Investing in opportunity zones is getting more expensive. According to a new report, median home prices are up in 75% of the country's opportunity zones. And the number of homes priced below $150,000? That's slipped considerably.
Currently, only about 43% of OZs have median prices less than $150,000. That's down from 50% a year ago.
It's all an indication that even the poorest neighborhoods aren't exempt from the rising home prices brought on by the pandemic -- or the record-setting demand and interest rates that came with it.
As the ATTOM Data Solutions report explains, "Housing markets inside opportunity zones showed no major signs of cooling off."
What OZ investors need to know
The median price of single-family homes and condos rose in 2,771 opportunity zones across the nation in the first quarter of the year -- or 75% of all OZs. Outside of opportunity zones, median prices rose 78% -- only slightly more.
"Some of the country's poorest neighborhoods continued riding the long national boom in home prices during the first quarter of the year, reaping increases that pretty much matched those in more affluent areas," said Todd Teta, chief product officer with ATTOM Data Solutions. "Those ongoing gains emerged in the latest price data showing values in designated opportunity zones rising at about the same pace, or even more, than in other communities."
Median prices rose the most in Arizona, where 84% of all OZ housing markets saw an increase. Idaho, Oregon, Nevada, and Michigan all saw above-80% shares as well.
Fortunately for investors, homes in these areas are still quite affordable -- especially when compared to non-OZ markets (the national median price is a whopping $353,000 these days).
And most importantly? The recent increases ensure a solid return on your investment.
"Home values inside the zones remain quite low compared to the rest of the U.S. But they are far from immune from the boom," Teta said. "That shows continued interest among homebuyers in marginal areas and continues to bode well for the redevelopment that opportunity zone tax breaks are designed to promote."
The bottom line
Just like in the rest of the market, home prices in opportunity zones are rising. Still, with the tax advantages they provide and their relatively low cost compared to traditional markets, they continue to be a smart investment in most cases.
Just getting started in OZ investing? Let our opportunity zone investing guide light the way.