Real estate investors have an opportunity to maximize returns
Last year’s federal tax reforms created Opportunity Zones which give a tax break to investors who invest in certain designated areas.
An analysis of home prices in these zones and compared with prices outside the zones reveals the advantage that investors can gain from these regions.
ATTOM Data Solutions considered housing characteristics, home values and price appreciation for 7.4 million residential properties and 259,000 home sales in more than 3,000 Opportunity Zones.
These zones included ones in the areas that have this week been named as locations for Amazon’s headquarters expansion, HQ2. New York City, Washington DC, and Nashville.
"The new Opportunity Zones created by the tax reform legislation passed in December 2017 provide real estate investors with prime, tax-incentivized investing opportunities, particularly if they can find zones that are in the path of progress," said Daren Blomquist, senior vice president with ATTOM Data Solutions. "The newly announced Amazon HQ2 markets certainly qualify as being in the path of progress."
What the analysis reveals
The study found that homes located in Opportunity Zones nationwide and in each of the three ‘HQ2’ markets consistently were sold at a discount - so far in 2018 through September the average price is $163,746, 43% below the average home price of $287,150 outside of Opportunity Zones.
These homes have also appreciated in value more quickly over the past five years compared to homes outside of Opportunity Zones - 72% compared to 46% during the same period.
ATTOM also analyzed average property taxes for homes inside and outside Opportunity Zones and found that nationwide, the average property tax for single family homes and condos in Opportunity Zones is $1,918, 41% below the average property tax of $3,248 for single family homes and condos not in Opportunity Zones.
Average property taxes for homes inside Opportunity Zones were substantially lower than average property taxes for homes outside of Opportunity Zones in each of the three Amazon HQ2 markets.
