Investing in areas of opportunity is becoming more and more expensive. According to a new report, median house prices are rising in 75% of the country’s opportunity zones. What about the number of homes priced under $ 150,000? It has slipped considerably.
Currently, only about 43% of OZs have median prices below $ 150,000. This is down from 50% a year ago.
All of this indicates that even the poorest neighborhoods are not exempt from the rise in house prices brought on by the pandemic – or the record demand and interest rates that have accompanied it.
As the ATTOM Data Solutions report explains, “housing markets within the opportunity zones have shown no major signs of slowing down”.
What OZ investors need to know
The median price of single-family homes and condos rose in 2,771 opportunity areas across the country during the first quarter of the year – or 75% of all AOs. Outside the opportunity zones, median prices rose 78% – just more.
“Some of the poorest neighborhoods in the country continued to benefit from the long nationwide housing price boom in the first quarter of the year, recording increases that roughly match those in richer areas,” Todd said Teta, Product Manager at ATTOM Data Solutions. “These continued gains have appeared in the latest pricing data showing that values in designated opportunity areas are increasing at about the same rate, if not more, than in other communities.”
Median prices increased the most in Arizona, where 84% of all OZ real estate markets saw an increase. Idaho, Oregon, Nevada and Michigan also recorded shares of over 80%.
Luckily for investors, homes in these areas are still quite affordable – especially compared to non-OZ markets (the national median price is $ 353,000 these days).
And especially? The recent increases ensure a solid return on investment.
“Home values inside the zones remain quite low compared to the rest of the United States, but they are far from immune to the boom,” Teta said. “This demonstrates continued interest among home buyers in marginal areas and continues to bode well for the redevelopment that Opportunity Zone tax breaks are intended to promote.”
The bottom line
Just like in the rest of the market, house prices in opportunity areas are increasing. Yet with the tax advantages they offer and their relatively low cost compared to traditional markets, they continue to be a wise investment in most cases.
Have you just started investing in OZ? Let our guide to investing in the opportunity zone light the way.