The housing market is booming, even amid recent economic upheaval related to the COVID-19 crisis, but that holds less true in Opportunity Zones [1] nationwide, according to a study by ATTOM Data Solutions [2], which collects and analyzes property, mortgage, foreclosure, and disaster statistics.
While the report showed home price gains steadily climbing nationwide, prices are rising more slowly—or not at all in some cases—in Opportunity Zones than in the broader metro areas.
The report showed median home prices increasing from Q3 of 2019 to the same quarter of 2020 in 74% of the Zones; in about half of the Zones, prices rose by about 10%.
It revealed that markets in Opportunity Zones continued improving in Q3 2020, even as COVID-19 spread throughout the nation, damaging much of the American economy, ATTOM reported.
However, the researchers added, "the price gains in Opportunity Zones fell below the pace of improvements in broader metropolitan statistical areas throughout the country: every metro area with enough data to analyze in the third quarter of 2020 showed year-over-year median price increases, while three-quarters of those areas saw prices jump more than 10%.
Median home prices in 76% of Opportunity Zones were lower than the national median of $283,813. That's roughly the same percentage as last year at this time. In about 36% of Opportunity Zones, the median home price is less than $150,000, also generally unchanged since last year at the same time.
“Home prices in Opportunity Zones around the country continued rising in the third quarter of 2020, riding the wave of a nationwide boom that has defied the economic damage from the widespread Coronavirus pandemic. The increases point toward signs that some of the country’s most distressed communities have great potential for revival,” said Todd Teta, Chief Product Officer with ATTOM. “At that same time, though, prices remain depressed in Opportunity Zones, and a notable number actually dropped in the third quarter—a potentially very troubling indicator. Those dueling trends will be important to watch over the coming months amid a highly uncertain economic outlook.”
The following are highlights from the report:
- Median prices rose from Q3 2019 to Q3 2020 in 74% of Opportunity Zones with sufficient data to analyze (see methodology in full report, here [2]) and increased in 60% of the Zones from the second to the third quarter of 2020.
- In Metropolitan Statistical Areas (MSA) with sufficient sales data to analyze, 89% of Opportunity Zones had medianQ3 sales prices that were less than the median values for the surrounding MSAs; 29 percent had median sales prices that were less than half the figure for the MSAs. Eleven percent of the zones had median sales prices that were equal to or above the median sales price of the broader MSAs.
- Year over year, median prices rose more than 10% in Q3 2020 in 890 (53%) of Opportunity Zones. Prices rose that much during that time period in 75% of all metro areas throughout the country.
- States with the largest percentage of Zones that had annual median price increases during the third quarter of 2020 included Washington (median prices up in 88% of zones), Missouri (88%), Arizona (86%), Ohio (83%) and Rhode Island (82%).
- Of all 1,737 Zones in the report, 629 (36%) had a median price in the third quarter of 2020 that was less than $150,000 and 313 (18%) had medians ranging from $150,000 to $199,999.
- The Midwest continued to have the highest portion of Opportunity Zone tracts with a median home price of less than $150,000 (58%), followed by the South (48%), the Northeast (41%) and the West (8%).