A recent report from ATTOM Data Solutions found that median home prices increased in 75% of the country’s “Opportunity Zones” — economically distressed communities that may qualify for tax deferment — year over year in the first quarter of 2021. In two-thirds of all Opportunity Zones, prices rose at least 10%.
The report studied 4,579 Opportunity Zones in the country with at least five home sales in the first quarter of 2021. 43% of those zones had median home prices of less than $150,000.
“Home values inside the zones remain quite low compared to the rest of the U.S., but they are far from immune from the boom,” said Todd Teta, ATTOM Data Solutions chief product officer. “That shows continued interest among homebuyers in marginal areas and continues to bode well for the redevelopment that Opportunity Zone tax breaks are designed to promote.”
In the Tax Cuts and Jobs Act of 2017, Opportunity Zones were defined as “census tracts” in or alongside low-income neighborhoods that meet various criteria for redevelopment in all 50 states, as well as the District of Columbia and U.S. territories. Census tracts, as defined by the Census Bureau, cover areas with 1,200 to 8,000 residents, with an average of about 4,000 people.
786 zones, or 17%, had median home prices ranging from $150,000 to $199,999. The total percentage of zones with typical values below $200,000 was 60% in the first quarter of 2021 — down from 67% in the first quarter of 2020. 956 zones, or 21%, had median homes values between $200,000 and $299,999 in the first quarter of 2021.
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Median household incomes in 87% of Opportunity Zones were less than the median incomes in the counties they were located.
“Some of the country’s poorest neighborhoods continued riding the long national boom in home prices during the first quarter of the year, reaping increases that pretty much matched those in more affluent areas,” Teta said. “Those ongoing gains emerged in the latest price data showing values in designated opportunity zones rising at about the same pace, or even more, than in other communities.”
States with the largest percentage of Opportunity Zones where median prices rose year over year during the first quarter included Arizona (median prices up in 84 % of zones), Idaho and Oregon (83%), and Nevada and Michigan (82%).
The Midwest had the highest portion of Opportunity Zone tracts with a median home price of less than $150,000 (68%), followed by the South (51%), the Northeast (43%) and the West (8%).