Opportunity zones are keeping pace with national home price trends and proved to be a solid investment in the second quarter. Median single-family home prices rose annually in 75% of opportunity zones in the second quarter. In about half of them, home prices increased by at least 15%, according to a new report from ATTOM Data Solutions, a real estate research firm.
Opportunity zones offer tax breaks for long-term investment in federally designated, low-income neighborhoods that are identified as areas ripe for investment. They were established by Congress in the Tax and Jobs Act of 2017.
“Housing markets kept chugging along in some of the nation’s poorest neighborhoods during the second quarter of this year in another sign that the decade-long home-price boom across the nation knows pretty much no boundaries,” said Todd Teta, chief product officer with ATTOM. “Values kept rising inside specifically designated opportunity zones at around the same rate as they did in other areas even as the coronavirus pandemic continued causing economic hardship.”
Still, property values in opportunity zones remain low, Teta adds. Despite the latest price increases, about 39% of the 5,236 zones tracked across the U.S. had median prices of less than $150,000 in the second quarter. The Midwest continued to have the highest portion of opportunity zone tracts with a median home price of less than $150,000 (63%), followed by the South (45%), the Northeast (41%), and the West (6%).
However, recent price increases “not only suggest that those communities are a very viable option for households priced out of more upscale neighborhoods,” Teta said. “They also indicate the ongoing potential for the economic revival that underpins the opportunity zone tax breaks.”