Home prices in opportunity zones show mixed trends in Q1 2024

Median prices for homes and condominiums in federally designated opportunity zones rose in 49% of areas from fourth-quarter 2023 to first-quarter 2024, according to a report released Thursday by Attom

On a year-over-year basis, however, prices increased in nearly two-thirds of these zones. Attom analyzed 3,512 zones with sufficient data, defined as having at least five home sales in Q1 2024.

The Tax Cuts and Jobs Act of 2017 defines opportunity zones 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.

These areas have shown a pattern of home values that track national trends over the past three years. The Q1 2024 data indicated price declines in the lowest-priced areas, highlighting potential challenges. Nonetheless, the overall trend suggests economic resilience in these distressed communities compared to broader markets, even as the decade-long housing boom slows.

For instance, opportunity zones outperformed the national market in terms of price growth, with 60% of zones seeing annualized gains that exceeded the U.S. average of 3.1% appreciation from Q1 2023 to Q1 2024. A similar pattern occurred on a quarterly basis. 

“Home prices still lag far behind national numbers, but gains and losses mostly keep tracking overall market patterns,” Rob Barber, CEO of Attom, said in a statement. “Clearly, there are exceptions, especially at the lowest end of the price scale. Nevertheless, the latest data shows Opportunity Zone housing markets continuing to attract considerable interest among home buyers pushed out of higher-priced areas in a market with very limited supplies of homes for sale. 

“That again points to the kind of economic viability needed to lure investors who may want to take advantage of the redevelopment incentives aimed at revitalizing those communities.”

In Q1 2024, 78% of opportunity zones had median home prices below the U.S. median of $330,000, consistent with trends over the past three years. About half of the zones had median prices below $200,000.

Among states that had  at least 25 zones with enough data to analyze, Kentucky led the way with 65% of zones seeing quarterly price increases. It was followed by New Jersey (58%), Tennessee (56%), Arizona (56%) and Minnesota (56%). 

Meanwhile, states with the smallest share of zones with quarterly price increases included Utah (38%), New York (42%), Virginia (42%), South Carolina (42%), and Alabama (44%).

Year over year, New Jersey saw the highest share of zones with price increases (91%), followed by Wisconsin (75%), Kentucky (70%), Minnesota (70%) and Illinois (70%).

Of the 3,512 zones studied, 34% had median prices below $150,000 in Q1 2024, down from 38% a year earlier. Another 16% had median prices between $150,000 and $199,999.

At a regional level, the  Midwest had the highest proportion of low-priced zones, with 67% having median prices below  $175,000. It was followed by the Northeast (47%), the South (42%), and the West (6%).

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