Tennessee Home Selling

Tennessee's housing market remains competitive and relatively affordable, offering attractive upside for investors and homebuyers. The median home sale price in September 2025 stood at approximately $390,000, below the national median of $435,000 and in line with neighboring Georgia ($373,500) and North Carolina ($380,000).

Across the state, roughly 7,500 homes sell each month after spending a median of 65 days on the market. This figure represents a slowdown compared with the prior year, and trails the national median of 51 days.

On the supply side, Tennessee issued roughly 6.21 new residential construction permits per 1,000 residents, putting it well above the U.S. average and signaling robust building activity aimed at addressing growing demand.

The average effective property tax rate in the state is 0.55%, ranking it in the lower tier nationally and below the U.S. median of about 0.83%. In addition, Tennessee does not impose a state income tax, making it an attractive target for both real estate investors and homeowners seeking opportunities to save.

Tennessee's foreclosure rate of 1 in every 2,682 housing units also sat below the national median (around 1 in 1,850) in Q3 2025, highlighting more stability than seven of its eight neighbors (only Mississippi reported a lower foreclosure rate during the period).

Tennessee offers solid opportunities for real estate investors looking to grow their investment portfolios. These opportunities are available in urban and suburban areas with varying degrees of return on investment (ROI). If you're an investor looking to generate the highest potential ROI in Tennessee, you may want to consider the following areas:

• Nashville: As the largest city in Tennessee, Nashville's booming job market and robust tourism drove prices up 18% year over year. It continues to be a top pick for investors seeking both flips and rentals.

• Memphis: Memphis combines some of Tennessee's lowest entry prices with rent-to-price yields north of 7%, thanks to steady logistics and healthcare employment driving rental demand.

• Chattanooga: Chattanooga's downtown revitalization, tech-sector growth, and scenic riverfront havefueled annual price growth and strong buyer interest in mixed-use developments.

• Knoxville: Knoxville's affordability, coupled with perpetual student and faculty housing demand near the University of Tennessee, make it ideal for stable rentals and long-term holds.

• Murfreesboro: Murfreesboro, one of Tennessee's fastest-growing cities, sees population surges from Nashville commuters and MTSU students,driving solid price appreciation and supporting a tight rental market.

• Franklin: Franklin's preserved historic downtown, high-income residents, and proximity to Nashville support steady appreciation, with median home prices rising to $650,000 and projections of continued growth.

• Brentwood: Brentwood's upscale neighborhoods, stringent zoning, and affluent buyer pool support 7%-8% average annual appreciation on $700,000 estates and virtually zero vacancy in premier subdivisions.

• Johnson City: Johnson City median prices soared to an all-time high of $367,675 in September 2025 as buyers seeking affordable housing, economic opportunities, and outdoor recreation activities flocked to the Appalachian Mountain community. Rental demand from East Tennessee State University and steady healthcare and manufacturing jobs continue to create robust development and appreciation prospects.

• Clarksville: With Fort Campbell military demand, a $300,000 median price, and 4% annual price growth alongside $1,600 average rents, Clarksville offers consistent cash flow and easy subdivision potential.

• Hendersonville: Hendersonville's home values surged 40.6% in just five years, spurred by lakeside appeal and Nashville-metro spillover. With a population of around 64,000, this Sumner-county city delivers exceptional upside potential for new residential projects.

The real estate market in Tennessee is moderately competitive, with the typical home lingering on the market for about 65 days. The length of time a property spends on the market is largely influenced by factors such as home size, features, and style. Homes that sell fastest in the Tennessee housing market typically have the following characteristics:

Zoning laws differ for many cities and municipalities in Tennessee, meaning that the regulatory landscape impacting the use of land in each locale varies. Therefore, real estate developers and home sellers should always verify local zoning districts, land-use rules, and permit obligations before undertaking a new project.

To avoid legal surprises and protect themselves, buyers often request a zoning verification letter. A zoning verification letter (or in some counties, a zoning compliance letter) is a municipal certification that includes a property's permitted uses, variances, unresolved violations, and restrictions.

Real estate investors and developers in Tennessee should take note of the following areas and the varying strictness of their zoning laws:

Areas with strict zoning laws: These areas usually enforce strict zoning requirements restricting the construction of certain homes or properties.

• Nashville (Davidson County): Metro Nashville's zoning code tightly regulates building height, lot coverage, and permitted uses, including overlay districts around downtown and Music Row.

• Collierville (Shelby County): Collierville enforces a Unified Development Code that prescribes lot sizes, permitted accessory structures, and architectural design guidelines.

  Areas with less bureaucratic zoning laws: These locations have looser requirements, helping investors avoid having to jump through too many hoops.

• Unincorporated Areas of Hickman and Perry counties: Many Tennessee counties have not adopted countywide zoning under TCA Title 13, Chapter 7, leaving unincorporated parcels effectively unzoned and streamlining minor renovations and home-based business approvals.

