ATTOM [1] has released its Q1 2023 report analyzing qualified low-income Opportunity Zones [2] targeted by Congress for economic redevelopment, in the Tax Cuts and Jobs Act of 2017 [3]. 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.
The new report revealed that median single-family home and condo prices stayed the same or decreased from Q4 of 2022 to Q1 of 2023 in 52% of Opportunity Zones around the country, where there was sufficient data and fell at least 3% in almost half. Meanwhile, they increased by at least that much in about 40% of those markets.
Those mixed patterns largely matched trends in neighborhoods outside the zones, as a slowdown in the national housing market, which began during the second half of 2022, continued into 2023 after a decade of almost unceasing growth.
By one key measure, Opportunity Zone markets even showed signs of holding up slightly better than other neighborhoods around the country during Q1 of 2023. Median prices in those areas were more often still higher compared to the point when the U.S. market began to flatten out last year.
"Home-price trends inside Opportunity Zones keep following along with the broader national picture, as they have for the past couple of years," said Rob Barber, CEO for ATTOM. "Through boom times and weaker times, values inside the zones have gone up or down at about the same pace as the national market. They're even doing a little better these days, depending on how you look at. The latest numbers provide a sign that areas targeted for the program's tax breaks are resilient during a time when the broader market is no longer heading ever higher."
As in the past, typical home values in Opportunity Zones continued to fall well below those in most other neighborhoods around the nation in the first quarter of 2023. Median Q1 prices were less the U.S. median of $321,135 in 79% of Opportunity Zones. That was about the same portion as in earlier periods over the past year. In addition, median prices remained less than $200,000 in 55 percent of the zones analyzed during Q1 of 2023.
Key findings:
- Median prices of single-family houses and condominiums decreased or stayed the same from the fourth quarter of 2022 to the first quarter of 2023 in 1,673 (52%) of the Opportunity Zones around the U.S. with sufficient data to analyze, while increasing in 48%. Medians were still up from Q1 of 2022 to the same period this year in 1,857 (55 percent) of those zones. (Among the 3,587 Opportunity Zones included in the report, 3,215 had enough data to generate usable median-price comparisons from Q4 of 2022 to Q1 of 2023; 3,359 had enough data to make comparisons between Q1 of 2022 and Q1 of 2023).
- Both the quarterly and annual trends in Opportunity Zones roughly followed national patterns. Median prices were flat or down from Q4 of 2022 to Q1 of 2023 in 53% of census tracts outside of Opportunity Zones, while remaining up annually in 56%.
- Median values dipped at least 3% quarterly in 46% of Opportunity Zones with sufficient data.
- Median prices also rose at least 3% quarterly in 42% of Opportunity Zones.
- Median single-family home values remained higher during Q1 of this year compared to Q2 of last year in 44% of Opportunity Zones. The same was true in just 39% of other neighborhoods across the country.
- Among states that had at least 25 Opportunity Zones with enough data to analyze during Q1 of 2023, the largest portions where median prices declined or stayed the same quarterly were in Arizona (median prices down from Q4 of 2022 to Q1 of 2023 in 61% of zones), Oregon (60%), Maryland (60%), Massachusetts (59%) and South Carolina (58%). States where at least half the zones still saw quarterly increases in the early months of 2023 included Wisconsin (median prices up, quarter-over-quarter, in 57% of zones), Florida (56%), Kentucky (56%), Utah (56%) and Georgia (54%).
- States where median home values remained up annually in a majority of Opportunity Zones included Wisconsin (median prices up year-over-year in 71% of zones), Florida (67%), Missouri (67%) and Indiana (67%).
- Of the 3,587 zones in the report, 1,368 (38%) had median prices in Q1 of 2023 that were less than $150,000. That was down slightly from 40% of those zones a year earlier. Another 597 zones (19%) had medians in Q1 of this year ranging from $150,000 to $199,999.
- Median values in Q1 of 2023 ranged from $200,000 to $299,999 in 759 Opportunity Zones (24%), while they topped the nationwide Q1 median of $321,135 in 748 (21%).
- The Midwest continued in Q1 of 2023 to have larger portions of the lowest-priced Opportunity Zone tracts. Median home prices were less than $150,000 in 61 percent of zones in the Midwest, followed by the Northeast (43%), the South (39%) and the West (5%).
- Median household incomes in 87% 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 54% of zones and less than half in 14%.
To read the full report, including more data, charts and methodology, click here [2].