Fourth Quarter 2024 Sees Continued Growth in Home Values Within Opportunity Zones

Home Values in Opportunity Zones See Positive Trends

Introduction
In recent times, Opportunity Zones across the United States have been a focal point for economic redevelopment, as highlighted in ATTOM's fourth-quarter 2024 report. The report reveals that home values in these designated areas continue to reflect the broader national housing market trends, with significant value appreciation observed in numerous zones.

Home Value Increases
According to the analysis, which encompassed 3,783 Opportunity Zones with sufficient sales data, nearly 49% of these areas saw median prices for single-family homes and condos rise between the third and fourth quarters of 2024. On an annual basis, approximately 61% of the zones experienced a similar upward trend. Notably, in some Opportunity Zones, prices surged by over 10% year-on-year, showcasing a robust market despite economic challenges.

Long-term Trends
For at least the last three years, home values in Opportunity Zones have closely tracked the national market's price shifts. This alignment has persisted even as the housing market in general continues to take fluctuating paths, be it through moderate or robust gains. Amidst the overall growth, there remains a disparity, as more affluent zones benefited more significantly compared to lower-tier neighborhoods, highlighting ongoing vulnerabilities.

Economic Revitalization
Despite some areas not keeping pace with the national recovery, the report indicates that numerous distressed communities are showing signs of economic vitality. Auctioning potential within these struggling communities has led to an influx of investment, as updated demand for affordable housing segments drives home buyers to explore these formerly overlooked markets.

Challenges Ahead
However, it’s worth mentioning that trends are not uniformly positive. Lower-income areas, particularly those with homes typically valued under $125,000, show annual price increases in only 47% of the zones, while higher-value zones have fared much better. This disparity raises concerns that the least economically advantageous neighborhoods are at risk of stagnation.

Regional Variations
Breaking down further, the report highlights that certain states have exhibited markedly different patterns. For instance, Indiana, with 75% of its Opportunity Zones experiencing price gains, stands in stark contrast to Louisiana, where only 44% reported similar improvements. Kentucky and Colorado also noted significant appreciation in home values across many of their Opportunity Zones, indicating regional strength in specific markets.

Market Stability Concerns
A mixed bag of results has followed the general trend of the national housing market, where an overall increase of 1% quarterly and 9% annually was observed. The contributing factors include ongoing demand in the wake of rising wages, coupled with continued supply constraints. This increase persists despite the recent uptick in mortgage rates, inching closer to 7% for a 30-year fixed loan.

Final Thoughts
With median household incomes in 86% of the Opportunity Zones falling behind those in their counties, it is evident that challenges remain ample. Nonetheless, the data presents a compelling narrative of growth and revitalization, hinting that Opportunity Zones are not just surviving but potentially thriving amidst national economic currents.

Conclusion
In summary, while prices in Opportunity Zones continue to demonstrate a correlation with national trends, it is crucial to keep an eye on varying regional performances and the ongoing challenges these neighborhoods face. As investment continues to flow, it may pave the way for sustained growth and eventual stability, embodying the opportunities the legislation aims to unleash.

About ATTOM
Providing essential property data and analytics, ATTOM helps illuminate trends and foster transparency within the real estate market. Their analysis, spanning over 155 million properties, ensures a thorough understanding of the shifting landscape of home values across America.