• Sevier County (outside Gatlinburg/Pigeon Forge): Outside its municipal limits, Sevier County relies solely on building-code permits; no zoning rules apply, so interior remodels and accessory-structure additions often proceed with only health-department septic and well approvals.

• Lewis County: In rural Lewis County, local governments issue only basic building permits; sellers need only meet state construction-code standards, not multilayered zoning reviews, for most residential improvements.

  Areas requiring a special permit via public hearing and approval from the zoning board: These areas generally require a special permit when a proposed real estate project fails to align with permitted zoning.

• Chattanooga (Hamilton County): Planned Unit Developments and conditional uses demand both a site-plan review by the Regional Planning Agency and a public hearing before the Chattanooga Zoning Hearing Examiner or Board of Zoning Appeals.

• Murfreesboro (Rutherford County): By ordinance, accessory dwelling units and variances, such as side-yard reductions, must go before the Zoning Board of Appeals, with neighboring property owners notified in advance of the hearing date.

  Areas where a Certificate of Occupancy is mandatory before legal occupation: In these locations, a Certificate of Occupancy (CO) is mandatory before legal occupation on a property.

• Memphis (Shelby County): Commercial and multiunit properties must obtain a Certificate of Use and Occupancy from Shelby County's Construction Code Enforcement office.

• Sevier County (Within City Limits): Pigeon Forge and Gatlinburg enforce CO requirements before closing or lease-up.

  Areas with Historic Commission Oversight: Developers in these locations are often required to apply to the historic preservation commission in the municipality for a Certificate of Appropriateness (COA) before renovating a property or changing its exterior appearance.

• Murfreesboro Historic Zoning Commission (Rutherford County): Exterior alterations in designated districts must be reviewed and approved by the nine-member Historic Zoning Commission.

• Franklin Historic Commission (Williamson County): Renovations within Franklin's local Historic Districts must adhere to the Secretary of the Interior's Standards and secure Historic Commission approval.

To secure solid ROI in the Tennessee housing market, home sellers and developers need to understand important state and local regulations to ensure ongoing compliance. Following these standards can help investors and sellers avoid legal penalties and maximize property value.

Some areas in the state are more development friendly and don't impose restrictive requirements; however, other areas have bureaucratic procedures that limit developers and investors. That's why it's critical to understand the specific local requirements in the municipality where you intend to develop or build a property.

Development-Friendly Areas

• Hickman and Perry Counties (Unincorporated): These rural counties have not adopted countywide zoning under TCA Title 13, Chapter 7. Hence, most home improvements and accessory structures simply need state building-code permits and not multilayered land-use approvals.
• Sevier County (Outside Gatlinburg and Pigeon Forge): Beyond city limits, only septic, well, and basic building permits apply. With no local zoning boards, small-scale residential projects sail through in weeks instead of months.
• Lewis County: With no zoning ordinances and only statewide construction-code oversight, both interior remodels and lot splits proceed with minimal red tape.

Moderately Regulated Areas

• Murfreesboro (Rutherford County): Standard single-family builds follow clear zoning rules, but accessory dwelling units (ADUs) and minor variances must go before the Zoning Board of Appeals, typically with a one-month review cycle.
• Knoxville (Knox County): Most residential uses fit right in, yet short-term rentals, duplex conversions, or conditional uses require a Special Use Permit and a single public hearing in front of the Board of Zoning Appeals.
• Chattanooga (Hamilton County): Home-site developments under three units per acre are typically by-right and approved relatively easily. However, planned developments and live-work units invoke a site-plan review and require a public hearing with the Regional Planning Commission and final approval from Chattanooga's City Council.

Highly Restrictive or Bureaucratic Areas

• Nashville (Metro Davidson County): A patchwork of overlay districts, downtown, historic areas, and Music Row, means any change in use, height, or facade triggers a public notice period and review by the historic commission or planning commission.
• Franklin (Williamson County): Historic Downtown Overlay guidelines mandate a Certificate of Appropriateness from the Historic Zoning Commission for every exterior alteration, in addition to a building-permit clearance.
• Collierville (Shelby County): The municipal code prescribes strict lot-size, setback, and architectural guidelines; deviations require a formal variance application, neighborhood notices, and a public hearing.

Regulatory Climate Factors

Real estate regulations vary by location in Tennessee, meaning that these laws shape the housing market in ways that determine how easy or hard it is to develop, renovate, or flip a property. Hence, understanding the regulatory factors in each Tennessee municipality will help investors determine how and where to invest in the state's housing market.

*NIMBYism - Not in My Backyard

To succeed as an investor in the dynamic housing market in Tennessee, you must adopt a fitting flipping or resale strategy. However, investors who want to maximize ROI must be aware of the local market conditions, and where and when each strategy is most effective.

