Opportunity zones—federally designated areas that are ripe for investment and revitalization—are benefiting from the housing boom, too, as they see prices increase to the likes of more affluent places. In the first quarter of 2021, 75% of opportunity zones with sufficient data saw median home prices rise annually. Two-thirds of them saw prices rise by at least 10%, according to a new report from ATTOM Data Solutions.
Opportunity zones were established by Congress in the Tax Cuts and Jobs Act of 2017. They offer investors a chance for tax breaks in exchange for making long-term investments in the revitalization of low-income federally designated neighborhoods nationwide.
“Some of the country’s poorest neighborhoods continued riding the long national boom in home prices during the first quarter of the year, reaping increases that pretty much matched those in more affluent areas,” says Todd Teta, chief product officer with ATTOM Data Solutions. “Those ongoing gains emerged in the latest price data showing values in designated opportunity zones rising at about the same pace, or even more, than in other communities.”
Still, home values inside these zones remain quite low compared to the rest of the U.S., Teta notes. “But they are far from immune from the boom,” he adds. “That shows continued interest among home buyers in marginal areas and continues to bode well for the redevelopment that opportunity zone tax breaks are designed to promote.”
About 43% of the opportunity zones tracked by researchers still had median prices of less than $150,000. A year ago, however,, that percentage stood at 50%. The Midwest continued to offer the highest number of opportunity zone tracts with a median home price of less than $150,000 at 68%, followed by the South (51%), the Northeast (43%), and the West (8%).
The states with the largest percentage of opportunity zones where median prices rose annually during the first quarter of 2021 included: Arizona (where median prices are up 84% year-over-year in these zones), Idaho (83%), Oregon (83%), Nevada (82%), and Michigan (82%).