Home prices rose in Q1 2022 for the majority of Opportunity Zones, with the pace of gains in half of all zones besting quarterly and annual increases across the nation, ATTOM reported.
Opportunity Zones are areas targeted for economic improvement, defined in the Tax Act legislation as census tracts in or alongside low-income neighborhoods that meet specific criteria for redevelopment. ATTOM analyzed 5,092 zones in the U.S. that had at least five home sales in Q1 2022.
The report found that median single-family home and condo prices increased in 55% of zones between Q4 2021 and Q1 2022. In 50%, prices rose by at least 20%, despite the fact that the pace of increases slowed in Q1.
“Home price trends in Opportunity Zones mirror what we’re seeing elsewhere in the housing market,” said Rick Sharga, executive vice president of market intelligence at ATTOM.
“Strong price growth has helped homeowners in these economically-challenged areas benefit from higher equity, and should contribute to the ongoing redevelopment of these areas.”
Typical home values in zones are lower than in most other neighborhoods, with median prices less than the national median of $320,500 in 76% of zones and under $200,000 in 51%.
But prices were up at least 25% YOY in more Opportunity Zones than in other neighborhoods.
“With so little entry-level inventory on the market, homes in Opportunity Zones represent some of the few remaining affordable options for prospective homebuyers,” Sharga said.
“This is especially important for first-time buyers, who typically have to stretch their finances in order to be able to afford a home.”
First-time buyers made up 34% of all home buyers, down from 45% in 2019. A Zillow survey of housing experts predicted that neither inventory nor the share of first-time buyers will bounce back until 2024.
“First-time homebuyers are feeling anxious and unprepared in this highly competitive housing market,” researchers wrote.