Knoxville won’t ever be ‘affordable’ again

Hide Caption Opinion columnist Hancen Sale on why Knoxville won't be affordable againGuest opinion columnist Hancen Sale said Knoxville will never return to being an affordable, hidden gem. But, he doesn't think it's a cause for panic.

• Home prices in Knoxville have risen faster than any other U.S. city since 2019, with values increasing by about 86%.
• The city's transition from a regional hub to a national destination has permanently shifted housing demand.
• Increasing the housing supply, rather than hoping for prices to fall, is the key to managing growth.

People ask me all the time: When will housing get back to normal? When will prices come down? When will Knoxville be affordable again?

Here’s the uncomfortable truth: It won’t.

The nostalgia is understandable. For generations, Knoxville offered something increasingly rare in America ‒ ordinary people like teachers, nurses and service workers could buy a home without a trust fund or generational wealth. A modest wage was enough for a decent apartment in a convenient location.

But that Knoxville is gone, and it isn’t coming back. Not because of greedy landlords. Not because of Californians. Not because developers build only luxury housing. Knoxville won’t be affordable again because the underlying conditions that made it affordable no longer exist.

The cost-of-living discount is gone

Before the pandemic, Knoxville’s housing market was the product of an economic equilibrium ‒ slow but steady population growth, abundant inexpensive land, and an economy defined less by rapid expansion than by its stability. Knoxville was affordable the way an undiscovered restaurant is affordable: because not enough people knew about it yet.

That moment has passed. Knoxville home prices have risen faster than any other city in the country, with the typical home increasing in value by roughly 86% ‒ about $190,000 ‒ since 2019. The rental market tells an even starker story: While the total number of rental units grew by 11% from 2014 to 2024, units priced under $1,000 fell by 38%, and units priced over $2,000 grew by 441%. Wages, meanwhile, grew only marginally and were undercut by the strongest bout of inflation since the 1980s.

Underlying all of this is a simple fact: Desirability is a one-way door. Knoxville, a once sleepy city now among the crown jewels of the fast-growing Sun Belt, has entered a larger competitive marketplace for households and capital ‒ one where people weigh housing costs, wages, taxes and quality of life across states. Housing markets are path dependent. When a city crosses the threshold from regional player to national destination, the demand curve permanently shifts ‒ and that shift isn’t cyclical. It’s structural. Cities don’t exit that marketplace unless something goes badly wrong.

Once that threshold is crossed, three things tend to happen. The buyer pool expands beyond the local labor market ‒ homes are no longer priced solely off local wages but off a national income distribution. Even if only a fraction of buyers are arriving from higher-cost metros, their bids reset comparable sales, appraisers use those comps, sellers anchor to them, and the new price floor sticks. Expectations then recalibrate: Homeowners become reluctant to sell below peak comparables, builders adjust to higher land values and construction costs, and lenders underwrite based on new norms. The entire ecosystem shifts upward.

Finally, supply constraints compound the problem. Nationally desirable cities often face geographic limits, regulatory barriers, infrastructure bottlenecks, or political resistance to density ‒ and when demand accelerates while supply lags, the resulting price escalation becomes embedded.

There is no bubble to burst

Some still hold out hope that the market will correct itself. But even if prices soften, that won’t restore affordability after years of rapid appreciation ‒ a 5% or 10% drop does not undo multiple years of compounding increases.

This reality has fueled a political temptation to treat growth itself as the villain ‒ to blame newcomers for changing the city. That impulse is understandable, but it is economically incoherent. Knoxville is growing because it is succeeding. Growth is not the problem. The question is whether Knoxville will allow enough housing, in enough forms, in enough neighborhoods, to keep that growth from becoming destructive.

So far, the answer has been timid. Large portions of residential land still prohibit accessory dwelling units, duplexes, and small-scale apartment buildings. New housing gets pushed to the outskirts, exacerbating traffic and infrastructure costs. Local debates focus on whether new buildings “fit the character” of a neighborhood rather than whether families can still afford to live there.

Why ‘affordable again’ is the wrong goal

Knoxville’s challenge, then, is not to become cheap again. It is to become abundant enough ‒ in housing supply, infrastructure, and opportunity ‒ that rising demand doesn’t calcify into permanent exclusion. That means slower rent growth, not magically cheaper rent. Smaller, denser, more affordable unit types, not just large single-family homes. More supply in high-opportunity neighborhoods, not just at the county’s edges. And meaningful public investment in subsidized housing, because the private market will never adequately serve the lowest-income households on its own.

What isn’t achievable is going backward. The era of being quietly undervalued is over. The only question now is whether we’re willing to do what it takes to keep Knoxville attainable for everyone who calls it home.

Hancen Sale is a Knoxville-based writer and political commentator and an appointee to the board of the Tennessee Housing Development Agency.