Nearly half (47 percent) of qualified opportunity zones saw median home prices rise more than the national increase of 9.4 percent year-over-year from Q4 2018 to Q4 2019, according to Attom Data Solutions’ Q4 2019 Opportunity Zones Report.
Qualified opportunity zones were created by the 2017 Tax Cuts and Jobs Act as a way to spur economic development in distressed or lower income neighborhoods by offering tax benefits. For this report, Attom analyzed 3,700 zones with at least five home sales in each quarter from 2005 to Q4 2019.
“Home prices in thousands of Opportunity Zone neighborhoods targeted for revival across the United States continued 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,” Todd Teta, chief product officer of Attom Data Solutions, said in a press release.
Despite this gain, 78 percent of the zones maintained median home prices in Q4 2019 that were less than the national median of $257,000, holding nearly the same percentage as Q3 2019. Meanwhile, 48 percent of zones reported median prices of less than $150,000.
From the last quarter of 2018 to the third quarter of 2019, 66 percent of opportunity zones reported a median price increase. In the remaining 34 percent, prices either decreased or stayed the same.
Pennsylvania, North Carolina, Arizona, Ohio and New Jersey reported the most zones with a year-over-year median price increase that surpassed the 9.4 percent national increase. In total, 20 states contained zones that went beyond this national figure.
Overall, California had the most opportunity zones sufficient for Attom to analyze, at 465, with Florida immediately following with 332 such zones and then Texas with 234 zones.
The Midwest kept its status as the region with the greatest number of opportunity zones with a median home price of less than $150,000 at 73 percent. The South had the next highest number of opportunity zones at this price level at 58 percent, followed by the Northeast at 51 percent and finally the West at 12 percent.
Such numbers in the Midwest are striking given that 48 percent of zones analyzed (the vast majority) had a median price of $150,000 in Q4 2019. Comparatively, only 16 percent of zones had median prices of $150,000 to $199,999 and 14 percent had median prices of $200,000 to $257,000 (the national median). Only 22 percent of zones had a median price of greater than $257,000.
Most Metropolitan Statistical Areas (MSAs) analyzed (84 percent) held median Q4 sales prices that were less than the median values for surrounding MSAs, 25 percent of which were less than half of surrounding MSA medians. Still, 16 percent of zones achieved median sales prices equal to or greater than the median sales price of its surrounding MSAs.
Wyoming asserted its status as the state with the highest percentage of census tracts meeting opportunity zone requirements at 17 percent. Other high percentage states included Mississippi at 15 percent, Alabama at 13 percent, North Dakota at 12 percent and New Mexico also at 12 percent.
“These areas are among the most vulnerable to economic downturns,” Teta added in the press release. “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.”