The 2017 Tax Reform and Jobs Act created Opportunity Zones in disadvantaged markets with the intention of improving economic prospects within low-tier communities and offering investors in Opportunity Zones capital gains tax deferrals. Investors and developers may exercise residential and/or commercial investment choices in Opportunity Zones.
In a recent report by ATTOM Data Solutions analyzing some 3,700 Opportunity Zones, we learned that median year/year prices increased in two thirds of Opportunity Zones targeted for tax breaks. Fifty percent of the Zones saw median home prices rise more than the national average to +8.3% from Q3 2018 to Q3 2019. Some 79% of Zones saw median home prices rise less than the national median price of $270,000.
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Todd Teta, chief product officer with ATTOM, said, “The nationwide home price surge in Q3 2019 spread through so-called Opportunity Zones, much as it did the rest of the country. Despite sitting in some of the nation’s poorest areas, Opportunity Zones were hardly immune from a housing boom heading into its ninth year. This is encouraging news for people living in these communities as well as investors looking to take advantage of the Opportunity Zone (capital gains tax deferral) program.”
States with the highest percentage of census tracts meeting Opportunity Zone requirements, (home prices less than $150,000), include
- Wyoming – 17%
- Mississippi – 15%
- Alabama – 13%
- North Dakota – 12%
- New Mexico – 12%
- The District of Columbia had 10% of its census tracts qualify.
Regionally, Opportunity Zones in the Midwest came in with 71%, the South with 56%, the Northeast at 47% and the West with 12% meeting home prices of less than $150,000.
Only two Opportunity Zones saw home prices surpass home prices in surrounding metros. Those two Zones were Indianapolis-Carmel IN at 96% above and Mobile AL at 36% above surrounding metro home prices.
The remaining eight Opportunity Zones with the greatest home price appreciation in Q3 2019 included…
- Chicago-Naperville-Joliet IL/IN/WI – -6% below home prices in surrounding metros
- Daphne-Fairhope AL – -65% below
- Chicago-Naperville-Joliet IL/IN/WI – -46% below
- Philadelphia-Camden-Wilmington PA/NJ/DE/MD – -84% below
- Miami-Fort Lauderdale-Miami Beach FL – -14% below
- Atlanta-Sandy Springs-Marietta GA – -67% below
- Charlotte-Gastonia-Concord NC/SC – -56% below
- Indianapolis-Carmel IN – -25% below
Thanks to ATTOM Data Solutions’ Christine Stricker for source data.