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Affordable Housing in Chattanooga: Challenges & Opportunities

Writer's picture: Lift Media GroupLift Media Group

Updated: Feb 7

January 2025


It’s easy to understand why Chattanooga, Tennessee is a popular place to move these days. Known for its stunning views, vibrant arts scene, and booming economy, Chattanooga is growing at a pace that is increasingly harder to sustain. In fact, it is facing a critical challenge: a growing housing crisis. Over the past decade, the city has experienced significant population growth and economic development, but these advancements have also led to skyrocketing housing costs and a shortage of affordable options for many residents.


The Roots of the Crisis

Several factors have contributed to Chattanooga's housing challenges:

Population Growth. Chattanooga's population projections have shifted from 371,000 to and anticipated 505,000 by 2070., driven by its reputation as an affordable and livable city. However, the supply of housing is not keeping pace with demand, creating a gap that drives prices upward. It is also anticipated that Chattanooga will need more than 46,000 additional units of housing over this timeframe to accommodate growth. Click here to learn more. 


Economic Development. The influx of tech companies, startups, and remote workers has boosted the local economy but has also increased competition for housing, particularly in desirable neighborhoods.


Lack of Equitable Development. The revitalization of areas like the Southside and Northshore has brought new businesses and residents, but it has also displaced long-time, lower-income residents as property values and rents have surged.


Limited Affordable Housing Development. Developers have focused on building higher-end apartments and homes, leaving a significant gap in affordable and workforce housing.


The Impact on Residents

The housing crisis in Chattanooga affects a wide range of residents, from low-income families to young professionals and seniors on fixed incomes. Key impacts include:

  • Rising Rents. The median rent in Chattanooga has increased by more than 40% over the past five years, pushing many households to spend more than 30% of their income on housing.

  • Homelessness. The number of unhoused individuals in Chattanooga has risen, with local shelters and organizations struggling to keep up with the demand for services.

  • Economic Strain. High housing costs limit disposable income for essentials like healthcare, education, and transportation, exacerbating financial stress for many families.


Steps Being Taken

The city and local organizations are working to address the crisis through various initiatives:

  1. (PILOT) Affordable Housing Projects: Efforts like the Chattanooga Housing Authority’s development projects aim to create more affordable units for low- and middle-income families. Each affordable unit has a “price,” determined by the potential revenue lost by charging below-market rents. This price is calculated based on the project’s ZIP code, unit size (0, 1, 2, 3, and 4 bedroom), and affordability level (50%, 60%, 70%, and 80% AMI).

  2. (HOME) Policy Changes: Zoning reforms and incentives for developers to include affordable housing in new projects are being considered.

  3. (CDFI) Community Support Programs: The CDFI Program uses monetary awards and training opportunities to invest in and build the capacity of CDFIs, empowering them to grow, achieve organizational sustainability, and drive community revitalization. Nonprofits like Habitat for Humanity and Chattanooga Neighborhood Enterprise provide resources, education, and support for homeowners and renters.

  4. Public-Private Partnerships: Collaborative efforts between the city, developers, and community organizations are exploring innovative solutions to increase the housing supply.


Conclusion

Chattanooga's housing crisis is a complex issue that requires urgent attention and collaboration across sectors. While the challenges are significant, the city’s history of innovation and resilience provides hope. By prioritizing affordable housing and equitable development, Chattanooga can ensure that its growth benefits all residents and maintains the qualities that make it a truly livable city. In our next installment for the series we will discuss The Path Forward: A Multi-Faceted Approach to Affordable Housing.

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