The Cost to Buy vs Rent in Tennessee (2024)

According to the Census Bureau, 225,000 people migrated to Tennessee between July 2021 and July 2022, many coming from the coasts and higher-priced cities.

The staggering influx has shown up in home prices.

According to our conservative assumptions of a 5% down payment plus estimated private mortgage insurance (PMI), property taxes, and homeowner’s insurance, buying a house costs more than renting one in most of the state. See the full methodology at the end of this article.

However, buyers with 20% down might see a lower monthly bill, thanks to reduced interest costs and no PMI.

But even with a low or no down payment, The Volunteer State could be a great place to set down roots. It doesn’t appear housing demand – or home prices – will fall any time soon.

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Monthly Cost Difference to Buy

1. Nashville +$1,137
2. Memphis -$171
3. Knoxville +$697
4. Clarksville +$906
5. Chattanooga +$520
6. Johnson City +$390
7. Cleveland +$621
8. Kingsport +$285
9. Brentwood +$5,049
10. Dyersburg +$64

1. Nashville

The country music capital enjoyed incredible growth during the pandemic translating to higher home prices. Homes cost 51% more than they did in January 2020, says Zillow. While renting isn’t exactly cheap, buying is less so: you’ll spend about $1,100 more per month buying a house here.

2. Memphis

On the other end of the affordability spectrum is Memphis. Own a home near the old stomping grounds of Elvis, Jerry Lee Lewis, and Johnny Cash for $171 less per month than renting. It’s the only city on our list where estimated mortgage payments are cheaper than rent.

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3. Knoxville

It seems nothing can stop Knoxville home values. Prices are up over 12% in a year despite decades-high mortgage rates. It now costs nearly $700 more per month to buy than rent here.

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4. Clarksville

Visit Clarksville says the town offers “historic attractions, an artsy vibe, naturally beautiful rivers and trails, a trendy craft food and beverage scene,” and more. While not inexpensive, the city offers homes in the $300,000 range, well below the national average of $417,700.

5. Chattanooga

From the International Towing and Recovery Museum to the Tennessee Aquarium, there’s a little for everyone in Chattanooga. With area employers like Volkswagen, BlueCross BlueShield, and McKee Foods, you’ll have the extra funds to enjoy local attractions after making your estimated house payment of $2,366 per month.

6. Johnson City

Johnson City rent for a single-family home is nearly $1,700 per month. Prospective renters should consider coming up with a down payment or receiving up to $15,000 in down payment assistance from the Tennessee Housing Development Agency to buy for just a little more than renting.

7. Cleveland

Cleveland is the destination for all things outdoor, from rafting and water sports to hiking, biking, and fishing. Reasonable home prices make setting down roots here even more attractive.

8. Kingsport

Relatively high rents and low home prices narrow the cost gap between renting and owning. Those with a 5% down payment may be able to purchase a home for about $300 more per month than renting in Kingsport.

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9. Brentwood

The Hollywood of Tennesse, Brentwood is anything but affordable. But for those with large budgets, the town offers exclusive neighborhoods and you might even see a celebrity or two.

10. Dyersburg

The most affordable town on our list, we estimate it will cost about the same to buy or rent in Dyersburg. Residents with a down payment, gift funds, or down payment assistance should consider becoming homeowners over spending more money on rent.

Get Pre-Approved for Your Tennessee Home

Homes in Tennessee are in a range of prices affordable to just about any budget. See what home price you qualify for by requesting your pre-approval from a Tennessee lender.

Start your home purchase. Find a Tennessee lender.

Methodology

To compare the costs of buying versus renting in 10 Tennessee cities, we started with typical home prices as reported on the Zillow Home Value Index (ZHVI) Single-Family Home Time Series for November 2023. We assumed a 5% down payment, the typical requirement for first-time buyers. We then calculated the monthly payment on a 30-year fixed mortgage using a 6.845% rate, the average rate at the time of data collection as published on Optimal Blue Mortgage Market Indices for a buyer with less than 20% down and a 700 FICO score. We added PMI costs per rates from mortgage insurance provider MGIC. Then we added annual homeowner’s insurance premiums as reported by Policygenius and property tax data from Roofstock and the U.S. Census Bureau. We assumed zero HOA dues. We compared this total housing payment with rent data from the Zillow Observed Rent Index (ZORI) Smoothed Single Family Residence Time Series except when no data was available, in which case we searched for current rent statistics on Zillow’s site. City selection was based on the highest population except where it made sense to bypass a suburb of a major city to highlight one in a different area.

About The Author:

Tim Lucas spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. Tim has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, and more.