Setting the right price is one of the most important steps in attracting qualified buyers and maximizing profit in the diverse Tennessee housing market. If you intend to sell a home and overprice the listing, you increase the chances of the property sitting on the market for much longer than it should. Conversely, if you underprice the property, you could risk missing out on the maximum possible sale price. To achieve the right balance, smart sellers tailor their pricing strategy to local market conditions and buyer psychology. This is often achieved in consultation with a local real estate agent or appraiser who will analyze active, pending, and recently sold comparables within the last 90 days.

The following guide offers insight into the most effective pricing strategies used across Tennessee, with area-specific insights on where and how the strategies are commonly applied:

Note that local market dynamics in Tennessee dictate the optimal home-pricing approach. The table below provides information on the recommended strategy for each set of market conditions:

Certain factors play a critical role in shaping the trends of Tennessee's real estate market, especially at the local level, where conditions for demand and supply may differ widely across cities, towns, and regions. These factors not only influence the overall direction of the housing market in the state but also define the unique characteristics of local property markets throughout Tennessee.

Economic Factors

Tennessee's strong economic growth, driven by a $500 billion-plus GDP, robust expansions in manufacturing and healthcare, and one of the nation's lowest unemployment rates, supports ongoing housing demand in the state. These factors, along with the absence of a state income tax, help attract nearly 100,000 new residents each year. Meanwhile, year-over-year home-price growth of more than 8% demonstrates sustained buyer appetite, even amid higher interest rates.

Demographic and Social Factors

Rapid inbound migration from higher-cost states, the rise of remote work, and large student populations in Knoxville and Murfreesboro have reshaped demand for single-family homes and rental properties. Multigenerational living trends and growing interest in energy-efficient designs further influence buyer preferences for homes with in-law suites, sustainability upgrades, and walkable neighborhood amenities.

Regulatory and Legal Framework

Local zoning and land-use regulations, enforced by county and municipal authorities, define permissible densities, building heights, and conditional uses, with variances and special permits adjudicated by local boards of zoning appeals. Tennessee's title-theory deed-of-trust system affects foreclosure procedures, and the absence of statewide rent control leaves rental rates subject to market forces and individual lease agreements.

Taxation and Fiscal Policy

Tennessee's lack of personal income tax enhances homeowners' and investors' net returns, while property taxes, averaging $4.61 per $1,000 of value, vary significantly by county. Historic-rehabilitation credits and federal opportunity-zone incentives provide targeted relief for qualifying redevelopment, and counties retain full discretion over tax-rate adjustments following periodic reappraisals.

Housing Policy and Government Programs

Federal and state initiatives, including Section 8 vouchers, USDA loan guarantees, and Tennessee's Property Tax Freeze for seniors and disabled homeowners, support affordability in urban and rural communities alike. Expanded veteran tax exemptions and energy-efficiency grants further incentivize both new construction and rehabilitation projects across the state.

Infrastructure and Development Trends

Major investments, from the FedEx hub expansion in Memphis to mixed-use towers in downtown Nashville, continue to generate new supply, while highway improvements, commuter-rail extensions, and Chattanooga's "Gig City" broadband network bolster connectivity. These projects encourage suburban growth in Murfreesboro, Franklin, and Johnson City and support burgeoning short-term rental markets in areas near the Great Smoky Mountains.

Market Sentiment and Investor Behavior

After years of double-digit appreciation, Tennessee's home-price growth has moderated to 5%-6% annually, with housing inventory up 16% and a five-month supply signaling a more balanced market. Buyers now hold increased leverage, with 1 in 4 listings seeing a price reduction. Drawn by yields of more than 8% in Memphis and strong occupancy rates statewide, both institutional and individual investors are shifting toward buy-and-hold rental strategies.

The real estate market in Tennessee offers plenty of opportunities for homeowners, developers, and investors who want to maximize profit. Big cities such as Nashville and Memphis offer steady demand, while fast-growing suburbs such as Murfreesboro and Hendersonville offer more opportunities for new builds and flips. Some of the most popular real estate investment strategies in Tennessee include fixing and flipping, buying and holding for long-term rentals, or building new houses where land is cheap.

To succeed in Tennessee's housing market, investors must understand the prevailing regulatory climate in the locality of the subject property or targeted development area. Sellers should check local rules on zoning, permits, and historic districts, since each town in Tennessee may have its own set of laws. In addition, if you're looking to flip your home, choosing the right pricing strategy for your market area may help ensure the property sells quickly and generates top dollar.

Successful real estate investments in the Tennessee property market involve balancing ambition with diligence. Whether you're staging a starter home in Clarksville, converting a duplex in Chattanooga, or restoring a historic bungalow in Franklin, aligning your strategy with the state's current real estate trends will help maximize your return on investment and ensure a smoother transaction in The Volunteer State's competitive housing landscape.