For the first time since the chaos of the COVID-era housing market, homebuilders in Hamilton County say they can finally predict what it will cost to build a house.
That might sound like good news. In many ways, it is.
But stability has not brought relief to buyers – and that, builders say, is now the industry’s most urgent challenge.
“Affordability is the No. 1 issue,” says Gabe Thomas, the 2026 president of the Home Builders Association of Greater Chattanooga. “Sales are difficult right now because people can’t afford to buy what we can build.”
Thomas, a local developer, describes a market that has cooled dramatically since the height of the pandemic but remains structurally strained. Costs are no longer exploding week to week, yet prices have not come down. Interest rates, insurance costs and infrastructure limits are all squeezing buyers and builders.
The result, he says, is a housing market that feels calmer but still broken.
From chaos to predictability
Five years ago, in the middle of the pandemic, selling homes was easy. Building them was not.
“Right after COVID, selling a home was easy. You built it and you sold it,” Thomas says. “That part was easy.”
What was not easy was pricing. Lumber and material costs surged at unprecedented rates, sometimes jumping dramatically in a matter of days. Builders struggled to estimate projects that might not be completed for months.
“Everything was increasing,” he says. “It wasn’t fluctuating – it was just up, up, up.”
That volatility has largely subsided. Prices have not returned to pre-pandemic levels, but they have stabilized enough for builders to plan again. Most projects now include modest inflation assumptions – typically 3 to 5% – that are reviewed periodically rather than rewritten constantly.
“That’s been fantastic,” Thomas says. “It was a nightmare to plan a few years ago. Now you can actually estimate what something is going to cost and move forward.”
That predictability, he says, has brought a sense of normalcy back to the industry – even as affordability continues to lag behind.
Politicians are listeninging
Another bright spot, Thomas says, is growing political attention to housing affordability.
“For years, we’ve been saying affordability is a crisis,” he says. “I think we’re finally seeing leaders say, ‘We get it. How do we solve this?’”
At the local level, Thomas points to affordability initiatives launched under Chattanooga Mayor Tim Kelly, including pilot programs designed to encourage workforce housing.
“What the city has done is powerful,” Thomas says. “They were one of the first groups to implement an affordability program like that – and it’s been effective.”
The attention matters, he says, because housing touches nearly every aspect of local life – from employment and infrastructure to education and economic development.
But political interest, he adds, has not always translated into public support.
Stability, yes, but affordability?
Even with costs leveling out, building a home that average residents can afford remains extraordinarily difficult.
“Costs aren’t going up dramatically anymore, which is good,” Thomas says. “But they’re not going down. And they need to come down.”
He cites a web of factors beyond materials: higher interest rates, rising insurance premiums and labor constraints tied in part to immigration policy.
“Tariffs impact pricing. Immigration policy impacts pricing,” he says. “So many things that go into it, it’s hard to point to just one cause.”
Demand, meanwhile, has shifted rather than disappeared.
Overall demand has remained relatively stable, Thomas says, but it has migrated upmarket. Higher-end homes – often priced at $1 million or more – continue to sell, while entry-level and mid-range homes move more slowly.
“That makes it look like demand is the same,” he says. “But the makeup of that demand has changed dramatically.”
Many homeowners, he adds, are effectively stuck – locked into low-interest mortgages they can’t afford to give up, even as their families grow.
Growth backlash, toxic climate
Despite increased political attention, Thomas says the broader climate around development has become hostile.
“I’ve never felt more like a criminal in my life than I do as a developer,” he says. “People think we’re stealing from people.”
Public opposition to new housing has intensified, he says, particularly in neighborhood meetings and online forums. While he understands the frustration that comes with growth, the tone has become corrosive.
“If construction is happening next door to your house, it’s annoying. I get that,” Thomas says. “But people want to live here. That’s a good thing.”
He believes much of the tension stems from fear – fear of traffic, noise, stormwater runoff and changes to neighborhood character. Builders, he says, are often painted as unconcerned with those impacts.
“We want responsible growth,” he says. “We want the same thing the county wants, the city wants, even the opposition wants.”
Simply rejecting development, he argues, creates its own set of problems.
“Just saying no causes the same problems as building recklessly,” he says.
Schools, sewers and uncertainty
One of the most pressing complications facing builders, Thomas says, is infrastructure – particularly school capacity and sewer availability.
Hamilton County, he notes, is effectively out of sewer capacity in many areas, a bottleneck that has pushed development into neighboring counties such as Bradley County.
Schools are another flashpoint
In December, the Hamilton County School Board adopted a policy allowing it to exclude new neighborhoods from specific school zones without a full redistricting process. Thomas says the policy reflects real overcrowding concerns but creates major uncertainty for builders and buyers.
“Developers are investing $15 million into a neighborhood and they don’t know where homeowners are going to go to school,” he says. “That’s huge.”
He stresses that the school board is not wrong to address overcrowding, but says builders should be part of the solution rather than reacting after decisions are made.
“How do we do this together?” he says. “Instead of everyone pointing fingers, how do we solve it collectively?”
When renters become neighbors
One of Thomas’ most vivid memories from recent years came during a community meeting over a proposed rental development.
As soon as residents learned the homes would be rentals, opposition hardened.
“There was this feeling of, ‘We don’t want those people here,’” he says. “And I was like, ‘What does that mean?’”
The project moved forward. Today, the neighborhood blends in seamlessly with surrounding homes. Most residents, Thomas says, likely don’t even realize it is a rental community.
Now, families who can’t afford to buy are raising children there, living in a stable neighborhood within a good school district.
“That almost makes me emotional to think about,” he says. “Why are we just saying no when people are building their lives there?”
A call for collaboration
As Thomas prepares to lead the Home Builders Association of Greater Chattanooga, he says his goal is not to defend every development but to reframe the conversation.
“We want to be part of the solution,” he says. “We’re not just trying to make money and disappear.”
That means holding builders to high standards – managing stormwater responsibly, controlling debris, addressing traffic concerns and engaging with neighbors early. It also means acknowledging that growth brings real challenges.
“We’re not just dropping down a money-making machine,” he says. “We’re building communities.”
Growth, Thomas adds, looks different everywhere. What works in Nashville or Knoxville might not work in Chattanooga. But he doesn’t believe the region has reached its limit.
“People want to live here because it’s an amazing place,” he says. “That’s something we should get right – not run from.”