Investors in lower-income opportunity zones are seeing appreciation on their properties grow higher and higher.
Opportunity zones were established by Congress in the Tax Cuts and Jobs Act of 2017. They offer investors tax breaks in exchange for making long-term investments in the revitalization of low-income federally designated neighborhoods nationwide.
The median single-family home and condo price increased from 2021’s third quarter to its fourth in 56% of the opportunity zones nationwide and rose by at least 20% annually in nearly half, according to a newly released analysis by ATTOM Data Solutions.
Median values rose in about half of the zones by more than 16.1% in the fourth quarter of 2021 compared to the fourth quarter of 2020.
Still, homes in opportunity zone areas continued to cost a fraction of those in most other regions of the U.S. in the fourth quarter. Typical values remained under $200,000 in 51% of the zones during that time. The Midwest region had the highest portion of opportunity zone tracts, with a median home price of less than $150,000 (61%), followed by the South (40%), the Northeast (36%), and the West (4%).
“Neighborhoods in and around some of the poorest areas of the United States kept riding the national housing market boom in the fourth quarter of last year, much as they did throughout 2021,” says Todd Teta, chief product officer with ATTOM. “The pace of price increases slowed, which is common in the last few months of any year. But gains in opportunity zones again pretty much matched what was going on elsewhere and even beat out the rest of the market in some ways. While opportunity zone markets remained depressed, the increases probably reflected the trickle-down effect of buyers priced out of more expensive neighborhoods. The gains also represented an ongoing sign of vitality in lower-income areas-- something that ups the ante for investors looking to take advantage of opportunity zone tax breaks.”