Home price gains in opportunity zones beat the rocky U.S. housing market in the third quarter, according to a report from national real estate data curator ATTOM.
The median price for single-family homes and condos rose 51% from the second quarter to the third quarter this year in 51% of opportunity zones around the country. In half of those opportunity zones, prices went up at least 3%.
The gains fell below those recorded in earlier time periods over the past year, but they still stood out amid a broader national market that saw a 3% decline in the median single-family home price in the third quarter after a period of uninterrupted gains.
Implemented in 2019, opportunity zones are an economic development tool that allows people to invest in distressed areas of the United States. They were created to spur economic growth and job creation in low-income communities while providing tax benefits to investors.
Economic Woes Trigger Declines In U.S. Housing market
“The combination of higher home prices and mortgage rates that have doubled over the past few months has made affordability a real challenge for both traditional homebuyers and investors,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “For many prospective buyers, the solution to worsening affordability is to look for less expensive homes, and it seems like homes in opportunity zones might represent a relative bargain for buyers who’ve been priced out of other markets.”
Typical home values in opportunity zones remain lower than those in most other neighborhoods around the nation in the third quarter. Median third-quarter prices are below the nationwide median of $339,815 in 79% of opportunity zones.
Median prices remained below $200,000 in 50% of the zones during the third quarter, but that percentage was down from 56% in the third quarter of 2021.
The relative strength of opportunity zone markets continued in the third quarter even amid a series of forces that threatened to stall or derail an 11-year boom that nearly tripled home prices nationwide and has trickled down to the nation’s lowest-priced neighborhoods. Summer 2022 saw the national median sales price decline by 3% as 30-year mortgage rates approached 7%, consumer-price inflation remained at a 40-year high and the stock market fell.
More drops in home values could have a negative effect on opportunity zones if they make other areas more affordable to buyers.
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