Many, But Not All, Home Prices are Starkly Lower in Opportunity Zones

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IRVINE, CA—It is not unexpected that home prices in Opportunity Zones are low. What may be unexpected is how much lower they are compared to other parts of the country. That is one of the findings of a report by ATTOM Data Solutions, which looked at nearly 3,100 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.

The analysis found that roughly 80% of those zones had median home prices in the second quarter of 2019 that were below the national figure of $266,000 and that half had median prices of less than $150,000.

The report further compared Opportunity Zones to surrounding regions and found that median Q2 2019 prices in about one in four zones were less than 50% of the typical value in the Metropolitan Statistical Areas where they exist.

Not all areas are struggling, however. The report found that among Opportunity Zones with at least 10 sales in each of the five latest quarters, 41 had Q2 2019 medians of $400,000 or more. They included areas of King County, WA; Denver County, CO; Coconino County, AZ; Deschutes County, OR and Alameda and Contra Costa counties in California.

At the opposite end, 50 zones had Q2 2019 medians of less than $50,000. They included areas of Philadelphia, PA; Baltimore, MD; Montgomery, AL; Duval County, FL and Jefferson County, AL.

“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,” says Todd Teta, chief product officer with ATTOM Data Solutions, in prepared remarks. “But the differences between these and other areas in most parts of the nation are stark. The numbers provide key benchmarks for how much room there is for these areas to grow and how much new investment they need.”

The report also found that:

States with the highest percentage of census tracts meeting Opportunity Zone requirements include Wyoming (17%), Mississippi (15%), Alabama (13%), North Dakota (12%) and New Mexico (12%). Washington, DC, also is among the leaders (14%). Nationwide, 10% of all tracts qualify.

Among the 3,073 Opportunity Zones with sufficient data to analyze, California has the most, with 374, followed by Florida (317), Texas (164), Pennsylvania (154), North Carolina (145) and Tennessee (138).

Of the tracts analyzed, 47% had a median price in Q2 2019 of less than $150,000. The median ranged from $150,000 to $199,999 in 17%, from $200,000 up to the national median of $266,000 in 16% and more than $266,000 in 19%.

Within Opportunity Zones, 86% had median Q2 2019 sales prices that were less than the median sales price for the surrounding Metropolitan Statistical Area. Roughly 26% had median sales prices less than half the figure for the MSA. Only 14% had median sales prices that were equal to or above the median sales price in the MSA.

States that had the highest percentage of Opportunity Zone tracts with a median price less the half the MSA figure included Alabama (55%), Pennsylvania (53%), Illinois (51%), Ohio (47%) and Georgia (45%). States with the smallest percentages included Washington (1%), Nevada (3%), Oregon (4%) Colorado (4%) and Indiana (4%)

Regionally, the Midwest had the highest rate of Opportunity Zone tracts with a median home price of less than $150,000 (73%), followed by the South (57%), the Northeast (53%) and the West (13%).

The Midwest also had the highest percentage of Opportunity Zone tracts where the median price was less than that of surrounding MSAs (89%), followed by the Northeast (87%), the South (85%) and the West (85%).