Home values in Opportunity Zone redevelopment areas keep pace with national gains
Utah — ATTOM, a leading curator of real estate data nationwide for land and property data, today released its first-quarter 2022 report analyzing qualified low-income Opportunity Zones targeted by Congress for economic redevelopment in the Tax Cuts and Jobs Act of 2017 (see full methodology below). In this report, ATTOM looked at 5,092 zones around the United States with sufficient data to analyze, meaning they had at least five home sales in the first quarter of 2022.
The report found that median single-family home and condo prices rose from the fourth quarter of 2021 to the first quarter of 2022 in 55 percent of Opportunity Zones around the country and jumped by at least 20 percent annually in half. ATTOM analyzed those areas where there was sufficient data for all quarters. Those gains followed similar patterns over the past year, as home prices in distressed neighborhoods around the nation continue to keep up with gains in the broader national housing market.
While the pace of increases slowed in the first quarter of 2022 compared to peak periods last year, median values still went up in about half the Opportunity Zones by more than the 16.6 percent year-over-year gain seen nationwide.
“Home price trends in Opportunity Zones mirror what we’re seeing elsewhere in the housing market,” says Rick Sharga, EVP 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.”
Typical home values in Opportunity Zones do remain lower than those in most other neighborhoods around the nation in the first quarter of 2022. Median first-quarter prices were less than the national median of $320,500 in 76 percent of Opportunity Zones, about the same portion as in earlier periods last year.
Typical values also were under $200,000 in 51 percent of the zones during the first quarter of 2022. That figure marked the same percentage as in the fourth quarter of 2021, but was down from 61 percent a year earlier, as markets inside some of the nation’s poorest communities kept improving amid a time of historically low mortgage rates, high buyer demand, and tight supplies of homes for sale.
In another ongoing sign of strong growth, prices spiked at least 25 percent from the first quarter of 2021 to the same period in 2022 in a larger portion of Opportunity Zones than in other neighborhoods around the country.
Opportunity Zones are defined in the Tax Act legislation as census tracts in or alongside low-income neighborhoods that meet various criteria for redevelopment in all 50 states, the District of Columbia, and US territories. Census tracts, as defined by the US Census Bureau, cover areas that have 1,200 to 8,000 residents, with an average of about 4,000 people.
Prices inside Opportunity Zones remained on an upward track during the first quarter of 2022 as a decade-long price boom in the United States kept boosting markets throughout the US Those included lower-income communities that have become more appealing as many buyers have gotten priced out of more-expensive neighborhoods.
“With so little entry-level inventory on the market, homes in Opportunity Zones represent some of the few remaining affordable options for prospective homebuyers,” Sharga added. “This is especially important for first-time buyers, who typically have to stretch their finances in order to be able to afford a home.”
Both the overall housing market and Opportunity Zones are facing headwinds today that didn’t exist a few months ago, as mortgage rates have risen to 5 percent, the stock market has fallen, and consumer price inflation is at a 40-year high. But those uncertainties have yet to stifle price growth.
High-level findings from the report include:
- Median prices of single-family houses and condominiums rose from the fourth quarter of 2021 to the first quarter of 2022 in 2,617 (55 percent) of the Opportunity Zones around the U.S. with sufficient data to analyze, and increased from the first quarter of 2021 to same period this year in 3,529 (78 percent) of those zones. By comparison, median prices rose quarterly in 58 percent of census tracts outside of Opportunity Zones and annually in 80 percent. (Among the 5,092 Opportunity Zones included in the report, 4,722 had enough data to generate usable median-price comparisons from the fourth quarter of 2021 to the first quarter of 2022; 4,550 had enough data to make comparisons between the first quarter of 2021 and the first quarter of 2022).
- Measured year over year, median home prices rose at least 20 percent in the first quarter of 2022 in 2,231 (49 percent) of Opportunity Zones with sufficient data. Prices rose that much during that time period in 44 percent of other census tracts throughout the country.
- Typical single-family home values in 55 percent of Opportunity Zones increased from the first quarter of 2021 to the first quarter of 2022 by more than the jump in the overall national median home price. Nationally, the figure rose 16.6 percent, year over year. Measured quarterly, prices in Opportunity Zones increased at a slower rate than in most of 2021. But 52 percent of zones still saw larger quarterly improvements from late 2021 to early 2022 than the national uptick of 1.7 percent.
- Among states that had at least 25 Opportunity Zones with enough data to analyze during the first quarter of 2022, those with the largest portion of zones where median prices rose year over year were in the West. They were led by Utah (median prices up, year over year, in 97 percent of zones), Arizona (97 percent), Nevada (93 percent), Oregon (88 percent) and Florida (87 percent).
- Of all 5,092 zones in the report, 1,807 (35 percent) still had median prices in the first quarter of 2022 that were less than $150,000 and another 779 (15 percent) had medians ranging from $150,000 to $199,999.
- Median values in the first quarter of 2022 ranged from $200,000 to $299,999 in 1,092 Opportunity Zones (21 percent) while they topped the national median of $320,500 in 1,238 (24 percent).
- The Midwest continued in the first quarter of 2022 to have the highest portion of Opportunity Zone tracts with a median home price of less than $150,000 (61 percent), followed by the South (39 percent), the Northeast (39 percent) and the West (3 percent).
- Median household incomes in 87 percent of the Opportunity Zones analyzed were less than the medians in the counties where they were located. Typical incomes were less than three-quarters of county-level figures in 56 percent of zones and less than half in 13 percent.
The ATTOM Opportunity Zones analysis is based on home sales price data derived from recorded sales deeds. Statistics for previous quarters are revised when each new report is issued as more deed data becomes available. ATTOM’s analysis compared median home prices in census tracts designated as Opportunity Zones by the Internal Revenue Service. Except where noted, tracts were used for the analysis if they had at least five sales in the first quarter of 2022. Median household income data for tracts and counties comes from surveys taken the US Census Bureau (www.census.gov) from 2016 through 2020. The list of designated Qualified Opportunity Zones is located at U.S. Department of the Treasury. Regions are based on designations by the Census Bureau. Hawaii and Alaska, which the bureau designates as part of the Pacific region, were included in the West region for this report.
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