Residential Real Estate News
Residential Prices Rise in Most Opportunity Zones Across America Mid-2022
Property data company ATTOM just released its second-quarter 2022 report analyzing 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 single-family home and condo prices rose from the first quarter of 2022 to the second quarter of 2022 in 63 percent of Opportunity Zones around the country and went up at least 5 percent in roughly half of zones analyzed with sufficient data. Typical values also shot up at least 20 percent annually in about half of Opportunity Zones with enough data to analyze across all quarters.
Moreover, median values increased in about half the Opportunity Zones by more than the 8.8 percent quarterly and 15.3 percent year-over-year gain seen for all markets nationwide in the Spring of 2022.
Those gains extended similar patterns seen over the past year as home prices in distressed neighborhoods around the nation continued to keep up with gains in the broader national housing market.
Typical home values in Opportunity Zones remained lower than those in most other neighborhoods around the nation in the second quarter of 2022. Median second-quarter prices fell below the national median of $346,000 in 77 percent of Opportunity Zones, about the same portion as in earlier periods over the past year. Considerable price volatility also continued in those markets, as median values dropped quarterly in 37 percent of them, probably reflecting the small number of sales in many areas.
"Homes in most Opportunity Zones represent affordable options for real estate investors and consumer homebuyers in a market where both home prices and mortgage rates have been rising," said Rick Sharga, executive vice president of market intelligence at ATTOM. "With home prices up 15 percent compared to a year ago and mortgage rates nearly doubled, both investors and homebuyers may find the lower purchase prices for homes available in Opportunity Zones very attractive."
Median prices also were under $200,000 in 49 percent of the zones during the second quarter of 2022. But that percentage under $200,000 was down from 58 percent in the second quarter of 2021 and 52 percent in the first quarter of 2022.
In another ongoing sign of market strength, prices spiked at least 25 percent from the second quarter of last year to the same period this year in a larger portion of Opportunity Zones than in other neighborhoods around the country.
Opportunity Zones are defined in the Tax Act legislation 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. Census tracts, as defined by the U.S. Census Bureau, cover areas that have 1,200 to 8,000 residents, with an average of about 4,000 people.
The ongoing price spikes inside Opportunity Zones in the second quarter was one of the latest signs of how high buyer demand coupled with tight supplies of homes for sale throughout the U.S. may have priced many households out of more upscale neighborhoods into lower-priced markets. Demand continued into the Spring buying season even as home mortgage rates rose in the second quarter to nearly 6 percent, gasoline and other fuel costs soared, inflation shot up to 40-year highs and economic uncertainty across the country increased.
High-level findings from the report:
- Median prices of single-family houses and condominiums rose from the first quarter of 2022 to the second quarter of 2022 in 2,928 (63 percent) of the Opportunity Zones around the U.S. with sufficient data to analyze, while declining in 37 percent. They increased from the second quarter of 2021 to the same period this year in 3,692 (77 percent) of those zones. By comparison, median prices rose quarterly in 69 percent of census tracts outside of Opportunity Zones and annually in 82 percent. (Among the 5,198 Opportunity Zones included in the report, 4,654 had enough data to generate usable median-price comparisons from the first quarter to the second quarter of 2022; 4,793 had enough data to make comparisons between the second quarter of 2021 and the second quarter of 2022).
- Measured year over year, median home prices rose at least 25 percent in the second quarter of 2022 in 1,883 (39 percent) of Opportunity Zones with sufficient data. Prices rose that much during that time period in just 34 percent of all other census tracts outside of opportunity zones throughout the country.
- Among states that had at least 25 Opportunity Zones with enough data to analyze during the second quarter of 2022, those with the largest portion of zones where median prices rose year over year were in the West. They were led by Utah (median prices up, year over year, in 97 percent of zones), Arizona (93 percent), Nevada (93 percent), Oregon (89 percent) and Idaho (88 percent).
- Of the 5,198 zones in the report, 1,763 (34 percent) still had median prices in the second quarter of 2022 that were less than $150,000. That was down from 41 percent of those zones a year earlier. Another 778 zones (15 percent) had medians in the second quarter of this year ranging from $150,000 to $199,999.
- Median values in the second quarter of 2022 ranged from $200,000 to $299,999 in 1,118 Opportunity Zones (22 percent) while they topped the nationwide second-quarter median of $346,000 in 1,172 (23 percent).
- The Midwest continued in the second quarter of 2022 to have the highest portion of the least-expensive Opportunity Zone tracts, with median home prices of less than $175,000 (69 percent), followed by the Northeast (45 percent), the South (45 percent) and the West (6 percent).
- Median household incomes in 87 percent 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 percent of zones and less than half in 16 percent.
