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Median prices in designated economically-challenged areas are mirroring what is occurring elsewhere in the housing market—and the prices are climbing. The median single-family home and condo price increased from the fourth quarter of 2021 to the first quarter of 2022 in 55% of opportunity zones nationwide, and jumped by at least 20% annually in half of those areas, according to a new report from ATTOM Data Solutions.
Median values are up in about half of opportunity zones by more than 16.6% year-over-year, according to the report. 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.
“Home price trends in opportunity zones mirror what we’re seeing elsewhere in the housing market,” says Rick Sharga, executive vice president of market intelligence at ATTOM. “Strong price growth has helped homeowners in these economically-challenged areas benefit from higher equity, and should contribute to the ongoing redevelopment of these areas.”
Still, typical home values in opportunity zone areas do tend to be lower than those in most other neighborhoods nationwide. In the first quarter, median prices were less than the national median of $320,500 in 76% of the opportunity zones tracked, according to ATTOM Data Solutions’ report. Typically, values were below $200,000 in 51% of the zones in the first quarter.
“With so little entry-level inventory on the market, homes in opportunity zones represent some of the few remaining affordable options for prospective home buyers,” Sharga says. “This is especially important for first-time buyers, who typically have to stretch their finances in order to be able to afford a home.”
Nevertheless, many opportunity zones are experiencing strong price growth: Prices increased at least 25% from the first quarter of 2021 to 2022 in a majority of opportunity zones.