Median single-family home and condo prices increased from the second to third quarter in 62 percent of Opportunity Zones around the country and rose by at least 20 percent annually in 47 percent of them, according to ATTOM’s third-quarter Opportunity Zones report. The report found those patterns closely parallel the broader housing market.
By some measures, values in Opportunity Zones did even better, extending patterns from over the past year.
Opportunity Zones are defined in the Tax Act legislation as census tracts in or alongside low-income neighborhoods that meet various criteria for redevelopment. Census tracts cover areas that have 1,200 to 8,000 residents, with an average of about 4,000 people.
“The third quarter of 2021 was just like the second, which was pretty much like the first when it came to home prices in some of the more distressed neighborhoods around the United States. 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,” ATTOM Chief Product Officer Todd Teta said in a release. “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.”
Home values in most Opportunity Zones again trailed well behind values in most other neighborhoods around the country in the third quarter, according to the report. About three-quarters of zones with enough data to analyze had typical third-quarter prices below the national median of $310,500, about the same as in earlier periods over the year.
Median values also remained under $200,000 in 53 percent of Opportunity Zones in the third quarter. That was down from 57 percent in the second quarter of 2021 and 63 percent a year ago, as values inside some of the nation’s poorest communities kept up with broader national housing market gains despite the pandemic remaining a threat to the economy.
In a sign of even more growth, prices spiked by at least 25 percent year-over-year in the third quarter in four of every 10 Opportunity Zones, compared with three of every 10 communities in the rest of the country.
Median prices of single-family houses and condominiums rose from the second to third quarter in 62 percent of Opportunity Zones with sufficient data to analyze and increased in 78 percent of the zones year-over-year. By comparison, median prices rose quarterly in 65 percent of census tracts outside of Opportunity Zones and annually in 82 percent. Typical single-family home values in roughly half of all Opportunity Zones increased annually in the third quarter by more than the 15.9 percent increase in the overall national median home price.
Among states that had at least 20 Opportunity Zones with sufficient data, those with the largest percentage of zones where median prices rose year-over-year were Idaho (median prices were up in 97 percent of the zones), Arizona (94 percent), Massachusetts (91 percent), Delaware (90 percent) and Utah (89 percent).