'Dueling trends' impact Opportunity Zone home price growth
Median home prices rose annually in 74% of Opportunity Zones across the country in the third quarter, with 53% growing by 10% or more, according to Attom Data Solutions.
A 36% share of zones had a median price below $150,000, down from 48% the year before. Overall, 76% of the zones had housing prices below the national median of $283,813 while the remaining 24% were above that mark, compared to 79% and 21% in the third quarter of 2019 when the median price was $270,000.
“Home prices in Opportunity Zones around the country continued rising in the third quarter of 2020, riding the wave of a nationwide boom that has defied the economic damage from the widespread coronavirus pandemic," Todd Teta, chief product officer with Attom Data Solutions, said in a press release.
Under the Tax Cuts and Jobs Act of 2017, investors dodge capital gains taxes to develop Opportunity Zones, providing affordable housing in low-income urban and rural communities in poor census tracts across the U.S.
Within the zones, 89% of homes had prices under the median of their individual metro areas, while about 29% had median prices under the 50th percentile of their surrounding markets. However, 11% had values above the median sales price of their housing market. Because of their status in poor census tracts, Opportunity Zone housing is vulnerable, even during a strong year for real estate.
"The increases point toward signs that some of the country’s most distressed communities have great potential for revival," Teta said. "At that same time, though, prices remain depressed in Opportunity Zones, and a notable number actually dropped in the third quarter — a potentially very troubling indicator. Those dueling trends will be important to watch over the coming months amid a highly uncertain economic outlook.”
Missouri and Washington led all states by share of zones with median price increases at 88%. Arizona trailed closely at 86%, with Ohio's 83% and Rhode Island's 82% not far behind.
Attom based its report on 1,737 zones with at least five home sales in the third quarter of 2020.