Revitalized neighborhoods see rapid value appreciation as investors flock to the market
Opportunity Zones, once-struggling neighborhoods designated for economic revitalization, are experiencing a surge in home prices and values.
Median home values in these areas increased in over 60% of analyzed zones during the second quarter, according to a new report by ATTOM. Prices were also up annually in 62% of the zones analyzed.
“The trickle-down impact of the extended housing market boom across the US continues to uplift many neighborhoods in need, revealing their economic potential,” said ATTOM chief executive officer Rob Barber. “This pattern is especially evident in opportunity zones as house hunters priced out of more-expensive areas turn to places they can afford.”
Amid the nationwide price surge during the spring home buying season, median prices inside nearly half of the opportunity zones analyzed shot up more than 10% quarterly and annually.
That continued a long-term trend of home values inside these low-income areas targeted for redevelopment moving in parallel with broader nationwide housing market shifts over the past three years.
However, the price gains were somewhat uneven, benefiting higher-priced opportunity zones more than the very lowest-priced neighborhoods. Nevertheless, the overall picture remained one of economic strength or limited weakness in many of the country’s most distressed communities compared to other markets.
By some measures, opportunity zone price trends even outperformed the national market during the second quarter. Increases in median home values exceeded the nationwide gain in a slightly larger portion of the zones.
Read more: Homebuyers flock to tax-incentived zones as prices soar elsewhere
“While gains inside these zones vary, many are experiencing price increases, demonstrating the momentum necessary to attract the investments that the opportunity zone model is designed to generate,” Barber said in the report.
Despite the price surge, most opportunity zones still had typical home values well below the US median of $365,000 in the second quarter. Median prices were under $200,000 in almost half the zones.
The report analyzed 3,904 opportunity zones around the country with sufficient data. Opportunity zones are census tracts in or alongside low-income neighborhoods that meet various criteria for redevelopment under a federal tax incentive program.
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