Home-price appreciation in opportunity zones (OZ) located in Amazon HQ2 markets is already outperforming the markets surrounding those areas, according to a report from Irvine, California–based research firm ATTOM Data Solutions.
A release on the report from a representative of the firm says the “new opportunity zones created by the tax-reform legislation passed in December 2017 provide real estate investors with prime, tax-incentivized investing opportunities, particularly if they can find zones that are in the path of progress.” ATTOM Data analyzed opportunity zones in the Amazon HQ2 markets of New York and Washington, D.C., along with Nashville, and found strong home-price appreciation in these zones, even while homes can still be purchased at significant discounts.
When asked for comment on why he thinks home-price appreciation in OZ is outperforming that of the surrounding areas, ATTOM Data Solutions’ SVP Daren Blomquist told SoCal Real Estate, “The scarcity of available housing inventory, combined with increasing demand from millennials coming for jobs, has already spurred some gentrification in distressed pockets in many cities across the country — in particular, places with a robust job market such as New York, D.C., and Nashville. Millennials are often more interested in living in an urban environment close to downtown and are often more open to living in a neighborhood that might be considered distressed, helping to provide demand for even struggling parts of these cities. The opportunity zones will likely accelerate this trend.”
According to the release, a nationwide analysis of 7.4 million residential properties and 259,000 home sales in more than 3,000 opportunity zones shows that the average home prices in opportunity zones so far in 2018 through September is $163,746, which is 43 percent below the average home price of $287,150 outside of opportunity zones. Also revealed was that in the Washington, D.C., metro area, the average home price for homes inside opportunity zones was $362,413, which is 30 percent below the average home price of $520,394 outside of opportunity zones, and in the New York metro area, the average home price for homes inside opportunity zones was $341,774, which is 51 percent below the average price of $695,544 outside of opportunity zones.
However, nationwide, home prices over the past five years are up 72 percent compared to 46 percent appreciation for homes outside of opportunity zones during the same period, according to ATTOM Data Solutions. In D.C., appreciation was 48 percent in OZ versus 21 percent outside OZ; in New York, appreciation was 54 percent in OZ versus 25 percent outside OZ; and in Nashville, appreciation was 52 percent in OZ versus 47 percent outside OZ.
The report says the analysis includes 80 opportunity zones in the Washington, D.C., metro area with a total of 263,889 single-family homes and condos and a total of 3,031 home sales YTD in 2018; 65 opportunity zones in the New York metro area with a total of 129,826 single-family homes and condos and a total of 1,442 home sales YTD in 2018; and five opportunity zones in the Nashville metro area with a total of 28,381 single-family homes and condos and 367 home sales YTD in 2018.