Low-income redevelopment zones continue to benefit from home price appreciation around the country, and some are faring better than their neighbors.
ATTOM’s Q2 2023 review of low-income Opportunity Zones targeted by Congress for economic redevelopment found that 61% of the 3,909 data zones saw price increases. In half of those, prices were up 5% or more.
Opportunity zones exist in and around low-income neighborhoods where the federal government offers tax breaks to advance economic development. Overall, these areas follow home price trends in other parts of the country.
Values declined in the last half of 2022 before recovering in 2023, a pattern that has impacted most U.S. neighborhoods. But prices in many zones rose faster than the nationwide trend both quarter-over-quarter and year-over-year.
The fact that these zones, which suffer from ongoing economic distress, are following typical housing patterns is a sign of economic strength and the strength of housing demand. In 80% of zones, Q2 prices were under the national median of $350,000.
“Another quarter and another sign of housing market strength. That was the story yet again in Opportunity Zones around the U.S. during the Spring buying season of 2023,” ATTOM CEO Rob Barber said.
“For sure, prices remain low in Opportunity Zones. But once again, home value trends present a positive note for investors considering using federal tax breaks offered to redevelop neighborhoods in need of revival… With an ongoing tight supply of homes for sale pushing the trends even more throughout the country, there are no major signs that Opportunity Zones price patterns will fall out of step with the national scenario in the near future.”
Opportunity zones are nearing the end of their tenure — the Tax Cuts and Jobs Act of 2017 that created them provided legislation for just ten years — but experts are optimistic that Congress will extend them. Real estate insiders, investors, and business owners alike say the bill has resulted in low-income area development.
“We are getting these neighborhoods cleaned up and renovated and jobs created and taxes generated and we have a housing shortage and we are creating housing,” Louis Rogers, co-CEO of Capital Square, which works in Opportunity Zones, noted. “The program has proven to be successful.”
An extension of the bill appears to have bipartisan support, though there are concerns it won’t pass the current divided Congress.
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