Median home prices rose in 64 percent of opportunity zones between the final quarter of 2019 and the first quarter of 2020, according to Attom Data Solutions’ Q1 2020 Opportunity Zones Report. In 36 percent of opportunity zones, median home prices declined or remained steady from quarter to quarter.
For this report, Attom analyzed approximately 3,000 census tracts designated as opportunity zones by the Internal Revenue Service (IRS) containing at least five home sales in each quarter from 2005 through Q1 2020. These areas, typically distressed or lower income neighborhoods, are offered tax benefits as a way to spur economic development.
Forty-five percent of zones saw median home prices increase by more than the national median home price increase of 11.3 percent year-over-year from Q1 2019 to Q1 2020. That number was down slightly from 47 percent of zones with median home price increases greater than the national increase of 9.4 percent year-over-year from Q4 2018 to Q4 2019.
“Home prices in designated opportunity zones around the country keep showing strong gains, tracking the housing market boom now in its ninth year,” Todd Teta, chief product officer at Attom Data Solutions, said in a statement. “Nearly half did even better in the first quarter of 2020 than the nation as a whole — a notable trend in some of the country’s most distressed neighborhoods.”
California held the greatest number of opportunity zones, with 389 zones. Florida (295 zones), Georgia (148 zones), Texas (144 zones) and North Carolina (137 zones) followed to round out the top five states.
The majority of opportunity zones included in the report — 46 percent — had median home prices in the first quarter that were less than $150,000. The next greatest concentration of zones had homes in median price ranges over $265,900, with 22 percent of zones in this category. Seventeen percent of zones had median prices between $150,000 and $199,999, and 16 percent had median prices between $200,000 and $265,900.
Out of those metro areas with sufficient data to analyze, 86 percent of opportunity zones had median Q1 2020 sales prices less than the median sales prices for homes in the surrounding metro areas. About 25 percent of opportunity zones had median sales prices that were less than half the median sales prices in the surrounding metro areas. Only 14 percent of opportunity zones had median sales prices that were equal to or greater than median sales prices in the surrounding metro areas.
Regionally, the Midwest had the greatest number of opportunity zone tracts with a median home price that was less than $150,000, with 76 percent of opportunity zone tracts falling into this category. The South contained the second greatest number of opportunity zone tracts with median prices of that value, with 58 percent containing median home prices less than $150,000. The Northeast had 45 percent of opportunity zone tracts with median home prices at this rate and the West contained 11 percent at this price range.
“As with other recent Attom reports, this one needs to be taken in the context of the looming impact of the coronavirus pandemic, which could cut the legs out from under the housing market,” Teta added. “For now, though, home prices are going strong in opportunity zones, which offers significant hope to current and potential homeowners and investors.”