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Many of the nation’s most disadvantaged neighborhoods saw home prices soften in line with the national trend in the closing months of 2023 — but a surprisingly large share of them also outperformed the broader market.
The latest report comes Thursday from the data provider Attom, which tracked home sales in more than 3,000 low-income “opportunity zones” that the U.S. government has targeted for redevelopment using tax breaks and other incentives.
“This has clearly become an extended story as the zones continue to attract homebuyer interest in a very tight housing market,” Attom CEO Rob Barber said in a statement. “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.”
Part of that attractiveness to investors? Homes in these disadvantaged areas tend to sell for less to begin with.
The median price in more than half of the nation’s opportunity zones was less than $200,000 in the fourth quarter of the year — a far cry from the U.S. median sale price of $333,000. In fact, barely 1 in 5 of these opportunity zones had a median price that was above that same national median.
But the government has also approved a series of tax incentives for investors who buy into these zones.
While many opportunity zones continued to struggle, there may be signs that some of that focus on redevelopment is paying off.
Median prices grew by at least 5 percent from the third quarter to the fourth in 38 percent of census tracts labeled an opportunity zone, compared with 33 percent of all U.S. tracts. On an annual basis, 42 percent of opportunity zones saw at least 10 percent price growth year-over-year, compared with 38 percent of neighborhoods nationwide.
Still, the performance of these areas largely continues to track with the broader real estate market ups and downs.
Nationally, the median home price declined 3.4 percent from the third quarter to the final three months of 2023, even as prices remained up 5.2 percent year over year.
About 46 percent of opportunity zones saw greater quarterly decreases than 3.4 percent, compared to 45 percent of census tracts nationwide.
