Nearly half of all opportunity zone redevelopment areas have seen prices rise at least 20% annually, according to a new report from ATTOM Data Solutions. Home values in opportunity zones are moving up and parallel the broader U.S. housing market.
Opportunity zones, established by Congress in the Tax Cuts and Jobs Act of 2017, were created to help revitalize low-income areas, offering investors significant tax breaks over several years to those who do so. More than 8,700 communities across the country have been designated as available for revitalization using opportunity zones.
Median single-family home and condo prices rose from the second quarter to the third quarter in 62% of the 5,402 opportunity zones that researchers tracked across the country. Still, home values in the majority of opportunity zones trail well behind those in surrounding neighborhoods in most communities.
Thirty-six percent of the zones tracked by researchers saw median prices in the third quarter that were less than $150,000, and 17% had a median ranging from $150,000 to $199,000.
“Values in markets scattered through so-called opportunity zones kept rising at around the same pace seen in more upscale areas, as the housing market boom kept lifting fortunes just about everywhere,” says Todd Teta, chief product officer with ATTOM. “Home values in opportunity zones are still very low relative to other areas. But the ongoing gains showed that lots of households are buying in those areas—something that should lure the attention of investors looking to take advantage of Opportunity Zone tax breaks.”
The Areas Seeing the Most Growth
The Midwest continued to have the highest number of opportunity zone tracts with a median price of less than $150,000 (60%), followed by the South (42%), the Northeast (35%), and the West (5%), according to researchers.
Meanwhile, the states that saw the largest percentage increases in median prices year over year during the third quarter were Idaho (where median prices were up 97% annually in opportunity zones); Arizona (94%); Massachusetts (91%); Delaware (90%); and Utah (89%).