to buy his first home but was holding off, waiting for the Chattanooga housing market to crash. He asked if I could predict when that might happen. This question made me wonder how many others are thinking the same thing as we watch home prices continue to rise. While I don’t have a crystal ball, I can offer an informed perspective using reliable statistics.

To start, it's important to understand the indicators that typically cause housing market crashes. Spoiler alert: it’s supply and demand. Historically, housing market crashes occur when demand suddenly drops or there is an oversupply of homes. This can be triggered by economic downturns or rising unemployment rates. For instance, a sudden drop in home buying demand can happen if many potential buyers lose their jobs during a recession. According to the U.S. Bureau of Labor Statistics, Chattanooga enjoys a stable unemployment rate outside of extraordinary events like a global pandemic. However, significant layoffs from a major local employer could impact this stability. And your guess is as good as mine there.

A decline in demand could also occur if Chattanooga suddenly loses its appeal as a desirable relocation spot. Yet, given our frequent appearances in national "Best Places to Live" lists, it's unlikely that demand for housing here will wane anytime soon.

Another factor leading to a housing market crash is an oversupply of new properties. Although our inventory has increased compared to last year, we currently have just 2.1 months of inventory available. While this is a positive trend for buyers, it suggests that it could take up to two years to reach an oversupply situation, if at all.

Given these factors, I advised my neighbor to be careful waiting for a market crash before buying. Delaying too long might mean purchasing at even higher prices than today. If you're considering buying a home in Chattanooga, it's essential to stay informed and act based on current market conditions rather than waiting for an unpredictable crash.