Home Price Appreciation in U.S. Opportunity Zones Less Than National Average
According to ATTOM Data Solutions, the median U.S. home prices increased from the third quarter of 2019 to the third quarter of 2020 in 74 percent of the zones and rose by more than 10 percent in slightly more than half the zones.
Those gains revealed that housing markets in Opportunity Zones continued improving in the third quarter of 2020, even as the Coronavirus pandemic spread throughout the nation, damaging large sectors of the American economy. The impact generally hit hardest in lower-income communities that include most of the zones targeted for tax breaks designed to spur redevelopment.
But the price gains in Opportunity Zones fell below the pace of improvements in broader metropolitan statistical areas throughout the country: every metro area with enough data to analyze in the third quarter of 2020 showed year-over-year median price increases, while three quarters of those areas saw prices jump more than 10 percent.
The report also shows that 76 percent of the Opportunity Zones analyzed had median home prices in the third quarter of 2020 that were less than the national median of $283,813 - roughly the same percentage that were below the national figure in the second quarter of 2020. About 36 percent of the zones still had median prices of less than $150,000, also about the same as in the prior quarter.
"Home prices in Opportunity Zones around the country continued rising in the third quarter of 2020, riding the wave of a nationwide boom that has defied the economic damage from the widespread Coronavirus pandemic. The increases point toward signs that some of the country's most distressed communities have great potential for revival," said Todd Teta, chief product officer with ATTOM Data Solutions. "At that same time, though, prices remain depressed in Opportunity Zones, and a notable number actually dropped in the third quarter - a potentially very troubling indicator. Those dueling trends will be important to watch over the coming months amid a highly uncertain economic outlook."High-level findings from the report include:
- Median prices rose from the third quarter of 2019 to the third quarter of 2020 in 74 percent of Opportunity Zones with sufficient data to analyze and increased in 60 percent of the zones from the second to the third quarter of 2020. (Of the 1,737 Opportunity Zones included in the report, 1,670 had enough data to generate usable median prices in the third quarter of both 2019 and 2020; 1,559 had enough data for the second and third quarters of 2020). Meanwhile, median prices rose annually in every metropolitan statistical area around the country with enough data to analyze and increased quarterly in all but one.
- In Metropolitan Statistical Areas with sufficient sales data to analyze, 89 percent of Opportunity Zones had median third-quarter sales prices that were less than the median values for the surrounding MSAs; 29 percent had median sales prices that were less than half the figure for the MSAs. Eleven percent of the zones had median sales prices that were equal to or above the median sales price of the broader MSAs.
- Measured year over year, median prices rose more than 10 percent in the third quarter of 2020 in 890 (53 percent) of Opportunity Zones with sufficient data to analyze. Prices rose that much during that time period in 75 percent of all metro areas throughout the country with sufficient data to analyze.
- States with the largest percentage of zones that had annual median price increases during the third quarter of 2020 included Washington (median prices up in 88 percent of zones), Missouri (88 percent), Arizona (86 percent), Ohio (83 percent) and Rhode Island (82 percent).
- Of all 1,737 zones in the report, 629 (36 percent) had a median price in the third quarter of 2020 that was less than $150,000 and 313 (18 percent) had medians ranging from $150,000 to $199,999. Another 328 (22 percent) ranged from $200,000 up to the national median price of $283,813 while 410 (24 percent) were more than $283,813.
- The Midwest continued to have the highest portion of Opportunity Zone tracts with a median home price of less than $150,000 (58 percent), followed by the South (48 percent), the Northeast (41 percent) and the West (8 percent).