Median home prices increased during the fourth quarter in 77 percent of Opportunity Zones established by Congress in the Tax Cuts and Jobs act of 2017, according to a report by ATTOM Data Solutions.
Congress targeted the Opportunity Zones with tax breaks designed to spur economic redevelopment. They are census tracts in or alongside low-income neighborhoods that met various criteria for redevelopment. They cover areas with 1,200 to 8,000 residents, with an average of about 4,000 people.
ATTOM analyzed 3,588 zones which had at least five home sales in the fourth quarter of 2020. The report found median home prices rose by more than 10 percent in nearly two-thirds of the zones compared with the fourth quarter of 2019.
“The country’s long run of home-price increases continues to leave no part of the housing market untouched, boosting fortunes from the wealthiest to the poorest parts of the United States,” ATTOM Chief Product Officer Todd Teta said in a release. “The latest evidence is the fourth-quarter 2020 data showing prices going up in Opportunity-Zone neighborhoods at around the same rate, and sometimes more, than in more well-off communities.”
“No doubt, prices remain substantially lower in Opportunity Zones, but the fact that they often rose by double-digit percentages in Q4 is significant,” he said. “Not only does it show market strength, but it also suggests that many distressed communities are ripe for the redevelopment that the Opportunity Zone tax breaks are designed to promote.”
According to the report, about 38 percent of the Opportunity Zones with enough data had median prices of less than $150,000 in the fourth quarter of 2020, down from 46 percent one year ago. States with the largest percentage of zones with median prices that rose year-over-year were Utah (89 percent); Oregon (86 percent); Washington (85 percent); Arizona (85 percent); and Connecticut (84 percent).
The report found the Midwest had the highest portion of Opportunity Zone-tracts with a median home price of less than $150,000 (59 percent), followed by the South (49 percent), the Northeast (40 percent) and the West (6 percent).
Of all 3,588 zones in the report, 38 percent had a median price in the fourth quarter of 2020 that was less than $150,000 and 17 percent had medians ranging from $150,000 to $199,999. The total percentage of zones with typical values below $200,000 was down from 64 percent in the fourth quarter of 2019.
Median values in the fourth quarter of 2020 ranged from $200,000 to $299,999 in 23 percent of the Opportunity Zones and were at least $300,000 in 22 percent, ATTOM found.
ATTOM said median household incomes in 89 percent of the zones were less than the medians in the counties in which they were located. Median incomes were less than three-quarters of county level figures in 59 percent of zones and were less than half in 16 percent.