Home Prices Rise in Nearly Half of Opportunity Zones

February 20, 2020

In nearly half of federally designated “Opportunity Zone” areas, median home prices rose annually more than the national rate. Median home prices in these areas climbed 9.4% from the fourth quarter of 2018 to the fourth quarter of 2019, according to new research from ATTOM Data Solutions. Researchers examined about 3,700 zones that had sufficient sales data to analyze (those that had at least five home sales in each quarter from 2005 to 2019).

The opportunity zone program was laid out as part of the 2017 federal tax overhaul, providing tax breaks to those who invest in designated, economically disadvantaged areas over several years. In January, the U.S. Treasury released final guidance on opportunity investing, which some analysts report is leading to an uptick recently in their use among the investment community.

About 48% of the zones that ATTOM Data Solutions tracked had a median home price of less than $150,000.

“Home prices in thousands of Opportunity Zone neighborhoods targeted for revival across the United States continue to ride the tide of the national housing market boom in the fourth quarter of 2019, marching along with broad trends and even doing better in many areas,” says Todd Teta, chief product officer with ATTOM Data Solutions. “These areas are among the most vulnerable to economic downturns. As a result, the recent upswing could change on a dime if the broader housing market flattens out or sags. But for now, the price gains are a crucial measure that neighborhoods designated as Opportunity Zone tax breaks hold significant allure for potential residents.”

Median prices increased from the fourth quarter of 2018 to the fourth quarter of 2019 in 66% of the Opportunity Zones analyzed. In 34% of the areas, prices declined or stayed the same.

In 20 states, year-over-year median home prices rose in at least half the Opportunity Zones and topped national increases. The states with the highest price increases in their designated zones were in Pennsylvania, North Carolina, Arizona, Ohio, and New Jersey.

California has the most designated Opportunity Zones at 465, followed by Florida (332), Texas (234), Pennsylvania (166), and North Carolina (165).