The median price of homes in so-called “opportunity zones”, or areas that have been designated as “economically challenged” are seeing price increases that mirror the rest of the U.S. housing market, according to a new report from ATTOM Data Solutions.
The report finds that the median single-family and condo price made gains in 55% of opportunity zones nationwide between the fourth quarter of 2021 and the first quarter of this year. What’s more, in half of those areas, home prices rose by at least 20% annually.
ATTOM said median values are up by more than 16.6% in around half of all opportunity zones. The opportunity zones were established under President Donald Trump through the Tax Cuts and Jobs Act of 2017. Under that act, investors in opportunity zones would be entitled to tax breaks in exchange for making long-term investments that aim to revitalize federally-designated neighborhoods across the country.
ATTOM’s executive vice president of market intelligence, Rick Sharga, said home price trends in opportunity zones have mirrored those in the wider housing market. “Strong price growth has helped homeowners in these economically-challenged areas benefit from higher equity, and should contribute to the ongoing redevelopment of these areas,” he said.
While the price increases suggest that the opportunity zones policy is working, it’s important to note that home values in these areas are still much lower than most other neighborhoods in the U.S. For instance, opportunity zone home values were on average much less than the national median home price of $320,500. Indeed, the median home value in 51% of opportunity zones was less than $200,000, the report found.
Sharga said the findings are important because, with so few entry-level homes currently on the market, the homes in opportunity zones provide some of the few remaining affordable options for buyers. “This is especially important for first-time buyers, who typically have to stretch their finances in order to be able to afford a home,” he said.
However, buyers should note that these homes may not stay affordable for very long, as they are currently witnessing strong price growth. ATTOM’s report found that opportunity zone home prices rose by at least 25% from Q4 2021 to Q1 2022 in a majority of zones.