Median Home Values Decrease During Fourth Quarter of 2023 in Just Over Half of Opportunity Zones Targeted for Economic Redevelopment Around U.S.; Price-Decline Trends Inside Zones Again Follow Closely With National Market Patterns
IRVINE, Calif., Feb. 15, 2024 /PRNewswire/ — ATTOM, a leading curator of land, property, and real estate data, today released its fourth-quarter 2023 report analyzing qualified low-income Opportunity Zones targeted by Congress for economic redevelopment in the Tax Cuts and Jobs Act of 2017 (see full methodology below). In this report, ATTOM looked at 3,667 zones around the United States with sufficient data to analyze, meaning they had at least five home sales in the fourth quarter of 2023.
The report found that median single-family home and condo prices dropped from the third quarter of 2023 to the fourth quarter of 2023 in 52 percent of Opportunity Zones around the country with sufficient data to analyze, declining by more than 3 percent in close to half.
Those downturns, in and around low-income neighborhoods where the federal government offers tax breaks to spur economic revival, tracked closely with nationwide price trends as a decade-long boom in the U.S. housing market showed signs of slowing down. The latest trends also continued a long-term pattern of home values inside Opportunity Zones moving alongside broader nationwide gains and losses for at least the last three years. That marked an ongoing sign of economic tides rising or falling inside some of the country’s most distressed communities along with other markets around the country.
Opportunity Zones even showed signs again of doing slightly better than other neighborhoods around the country during the fourth quarter of last year. For example, while prices generally decreased, a slightly larger portion of Opportunity Zones saw significant price increases in the fourth quarter compared to other locations around the U.S.
“The fourth quarter of last year certainly wasn’t a great one for Opportunity Zone home values, with more losses than gains. But within the bigger picture, those areas keep riding national coattails, whether home values are going up or whether they are going down. Nothing jumped out as much worse than what happened throughout the nation,” said Rob Barber, CEO for ATTOM. “This has clearly become an extended story as the zones continue to attract home-buyer interest in a very tight housing market. More broadly, it also shows the kind of economic strength inside Opportunity Zones that the legislation is designed to use as a springboard to attract investors.”
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.
Amid the economic limitations of Opportunity Zones, typical home values in most of those neighborhoods continued to fall well below those in other markets around the nation during the fourth quarter of 2023. Median fourth-quarter sales prices were less than the U.S. median sales price of $333,000 in 79 percent of Opportunity Zones. That was about the same portion as in earlier periods over the past year. In addition, median prices remained under $200,000 in 51 percent of the zones during the fourth quarter of 2023.
Considerable price volatility also remained in place inside Opportunity Zones, with median values either dropping or increasing by at least 5 percent in almost three-quarters of those locations from the third quarter of 2023 to the fourth quarter. That again likely reflected the small number of sales in many zones.
High-level findings from the report:
Median prices of single-family homes and condominiums decreased from the third quarter of 2023 to the fourth quarter of 2023 in 1,729 (52 percent) of the Opportunity Zones around the U.S. with sufficient data to analyze, while staying the same or increasing in 48 percent. Medians, however, were still up from the fourth quarter of 2022 to same period last year in 1,958 (60 percent) of those zones. (Among the 3,667 Opportunity Zones included in the report, 3,294 had enough data to generate usable median-price comparisons from the third quarter of 2023 to the fourth quarter of 2023; 3,247 had enough data to make comparisons between the fourth quarter of 2022 and the fourth quarter of 2023).Prices declined more quarterly or rose more annually than they did nationwide in almost the same portion of Opportunity Zones as elsewhere. The median single-family home value decreased from the third to the fourth quarter of 2023 by more than the national figure in 46 percent of Opportunity Zones tracts and 45 percent of tracts outside the zones. The median price rose, year over year, by more than the national figure in 50 percent of Opportunity Zones tracts and 48 percent of tracts outside the zones. (The nationwide median dropped 3.4 percent quarterly but was still up 5.2 percent from the fourth quarter of 2022 to the fourth quarter of 2023.)In one sign that Opportunity Zones again did a bit better than the rest of the country, median prices grew quarterly by at least 5 percent in a higher portion of those areas. Typical values went up at least that much quarterly in 38 percent of Opportunity Zones with enough data but in just 33 percent of other neighborhoods around the U.S. Medians also remained up annually by at least 10 percent more often in Opportunity Zones than elsewhere (42 percent versus 38 percent).Among states that had at least 25 Opportunity Zones with enough data to analyze during the fourth quarter of 2023, the largest portions of zones where median prices decreased quarterly were in Kentucky (medians down from the third quarter of 2023 to the fourth quarter of 2023 in 66 percent of zones), Minnesota (65 percent), Arizona (62 percent), California (61 percent) and Maryland (61 percent). States where prices were up quarterly in the largest portion of zones included Louisiana (median prices up quarterly in 67 percent of zones), Utah (63 percent), Missouri (54 percent), Ohio (53 percent) and Indiana (53 percent).States where median home values in Opportunity Zones remained up most often year over year included New Jersey (median prices up annually in 83 percent of zones), Missouri (77 percent), Wisconsin (72 percent), Virginia (68 percent) and Michigan (66 percent).Of the 3,667 zones in the report, 1,262 (34 percent) had median prices in the fourth quarter of 2023 that were less than $150,000. That was down from 37 percent of zones with sufficient data a year earlier. Another 604 zones (16 percent) had medians in the fourth quarter of last year ranging from $150,000 to $199,999.Median values in the fourth quarter of 2023 ranged from $200,000 to $299,999 in 825 Opportunity Zones (22 percent) while they topped the nationwide fourth-quarter median of $333,000 in just 768 (21 percent).The Midwest continued in the fourth quarter of 2023 to have larger portions of the lowest-priced Opportunity Zone tracts. Median home prices were less than $175,000 in 66 percent of zones in the Midwest, followed by the Northeast (46 percent), the South (45 percent) and the West (6 percent).
Report methodology
The ATTOM Opportunity Zones analysis is based on home sales price data derived from recorded sales deeds. Statistics for previous quarters are revised when each new report is issued as more deed data becomes available. ATTOM’s analysis compared median home prices in census tracts designated as Opportunity Zones by the Internal Revenue Service. Except where noted, tracts were used for the analysis if they had at least five sales in the fourth quarter of 2023. Median household income data for tracts and counties comes from surveys taken by the U.S. Census Bureau (www.census.gov) from 2017 through 2021. The list of designated Qualified Opportunity Zones is located at U.S. Department of the Treasury. Regions are based on designations by the Census Bureau. Hawaii and Alaska, which the bureau designates as part of the Pacific region, were included in the West region for this report.
About ATTOM
ATTOM provides premium property data to power products that improve transparency, innovation, efficiency, and disruption in a data-driven economy. ATTOM multi-sources property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation’s population. A rigorous data management process involving more than 20 steps validates, standardizes, and enhances the real estate data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 30TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include bulk file licenses, property data APIs, real estate market trends, property navigator and more. Also, introducing our newest innovative solution, that offers immediate access and streamlines data management – ATTOM Cloud.
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