Dr. Lawrence Yun thinks the job growth Knoxville and Chattanooga are experiencing will spread to the Tri-Cities area.  And that will create more housing demand, Yun, chief economist and head of research for the National Association of Realtors (NAR) said.

Yun’s comments were made for the 300 locals attending the installation of Wayne Porter as the 2025 president of the Northeast Tennessee Association of Realtors (NETAR) Friday night at the MeadowView Conference Resort and Convention Center.

He also expects 2025 to be a better year for the overall housing economy despite stubbornly high mortgage rates. His outlook is for a 9% sales increase. If that outlook holds for the local market, it would more than double last year’s 4.1% Tri-Cities area sales increase.

The mortgage rate outlook is for rates to stabilize in the 6% to 6.5% range. Currently, they are at 7%. Yun said the reason mortgage rates will not come down in the near term is the national debt. “So much government borrowing is eating up capital including some that would be going to the mortgage market.”  A key to lower mortgage rates is if Elon Musk and Vivek Ramaswamy find ways to cut spending. “We’ll have to wait and see.”

Some of the other concerns about what will happen during the coming Trump Administration are also on the wait and see list, he added. One example is the deportation issue. If it evolves to a system of work permits for jobs that need filling it would result in immigrants coming here to work instead of seeking benefits.  

“The stock market points of accelerated economic growth” and some of it can be seen in the housing market.

People are buying homes despite the 7% rates, he said. Your parents bought homes when rates were at 10% and 12% Yun told the audience. They had to buy a home to be part of the wealth accumulation class. Studies show homeowners have significantly more wealth than renters.

Despite the number of home with 3% and 4% mortgages, owners are finally beginning to give them up and use the equity to trade up or scale back. The reason, Yun said, is life happens. Births, deaths, marriages, new jobs, divorces and retirements mean many owners need another home regardless of the mortgage rates. “And since Tennessee is doing better with job creation than many other states we’re seeing more inventory which will encourage more home transactions.

Knoxville was identified as one of the top 10 housing markets in the nation for 2025 and Chattanooga is making gains. Yun said he thinks it’s inevitable that the growth pattern will expand to the rest of East Tennessee.