Affordable areas continue to attract buyers priced out of expensive metros
Opportunity zones continue to attract interest from homebuyers priced out of more expensive areas, according to ATTOM’s new report.
These zones, designated by the Tax Cuts and Jobs Act of 2017 for economic redevelopment, saw a mixed bag of price changes, with median single-family home and condo prices rising in 49% of zones quarter-over-quarter.
While price changes were mixed, the overall picture in opportunity zones revealed ongoing economic strength compared to other markets. This resilience is particularly noteworthy as the decade-long housing boom slows down nationwide.
“Home prices still lag far behind national numbers, but gains and losses mostly keep tracking overall market patterns,” ATTOM chief executive officer Rob Barber said in the report. “The latest data shows opportunity zone housing markets continuing to attract considerable interest among home buyers pushed out of higher-priced areas in a market with very limited supplies of homes for sale.”
While most opportunity zones had typical home values well below the US median of $330,000 in Q1 2024, nearly 60% of zones saw larger annual price increases than the 3.1% gain nationwide.
However, areas with the lowest home values faced challenges, with only 45% of opportunity zones where homes typically sold for less than $100,000 experiencing annual price increases. This contrasts with higher-priced zones, where prices climbed in 60% to 70% of cases.
“Clearly, there are exceptions, especially at the lowest end of the price scale,” Barber said.
Among states with at least 25 qualifying zones, Kentucky, New Jersey, Tennessee, Arizona, and Minnesota saw the highest percentage of zones with quarterly price increases. Meanwhile, Utah, New York, Virginia, South Carolina, and Alabama experienced the lowest percentage of increases.
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As of the first quarter of 2024, 34% of opportunity zones had median prices below $150,000, down from 38% a year earlier. The Midwest continued to have the largest share of the lowest-priced tracts, with 67% of zones having median prices under $175,000.
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