The Big Bend State’s economy is a combination of industrial and agricultural sectors. Automobile production, machinery and equipment, textiles, cattle farming and dairy products are just a few of the diversified industries in Tennessee. But unemployment is on the rise in the state as construction and leisure jobs were slashed due to the national economy’s fallout.

The real estate market has no good news at all. The largest obstacle to home purchasing is the lack of available credit for aspiring homeowners. Mortgage lenders have raised their standards when selecting their clients that led to very few approved applications. The retirees who are less concerned about their finances compared to young professionals with starting incomes are the only refuge of the market.

Nashville’s property scene is deteriorating. In contrast to its entertainment, higher education, finance and insurance and manufacturing sectors, the real estate market has been hit by the crisis albeit at a minimal bruising. There’s also a concern about the rising unemployment rate in its counties that make it harder for borrowers to continue financing their loans. Among those that had plummeting revenues include car manufacturer Nissan, technology giant Dell and retail firm Dollar General.

The real estate market is set to wilt as home sales remain sluggish. Nevertheless, the local market won’t be impacted severely with only a projected 11 percent home value decline in 2009. RealtyOutlook.com also expects home inventory to rise by the middle of the year.

The Chattanooga area is caught in a tumult of meltdowns. First, unemployment benefit claims are drawing out state funds. Second, the Scenic City’s small businesses cannot compete against the big players that maraud their market shares. Lastly, home values have plunged and caused a rise in inventory. The real estate market needs to revive sales that peaked during the property boom. This year, expect Chattanooga’s home prices to sink by 8 percent.

In Memphis, the slowdown in the local economy has threatened thousands of residents to be out of their homes in a few months. As FedEx, AutoZone and International Paper feel the pinch of the sour economy, many have lost their homes to foreclosure too. Homes are sitting idly in the market and total inventory is at an all-time high. This occurs despite the cheap prices in the Memphis property market.

Some parts of the River City are holding on nevertheless. Germantown, a suburb in Shelby County, is attracting buyers of $200,000 foreclosed sales. A nearby town, Collierville, has properties worth 7 percent more than the latter but buyers are still sensing plums in the area.

This year, RealtyOutlook.com forecasts a 13.5 percent drop in the Memphis’ average home sales. Much is attributed to slow sales and weak demand for housing.

Clarksville, a consistent placer among best cities polls by national publications, should remain grounded on its manufacturing industry. Recently, alternative energy company Hemlock Semiconductor Corporation selected to locate its $70-billion facility in the city. Plans are also on the way for the city’s redevelopment project that will involve long-term economic viability. However, this has not healed the real estate market that has been ailing since 2007. RealtyOutlook.com forecasts an 8 percent deflation in home values.

Knoxville’s real estate boom was not a substantial appreciation unlike that of major metropolitan areas. It was a good sign however since the local market won’t have drastic home values this year. Home prices tend to fall hard after a peak and would take a longer time to rise in the cycle. Still, the third largest city in the state is experiencing soft slides in its home values. RealtyOutlook.com expects prices to lower by 9 percent. The healthcare and energy industries will be the city’s main drivers for recovery.