How Much Does 1 Acre of Land Cost in Tennessee?

The cost of an acre of land in Tennessee is not a fixed figure, but varies significantly based on many factors. Understanding land value determinants is important for anyone considering a purchase. This article explores the various elements that shape land costs in Tennessee, providing insight into the financial considerations involved.

Current Landscape of Land Costs

The price of an acre of land in Tennessee shows considerable variation, making a single average figure difficult. Across the state, the average price for land hovers around $14,400 per acre, ranging from a few thousand dollars for rural plots to millions for prime development sites. Agricultural land values have seen notable increases, with farm real estate reaching approximately $5,710 per acre according to the USDA’s 2024 summary, a significant increase. Cropland values specifically reached $5,610 per acre, leading the nation in growth rate. These figures are generalized and subject to change based on specific market conditions.

The Tennessee land market has experienced steady growth over the past decade, driven by population increases and economic expansion. This demand has contributed to rising land values across rural and suburban areas. While land in Tennessee remains relatively affordable compared to some neighboring states, its value is deeply affected by specific attributes and regional dynamics. The state’s diverse landscapes mean land prices can differ dramatically even within a short distance, underscoring the need for detailed local research.

Key Determinants of Land Value

Several characteristics and external factors directly influence the value of an acre of land in Tennessee. Proximity to infrastructure, urban centers, and amenities significantly impacts land prices. Land near major highways (I-40, I-75, I-24, I-65) or within an hour’s drive of cities like Nashville, Knoxville, Chattanooga, and Memphis, commands higher prices due to increased accessibility. Access to amenities like schools, hospitals, shopping, and employment opportunities also enhances a property’s desirability and market value.

Land characteristics play a substantial role in its valuation. Topography, whether flat, hilly, or mountainous, affects its usability for various purposes, from agriculture to construction. Soil quality is another important factor; fertile soil is valuable for farming, while stable soil with good bearing capacity is crucial for building. Properties with natural water access, such as lakes or rivers, or those connected to public water lines, often have increased appeal and value. The presence of timber resources or mineral rights can also contribute to a property’s worth, depending on their marketability and accessibility.

Development potential is heavily influenced by zoning regulations, which dictate how a parcel of land can be used (residential, commercial, industrial, or agricultural). These regulations vary by county in Tennessee, and it is important to confirm that the intended use aligns with local zoning rules before purchase. The availability of utilities like water, sewer, electricity, gas, and internet connectivity is also a significant determinant, as properties lacking these may incur substantial development costs. Environmental considerations, including wetlands, floodplains, or conservation easements, can restrict development and affect land value.

Broader market dynamics exert considerable influence on land prices. The current balance of supply and demand directly impacts how much buyers are willing to pay for available land. Recent sales data for comparable properties provide the most accurate gauge of local market conditions and expected values. Overall economic conditions, including interest rates, can also affect the affordability of land and the willingness of buyers to invest. A growing population and robust job creation in urban centers create increased demand for residential and commercial real estate, pushing land values upward over time.

Geographic Variations in Tennessee Land Prices

Land costs in Tennessee vary significantly across geographic regions, reflecting the interplay of previously discussed factors. Metropolitan areas and their surrounding suburbs consistently exhibit the highest land values. For instance, in and around Nashville (Davidson County), residential land typically ranges from $175,000 to $300,000 per acre, with prime commercial locations potentially reaching up to $20 million per acre. Williamson County, a Nashville suburb, leads the state with median prices as high as $175,000 to $400,000 per acre, depending on lot size, due to its affluent character and excellent school systems.

Other major urban centers also command substantial prices, though generally less than Nashville. In Memphis (Shelby County), residential land costs typically range from $25,000 to $60,000 per acre, offering more affordable options compared to the Nashville area. Knoxville (Knox County) sees residential land prices between $40,000 and $100,000 per acre, with commercial land in areas like Turkey Creek ranging from $300,000 to $1 million per acre. Chattanooga (Hamilton County) offers a mix of urban and rural land options, with prices per acre ranging from $30,000 to $80,000 for residential land, and an average listing price of $138,967 per acre.

Rural areas across the state present a more affordable entry point into the land market. In East Tennessee, mountainous or heavily wooded tracts, such as in Hancock County, can have median prices as low as $10,000 to $13,000 per acre, representing some of the state’s most affordable options. Middle Tennessee rural land, such as in Hickman County, often sells for $4,000 to $8,000 per acre, while farmland in Giles County can range from $5,000 to $7,000 per acre. West Tennessee, known for its flatter floodplains and agricultural land, also provides more accessible price points compared to urban cores.

Recreational areas and tourist destinations, particularly those near lakes, rivers, or national parks like the Great Smoky Mountains, also experience elevated land values. Acreage suitable for tourism ventures, vacation rentals, or private estates in these desirable locations can range from $20,000 to $100,000 or more per acre, depending on specific features. The appeal of outdoor activities and scenic beauty in these regions contributes to their higher market demand.

Associated Costs Beyond the Purchase Price

Acquiring land in Tennessee involves several financial outlays in addition to the per-acre purchase price. Prospective buyers should budget for various closing costs, which typically include fees for title insurance, escrow services, attorney fees, recording fees, and transfer taxes. Tennessee levies a state transfer tax of $0.37 for every $100 of the property sale price, generally paid by the buyer. For example, a $300,000 land transfer would incur approximately $1,100 in state transfer taxes. A mortgage tax of $0.115 per $100 of indebtedness applies to financed portions, with the first $2,000 of debt typically exempt.

Beyond the initial purchase, due diligence costs are important for assessing the land’s suitability. A professional land survey is necessary to determine precise property boundaries and ensure no encroachments or discrepancies. For properties not connected to municipal sewer systems, a soil percolation test is often required to determine if the land can support a septic system, important for septic approval. Environmental assessments may also be prudent, especially for larger tracts or those with a history of commercial or industrial use, to identify any potential environmental liabilities.

Development and utility costs represent another significant category of expenses if the land is intended for building. Connecting to existing utility lines for water, sewer, and electricity incurs connection fees that vary by location and utility provider. If public water or sewer is unavailable, drilling a well can cost between $7,000 and $15,000 for deep wells, potentially exceeding $20,000 based on depth and ground conditions. Installing a septic system typically ranges from $3,280 to $9,550, though complex systems or challenging terrain can push costs higher. Site preparation, such as clearing and grading, also adds to the expense, with light clearing on a quarter acre potentially costing around $950.

Ongoing costs must be factored into the long-term financial commitment of land ownership. Property taxes are assessed annually based on the land’s appraised value, and these rates vary by county and specific tax districts. While Tennessee is known for relatively low property taxes, these are recurring expenses. If the property is part of a planned community, homeowners’ association (HOA) fees may also be applicable, covering maintenance of common areas or community amenities.