Home prices across the nation are stratospheric, having hit all-time highs in five of the first six months of the year, but, of course, the acceleration of home prices varies by state, city, and ZIP code. The researchers at ATTOM take quarterly dives into home-price data so as to compare America's Opportunity Zones—defined as "economically-distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment"—to markets that are not technically considered low-income tracts. They analyzed 5,236 zones that had at least fiver home sales during the quarter (full methodology is available at ATTOM.com).
The Q2 study found, generally, home prices rising in Opportunity Zones at a rate that roughly tracks trends in broader metro areas, even surpassing them in some ways, much as they did in the first quarter of this year, and more closely than what the same researchers saw during the last quarter of 2020.
ATTOM's Chief Product Officer Todd Teta says the rate at which home prices are rising in the nation's poorest neighborhoods, even in the face of the coronavirus pandemic, indicates that "the decade long home-price boom across the nation knows pretty much no boundaries."
Noting that house prices remain depressed in these neighborhoods, he says the data represents the promise of fiscal viability.
"The price spikes there not only suggest that those communities are a very viable option for households priced out of more-upscale neighborhoods, but they also indicate the ongoing potential for the economic revival that underpins the Opportunity Zone tax breaks."
The report found that median single-family home prices increased from the second quarter of 2020 to the second quarter of 2021 in 75% of the designated tracts and rose by at least 15% in about half of them.
Home values in about three quarters of these zones did continue to lag well behind the national Q2 median of $305,000. Some 39% of the zones recorded median prices of less than $150,000 in the second quarter of this year, but a year ago 47% were valued at less than $150k.
Many reports have shown that low-wage workers and communities of color were hit hardest when COVID-19 forced closings, lockdowns, and job losses. This surge in home prices has created a buffer for struggling mortgagers in the form of equity, and that could prevent foreclosure crises both in Opportunity Zones and the rest of the country.
Unlike the 2008 financial crisis, a time when many borrowers were underwater on their mortgages, borrowers who are currently delinquent on their mortgage payments can tap into their equity and sell their home rather than lose it through foreclosure, CoreLogic's Frank Martell said when his company issued its equity report last month.
“Homeowner equity has more than doubled over the past decade and has become a crucial buffer for many weathering the challenges of the pandemic,” he said at the time. "This reduces the likelihood of large numbers of distressed sales from homeowners who emerge from forbearance later in the year."
ATTOM's full report on home prices in Opportunity Zones is available at ATTOM.com.