Based on ATTOM Data Solutions' newly released Opportunity Zones report, median single-family home and condo prices increased from the second quarter of 2021 to the third quarter of 2021 in 62 percent of Opportunity Zones around the country and rose by at least 20 percent annually in 47 percent of them. Those patterns continued to closely parallel the broader U.S. housing market as it powered through a 10th straight year of gains. By some measures, values in Opportunity Zones did even better, extending patterns from over the past year.
Home values in most Opportunity Zones did again trail well behind values in most other neighborhoods around the U.S. in the third quarter of 2021. About three-quarters of zones with enough data to analyze had typical third-quarter prices below the national median of $310,500. That was about the same as in earlier periods over the past year.
Median values also remained under $200,000 in 53 percent of Opportunity Zones in the third quarter of this year. But that was down from 57 percent in the second quarter of 2021 and 63 percent a year earlier as values inside some of the nation's poorest communities kept up with broader national housing market gains despite the Coronavirus pandemic remaining a threat to the U.S. economy.
In a sign of even better growth, prices spiked by at least 25 percent in the third quarter, measured year over year, in four of every 10 Opportunity Zones, compared to three of every 10 communities in the rest of the country.
Those increases came despite the pandemic's financial impact causing the worst damage in lower-income communities like those comprising most of the zones targeted for tax breaks designed to spur economic redevelopment.
Opportunity Zones are defined in the Tax Act legislation as census tracts in or along side 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.
"The third quarter of 2021 was just like the second, which was pretty much like the first when it came to home prices in some of the more distressed neighborhoods around the United States. Values in markets scattered through so-called Opportunity Zones kept rising at around the same pace seen in more upscale areas, as the housing-market boom kept lifting fortunes just about everywhere," said Todd Teta, chief product officer with ATTOM. "Home values in Opportunity Zones are still very low relative to other areas. But the ongoing gains showed that lots of households are buying in those areas - something that should lure the attention of investors looking to take advantage of Opportunity Zone tax breaks."
High-level findings from the report include: