Almost three years after the 2017 Tax Cuts and Jobs Act, things are looking up. In fact, in almost half of the Qualified Opportunity Zones (QOZ), home prices have increased. This reflects the growth these areas have been experiencing – pretty exciting given these zones were originally “distressed communities” in need of a boost.
To get an idea of what this really means, here’s a quick refresher of QOZs. First of all, there are 8,760 Qualified Opportunity Zones. According to the U.S. Economic Development Administration, these zones are located “ in all 50 States, the District of Columbia, and five United States territories.” Investments in these struggling areas are incentivized due to tax cuts, which helps the zones recover.
If median house prices are any indication, the plan seems to be working.
Recently, ATTOM Data Solutions released a third report on these Opportunity Zones, marking an increase in over half the median home prices between 2018 and 2019. (To compare, the national increase was 9.4%, which was beaten by QOZs in 20 states.) This is a great sign that these areas are making strides towards recovery, though it should be noted that over three quarters of homes are still below the national median price, which is roughly $250k. Awesome for buyers, but for sellers, not so much.
This growth also varied by region. For instance, QOZs in the Midwest were very likely to have median home prices under $150k, which is well under the national average. Not to mention, many areas saw their home prices decrease, rather than grow.
It’s also worth noting that although there has been growth, it might not be permanent. According to Todd Teta, who is ATTOM Data Solutions’ chief product officer: “These areas are among the most vulnerable to economic downturns. As a result, the recent upswing could change on a dime if the broader housing market flattens out or sags.”
Although things are up in the air, for now the 2017 Tax Cuts and Jobs Act is still helping to revive struggling areas. So if you’re considering moving to one of the over 8,000 Qualified Opportunity Zones, you might just be coming in at a great time.
