Home values in some of the U.S.’s poorest communities increased again last quarter, continuing a trend that began earlier this year.
According to ATTOM Data Solutions, median single-family home and condo prices rose in 62% of the country’s Opportunity Zones in 2021’s third quarter.
Opportunity Zones are economically distressed areas in all U.S. states, territories, and the District of Columbia. Created by the Tax Cuts and Jobs Act of 2017, Opportunity Zones provide financial incentives to encourage development.
There are more than 8,700 Opportunity Zones across the country. ATTOM analyzed sales data from 5,402 Zones, the number of Zones that recorded at least five home sales last quarter.
The property analytics company found that home values rose in 3,136, or 62%, of them.
And values jumped by more than 20% in 47% of Opportunity Zones from 2020’s third quarter. This appreciation mirrors the rest of the country’s increasing home prices, ATTOM said.
Opportunity Zone home values rise, still lag rest of the country
Even with the increases, though, home values in Opportunity Zones still lag behind those elsewhere.
“About three-quarters of zones with enough data to analyze had typical third-quarter prices below the national median of $310,500,” ATTOM said.
The Midwest has the largest share of lowest-value homes in Opportunity Zones.
Sixty percent of Opportunity Zone homes in the Midwest had home values below $150,000 last quarter, followed by the South at 42% and the Northeast at 35%. Just 5% of Opportunity Zone homes in the West are below $150,000.
Fifty-three percent of houses and condos in all Opportunity Zones showed median home values below $200,000. However, that’s down from 57% in 2021’s second quarter and 63% in the first quarter.
To Todd Teta, ATTOM’s chief product officer, these numbers may attract additional real estate investment to Opportunity Zones.
“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,” Teta said. “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.”
ATTOM found that home prices grew by at least 25% last quarter from 2020’s third quarter in four out of every ten Opportunity Zones. The company said that compares to three out of every ten communities that aren’t in Opportunity Zones.
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