ATTOM Data Solutions, Irvine, on Thursday released an analysis of Opportunity Zones in the three markets selected for some portion of Amazon’s second headquarters, dubbed HQ2: New York, Washington, D.C., and Nashville.
The analysis found that homes located in Opportunity Zones nationwide and in each of these three markets consistently were sold at a discount but also have appreciated in value more quickly over the past five years compared to homes outside of Opportunity Zones.
“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,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “The newly announced Amazon HQ2 markets certainly qualify as being in the path of progress.”
The ATTOM analysis looked at housing characteristics, home values and price appreciation for 7.4 million residential properties and 259,000 home sales in more than 3,000 Opportunity Zones.
Specifically in the Amazon HQ2 headquarter markets, ATTOM analyzed 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 in 2018 year-to-date; 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 5 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.
The Opportunity Zone Discount The analysis found that the average home price in Opportunity Zones so far in 2018 through September is $163,746, 43% below the average home price of $287,150 outside of Opportunity Zones. This trend plays out in the local Amazon HQ2 markets, illustrating that real estate investors who buy in these zones are realizing a substantial discount below home prices in surrounding areas of the market.
Average home prices and discounts by market
The Opportunity Zone Advantage Even though homes in Opportunity Zones are selling at a discount, they have been appreciating faster over the last five years. Nationwide, prices for homes in Opportunity Zones are up 72% over the last five years compared to 46% appreciation for homes outside of Opportunity Zones during the same period. This trend also holds true in the local Amazon HQ2 markets, suggesting that real estate investors in these areas have been able to have their cake and eat it too.
5-year home price appreciation by market
Higher Share of Nonowner-Occupied Homes ATTOM also looked at the share of nonowner-occupied homes in Opportunity Zones since that provides insight into what real estate investing strategy may be most appropriate — home flipping or buying single family rentals. Nationwide, 37% of single family homes and condos in Opportunity Zones are nonowner-occupied, compared to 24% outside of Opportunity Zones. The numbers varied within the three local markets selected for some slice of Amazon HQ2 (see chart below).
Share of nonowner-occupied homes by market
Lower Property Taxes Lastly, ATTOM analyzed average property taxes for home inside and outside Opportunity Zones. Property taxes are typically the second highest cost of home ownership — behind the actual sales price of the home. Nationwide, the average property tax for single family homes and condos in Opportunity Zones is $1,918, 41% below the average property tax of $3,248 for single family homes and condos not in Opportunity Zones. Average property taxes for homes inside Opportunity Zones were substantially lower than average property taxes for homes outside of Opportunity Zones in each of the three Amazon HQ2 markets.
Average property taxes by market
