Homes in Opportunity Zones Performing Better Than Expected
In a sinking-price environment, homes in these more affordable markets hold their own.
Homes in Opportunity Zones have fallen but are withstanding the pressures most are facing during this volatile period in the housing market, according to a new report from ATTOM based on Q4 numbers.
“On balance, they aren’t dropping any faster than in more well-off neighborhoods around the country,” Rob Barber, CEO for ATTOM, said in prepared remarks.
“By a couple of metrics, they are even doing a little better,” Barber said. “That speaks to the continued strength of Opportunity Zone housing markets and their potential allure for investors who still want to take advantage of the program’s tax breaks even in the current uncertain economic environment.”
ATTOM studied 4,119 zones around the United States where there were at least five home sales in the fourth quarter of 2022.
Median single-family home and condo prices decreased from the third quarter to the fourth quarter last year in 56 percent of Opportunity Zones around the country and dropped by at least 5 percent in almost half, ATTOM’s report. This trend closely paralleled drops in neighborhoods outside the zones.
Because these zones are generally located in some of the country’s most affordable markets, Barber said, “These areas targeted for redevelopment tax breaks may be less vulnerable to taking a big hit if the market keeps dropping. The spring buying season should say a lot about whether they can maintain their strength.”
Of the 4,119 zones in the report, 1,481 (36 percent) had median prices in Q4 that were less than $150,000. That was down from 39 percent of those zones a year earlier. Another 697 zones (17 percent) had medians in Q4 ranging from $150,000 to $199,999.
Some Opp Zones Homes Up 10% Comparatively
Noting positively, for example, larger portions of Opportunity Zones saw typical values rise by at least 10 percent both quarterly and annually compared to the rest of the nation during the last few months of 2022.
In yet another ongoing sign of strength, median values were still up year over year in almost the same portion of Opportunity Zones as elsewhere around the country.