Opportunity Zone Home Price Trends Mixed In First Quarter

The median home value declined in about half of opportunity zones targeted for economic redevelopment, according to a report from real estate data curator ATTOM.

While the trend mostly matches the national market slowdown, one measure shows opportunity zones holding up slightly better than most markets. 

The report found that median single-family home and condo prices stayed the same or decreased from the fourth quarter of 2022 to the first quarter of this year in 52% of opportunity zones around the country, falling at least 3% in nearly half.

“Home-price trends inside opportunity zones keep following along with the broader national picture, as they have for the past couple of years,” ATTOM CEO Rob Barber said. “Through boom times and weaker times, values inside the zones have gone up or down at about the same pace as the national market. They’re even doing a little better these days, depending on how you look at it. The latest number provides a sign that areas targeted for the program’s tax breaks are resilient during a time when the broader market is no longer heading ever higher.”

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As in the past, typical home values in opportunity zones fell well below those in most other neighborhoods across the country. Median first-quarter prices were less than the U.S. median of $321,135 in 79% of opportunity zones.

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.                                                                                             

Tax benefits for investing unrealized capital gains in opportunity zones include temporary deferral of taxes on previously earned capital gains until the end of 2026 or when the asset is sold, according to the Tax Policy Center. Investors pay no taxes on capital gains earned through their investment in opportunity funds — the vehicle that invests in opportunity zones — for investments held for at least 10 years.

Opportunity funds can finance commercial and industrial real estate, housing, infrastructure and existing or startup businesses.

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