Median single-family home and condo prices rose from Q2 to Q3 2022 in 51% of Opportunity Zones around the country, and went up at least 3% in almost half, according to a new report from ATTOM.
The Q3 2022 report analyzed qualified low-income Opportunity Zones targeted by Congress for economic redevelopment in the Tax Cuts and Jobs Act of 2017. The report found that median prices fell below the nationwide median of $339,815 in 79% of Opportunity Zones, about the same portion as in earlier periods over the past year. In addition, median prices remained below $200,000 in 50% of the zones, down from 56% last year.
- By comparison, median prices rose from Q2 to Q3 2022 in 48% of census tracts outside of Opportunity Zones and annually in 75%.
- Measured year over year, median home prices remained up at least 15% in the third quarter of 2022 in 1,981 (45%) of Opportunity Zones. Prices rose that much during that time period in just 40% of other census tracts throughout the country.
- Typical single-family home values in 58% of Opportunity Zones either increased, or declined by less, than the nationwide drop-off in the median home price from the second quarter of 2022 to the third quarter of 2022.
- Nationally, the median dipped 2.7% quarterly. In addition, 55% of median values inside Opportunity Zones rose from last year by more than the national annual increase of 9.7%.
- Of the 4,732 zones in the report, 1,581 (33%) still had median prices that were less than $150,000. That was down from 38% of those zones a year earlier. Another 768 zones (16%) had medians ranging from $150,000 to $199,999.
- Median values in the third quarter of 2022 ranged from $200,000 to $299,999 in 1,057 Opportunity Zones (22%), while they topped the nationwide third-quarter median of $339,815 in 1,013 (21%).
- The Midwest continued to have the largest portion of the lowest-priced Opportunity Zone tracts. Median home prices were less than $175,000 in 66% of zones in the Midwest, followed by the South (45%), the Northeast (44%) and the West (6%).
- Median household incomes in 87% 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 56% of zones and less than half in 16%.
The report stated that the relative strength of Opportunity Zone markets continued in the third quarter even amid a series of forces that threatened to stall or derail an 11-year boom that nearly has tripled home prices nationwide and has trickled down to the nation’s lowest-price neighborhoods. More drops in home values could have an especially harsh effect on Opportunity Zones if those drops make other areas more affordable to buyers.
“The combination of higher home prices and mortgage rates that have doubled over the past few months has made affordability a real challenge for both traditional homebuyers and investors,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “For many prospective buyers, the solution to worsening affordability is to look for less expensive homes, and it seems like homes in Opportunity Zones might represent a relative bargain for buyers who’ve been priced out of other markets.”
For the full report, click here.