Much of the discussion thus far surrounding Opportunity Zones has been around investment in commercial or multifamily real estate, but what about residential real estate in those areas? A study from ATTOM Data Solutions shows that 80% of Opportunity Zones were found to have median home prices that were below the national figure of $266,000. Half had median prices less than $150,000.
“Opportunity Zones are among the poorest areas of the country, with some of the lowest home prices. This should come as no surprise because the zones are designed to be in or alongside economically distressed neighborhoods,” said Todd Teta, chief product officer with ATTOM Data Solutions.
Created by the Tax Cut and Jobs Act of 2017, Opportunity Zones seek to spark economic development in distressed areas by encouraging long-term investments through significant tax breaks.
States with the highest percentage of census tracts meeting Opportunity Zone requirements include Wyoming at 17%; Mississippi at 15%; Washington, D.C. at 14%; Alabama at 13%; North Dakota at 12% and New Mexico at 12%. Nationwide, 10% of all tracts qualify.
In the report, ATTOM looked at nearly 3,100 Opportunity Zones with sufficient sales data to analyze, which included areas with at least five home sales in the second quarter of 2019 as well as an average of at least five sales per quarter since Q3 2018.
Out of the 3,073 Opportunity Zones, California has the most that qualify for ATTOM's review, with 374. Florida is next behind with 317 Opportunity Zones, followed by Texas with 164, Pennsylvania with 154, North Carolina with 145 and Tennessee with 138.
Of the tracts analyzed by ATTOM, 47% had a median price in Q2 2019 of less than $150,000. In 17% of the areas, the median ranged from $150,000 to $199,999. Meanwhile, the median ranged from $200,000 up to the national median of $266,000 in 16%, and in 19%, the median was more than $266,000.
“But the differences between these and other areas in most parts of the nation are stark," Teta said. "The numbers provide key benchmarks for how much room there is for these areas to grow and how much new investment they need.”
Regionally, the Midwest had the highest rate of Opportunity Zone tracts with a median home price of less than $150,000, or 73%; followed by the South at 57%; the Northeast with 53%; and the West at 13%.
The Midwest also had the highest percentage of Opportunity Zone tracts where the median price was less than that of surrounding MSAs, 89%. Behind was the Northeast at 87%; the South at 85%; and the West also at 85%.
Fifty zones had Q2 2019 medians of less than $50,000, including Philadelphia; Baltimore; Montgomery, Alabama; Duval County, Florida and Jefferson County, Alabama are included in these zones.
