Median Home Values Increase in Majority of Opportunity Zones Targeted for Economic Redevelopment Around U.S.; Price Trends Inside Zones Continue to Roughly Match Broader Market Patterns; Opportunity Zone Home Values Again Improve Slightly More Than Elsewhere
IRVINE, Cal. – Nov. 16, 2023 — ATTOM, a leading curator of land, property, and real estate data, today released its third-quarter 2023 report analyzing qualified low-income Opportunity Zones targeted by Congress for economic redevelopment in the Tax Cuts and Jobs Act of 2017 (see full methodology below). In this report, ATTOM looked at 3,465 zones around the United States with sufficient data to analyze, meaning they had at least five home sales in the third quarter of 2023.
The report found that median single-family home and condo prices rose from the second quarter of 2023 to the third quarter of 2023 in 54 percent of Opportunity Zones around the country and rose at least 5 percent in close to half. The price improvements in and around low-income neighborhoods where the federal government offers tax breaks to spur economic revival, again tracked closely with a nationwide rebound from a temporary dip in home values that hit last year.
The renewed price growth also continued a long-term trend of home values inside Opportunity Zones following along with broader market gains for at least the last three years – an ongoing sign of economic strength inside some of the country’s most distressed communities.
Opportunity Zone markets even showed signs again, by one key measure, of doing slightly better than other neighborhoods around the country during the third quarter of this year. A slightly larger portion of Opportunity Zones versus other locations saw median values rise annually at a faster pace than they did nationwide.
“The third-quarter price data shows that many of the country’s lower-income neighborhoods continue to come back from the brief downturn we saw last year, right along with the rest of the U.S. housing market. While there were exceptions, Opportunity Zones overall saw no extended backslide and continued to benefit from the boom that has spiked home values around the nation for more than a decade,” said Rob Barber, CEO for ATTOM. “That trend is likely connected to financially marginal house hunters getting priced out of more expensive locations and turning to places like Opportunity Zones for affordable homes. This should give investors looking to take advantage of Opportunity Zone tax breaks more welcome news about the potential for those neighborhoods.”
Opportunity Zones are defined in the Tax Act legislation as census tracts in or alongside low-income neighborhoods that meet various criteria for redevelopment in all 50 states, the District of Columbia and U.S. territories. Census tracts, as defined by the U.S. Census Bureau, cover areas that have 1,200 to 8,000 residents, with an average of about 4,000 people.
As they have historically, typical home values in most Opportunity Zones fell well below those in other neighborhoods around the nation in the third quarter of 2023. Median third-quarter prices were less than the U.S. median of $350,000 in 81 percent of Opportunity Zones. That was about the same portion as in earlier periods over the past year. In addition, median prices fell below $200,000 in 49 percent of the zones during the third quarter of 2023.
Considerable price volatility also continued in Opportunity Zones, with median values either dropping or increasing by at least 5 percent in more than three-quarters of those locations from the second quarter of 2023 to the third quarter of 2023. That again likely reflected the small number of sales in many zones.
Still, the latest trends marked the second straight quarter in which Opportunity Zone home values, in general, erased losses seen during the downturn that lasted from the middle of 2022 into early 2023. That highlighted an extended scenario of home-price runups across the U.S. leaving a significant cluster of potential buyers with limited resources and few choices other than the lowest-priced communities. The apparently healthy demand in the third quarter continued even as home-mortgage rates climbed back up toward 8 percent for 30-year fixed-rate loans over the Summer, and inflation inched upward cutting into what buyers could afford.
“Like most places with fewer resources, Opportunity Zones remain especially vulnerable to negative forces affecting the housing market or the broader economy, so we will continue to keep a close watch on prices in those locations,” Barber added. “But the ongoing tight supply of homes for sale combined with high home-buying demand around the country suggests that Opportunity Zones are in a good position to remain on pace with the broader national trends.”
High-level findings from the report:
- Median prices of single-family homes and condominiums increased from the second quarter of 2023 to the third quarter of 2023 in 1,862 (54 percent) of the Opportunity Zones around the U.S. with sufficient data to analyze, while decreasing or staying the same in 46 percent. Medians also were up from the third quarter of 2022 to same period this year in 1,880 (58 percent) of those zones with sufficient data. (Among the 3,465 Opportunity Zones included in the report, all had enough data to generate usable median-price comparisons from the second quarter of 2023 to the third quarter of 2023; 3,258 had enough data to make comparisons between the third quarter of 2022 and the third quarter of 2023).
- But in a sign that Opportunity Zones again did a bit better than the rest of the country, median prices grew quarterly and annually by at least 5 percent in a higher portion of those areas. Typical values went up at least 5 percent quarterly in 44 percent of Opportunity Zones with enough data to analyze and annually in 49 percent.
- In addition, typical price increases exceeded national gains annually in a slightly larger portion of Opportunity Zones than elsewhere. The median single-family home value rose, year over year, by more than the national figure in 47 percent of Opportunity Zones tracts but just 43 percent of tracts outside the zones. (The nationwide median rose 6.1 percent from the third quarter of 2022 to the third quarter of 2023.)
- Of the 3,465 zones in the report, 1,124 (32 percent) had median prices in the third quarter of 2023 that were less than $150,000. That was down from 35 percent of those zones a year earlier. Another 564 zones (16 percent) had medians in the third quarter of this year ranging from $150,000 to $199,999.
- Median values in the third quarter of 2023 ranged from $200,000 to $299,999 in 827 Opportunity Zones (24 percent) while they topped the nationwide third-quarter median of $350,000 in just 670 (19 percent).
- The Midwest continued in the third quarter of 2023 to have larger portions of the lowest-priced Opportunity Zone tracts. Median home prices were less than $175,000 in 66 percent of zones in the Midwest, followed by the Northeast (47 percent), the South (41 percent) and the West (6 percent).
- Median household incomes in 87 percent of Opportunity Zones analyzed were less than the medians in the counties where they were located. Median incomes were less than three-quarters of county level figures in 54 percent of those zones and less than half in 14 percent.
The ATTOM Opportunity Zones analysis is based on home sales price data derived from recorded sales deeds. Statistics for previous quarters are revised when each new report is issued as more deed data becomes available. ATTOM’s analysis compared median home prices in census tracts designated as Opportunity Zones by the Internal Revenue Service. Except where noted, tracts were used for the analysis if they had at least five sales in the first quarter of 2023. Median household income data for tracts and counties comes from surveys taken the U.S. Census Bureau (www.census.gov) from 2017 through 2021. The list of designated Qualified Opportunity Zones is located at U.S. Department of the Treasury. Regions are based on designations by the Census Bureau. Hawaii and Alaska, which the bureau designates as part of the Pacific region, were included in the West region for this report.
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