Based on a new report by ATTOM, median single-family home and condo prices in the U.S. stayed the same or decreased from the fourth quarter of 2022 to the first quarter of 2023 in 52 percent of Opportunity Zones around the country where there was sufficient data and fell at least 3 percent in almost half. At the same time, though, they increased by at least that much in about 40 percent of those markets.
Those mixed patterns largely matched trends in neighborhoods outside the zones, as a slowdown in the national housing market, which began during the second half of 2022, continued into 2023 after a decade of almost unceasing growth.
By one key measure, Opportunity Zone markets even showed signs of holding up slightly better than other neighborhoods around the country during the first quarter of this year. Median prices in those areas were more often still higher compared to the point when the U.S. market began to flatten out last year.
"Home-price trends inside Opportunity Zones keep following along with the broader national picture, as they have for the past couple of years," said Rob Barber, chief executive officer for ATTOM. "Through boom times and weaker times, values inside the zones have gone up or down at about the same pace as the national market. They're even doing a little better these days, depending on how you look at it. The latest numbers provide a sign that areas targeted for the program's tax breaks are resilient during a time when the broader market is no longer heading ever higher."
Opportunity Zones are defined in the Tax Act legislation as census tracts in or alongside low-income neighborhoods that meet various criteria for redevelopment in all 50 states, the District of Columbia and U.S. territories. Census tracts, as defined by the U.S. Census Bureau, cover areas that have 1,200 to 8,000 residents, with an average of about 4,000 people.
As in the past, typical home values in Opportunity Zones continued to fall well below those in most other neighborhoods around the nation in the first quarter of 2023. Median first-quarter prices were less than the U.S. median of $321,135 in 79 percent of Opportunity Zones. That was about the same portion as in earlier periods over the past year. In addition, median prices remained less than $200,000 in 55 percent of the zones analyzed during the first quarter of 2023.
High-level findings from the report:
Median prices of single-family houses and condominiums decreased or stayed the same from the fourth quarter of 2022 to the first quarter of 2023 in 1,673 (52 percent) of the Opportunity Zones around the U.S. with sufficient data to analyze, while increasing in 48 percent. Medians were still up from the first quarter of 2022 to the same period this year in 1,857 (55 percent) of those zones. (Among the 3,587 Opportunity Zones included in the report, 3,215 had enough data to generate usable median-price comparisons from the fourth quarter of 2022 to the first quarter of 2023; 3,359 had enough data to make comparisons between the first quarter of 2022 and the first quarter of 2023).
Both the quarterly and annual trends in Opportunity Zones roughly followed national patterns. Median prices were flat or down from the fourth quarter of 2022 to the first quarter of 2023 in 53 percent of census tracts outside of Opportunity Zones, while remaining up annually in 56 percent.
Median values dipped at least 3 percent quarterly in 46 percent of Opportunity Zones with sufficient data. Median prices also rose at least 3 percent quarterly in 42 percent of Opportunity Zones.
But in a separate key measure - looking at trends since home prices began to slip last year - Opportunity Zones fared better. Median single-family home values remained higher during the first quarter of this year compared to the second quarter of last year in 44 percent of Opportunity Zones. The same was true in just 39 percent of other neighborhoods across the country.
Among states that had at least 25 Opportunity Zones with enough data to analyze during the first quarter of 2023, the largest portions where median prices declined or stayed the same quarterly were in Arizona (median prices down from the fourth quarter of 2022 to the first quarter of 2023 in 61 percent of zones), Oregon (60 percent), Maryland (60 percent), Massachusetts (59 percent) and South Carolina (58 percent). States where at least half the zones still saw quarterly increases in the early months of 2023 included Wisconsin (median prices up, quarter over quarter, in 57 percent of zones), Florida (56 percent), Kentucky (56 percent), Utah (56 percent) and Georgia (54 percent).
States where median home values remained up annually in a majority of Opportunity Zones included Wisconsin (median prices up year over year in 71 percent of zones), Florida (67 percent), Missouri (67 percent) and Indiana (67 percent).
Of the 3,587 zones in the report, 1,368 (38 percent) had median prices in the first quarter of 2023 that were less than $150,000. That was down slightly from 40 percent of those zones a year earlier. Another 597 zones (19 percent) had medians in the first quarter of this year ranging from $150,000 to $199,999. Median values in the first quarter of 2023 ranged from $200,000 to $299,999 in 759 Opportunity Zones (24 percent), while they topped the nationwide first-quarter median of $321,135 in 748 (21 percent).
The Midwest continued in the first quarter of 2023 to have larger portions of the lowest-priced Opportunity Zone tracts. Median home prices were less than $150,000 in 61 percent of zones in the Midwest, followed by the Northeast (43 percent), the South (39 percent) and the West (5 percent). Median household incomes in 87 percent of the Opportunity Zones analyzed were less than the medians in the counties where they were located. Median incomes were less than three-quarters of county-level figures in 54 percent of zones and less than half in 14 percent.