U.S. ZIP Codes where the median home cost less than $100,000 in early 2018 have had a 42% rise in prices in the three years since then, according to a CoreLogic Inc. analysis for The Wall Street Journal. That is about double the rise for ZIP Codes where the median was between $150,000 and $200,000, and triple the rise in locales with $300,000-plus price tags.

The pandemic has prompted wealthy buyers to splurge on vacation homes and families to trade in city living for the suburbs. It has also fueled demand among first-time home buyers and investors, lifting the bottom end of the housing market in particular.

While prices in many low-cost areas remain far below national averages, some worry that the price appreciation either won’t last or won’t reach the residents who stand to benefit most. The rising prices could also lock some families out of homeownership, especially young people and first-time buyers.

It is unclear if the recent rise “is a sign of upward and sustainable wealth accumulation for low-income and minority households,” said

Karen Petrou,

author of “Engine of Inequality: The Fed and the Future of Wealth in America.” “I think the data is at best equivocal on that point.”

Still, community advocates see signs that neighborhood revitalization is spreading from more established neighborhoods to those previously lacking signs of economic life.

James Jordan Jr., a general contractor, browsed Zillow Group Inc. listings last year across his hometown of Youngstown, Ohio. He was looking for a fixer-upper that he could rehab and flip but scoffed at listing prices of between $30,000 and $40,000 for homes in bad shape. (Zillow pegged the typical home value in Youngstown at just over $38,000 in April, a 26% rise from a year earlier.)

Instead, he turned to the Mahoning County Land Bank, which manages and sells vacant properties in town to those willing to fix them up. He spent $3,000 in September for a house in a rundown neighborhood east of downtown, where the other properties on the block were largely vacant. The only neighbor died soon after he bought the house.

But it was a four-bedroom house on a corner lot. He redid the plumbing and got rid of the mold. He pulled out the old carpets and painted the walls, all of which he estimates cost him about $5,000. With the house in better shape, he changed his mind about flipping it and decided to move in. He is selling his other house on the city’s north side, which is more centrally located, reasoning that he can get more money for it. “My decision was more economic,” he said.

Buyers in Youngstown tend to be a mix of locals looking to upsize and downsize, as well as investors, including those from out of state, according to

Debora Flora,

the Mahoning County Land Bank’s executive director.

Because the homes still go for prices that are considered low by national standards, mortgages and construction loans typically are tough to get. Homes that require tens of thousands of dollars in rehab costs typically end up in the hands of investors who have the cash for renovations, Ms. Flora said.

Often, an investment in this price range means sinking more money into buying and fixing up a property than it can ultimately fetch upon sale. At Youngstown Neighborhood Development Corp., a nonprofit that rehabs properties and focuses on neighborhood revitalization, the price increases lessen the risk of this pitfall.

“We’re seeing an opportunity for homes to get investment because they actually have real value,” said

Tiffany Sokol,

the organization’s housing director.

The cheapest third of homes increased in value faster than the rest of the market in the past few years, according to data from Zillow. Growth in these home values kept increasing in 2020, in contrast with the housing boom from the mid-2000s, when they lagged behind the market.

In Detroit’s cheapest ZIP Code, where the median sales price was $45,500 in early 2018, prices have since risen 113%, according to CoreLogic. That is far more than any other ZIP Code in the city.

That is leading to shifts across Detroit, which has thousands of vacant properties in poor condition. The Detroit Land Bank Authority, which manages these homes, sold 1,091 of them in the first three months of the year, more than double that of a year earlier. Increased demand has prompted the land bank to scrap plans to demolish about 300 houses, according to Rob Linn, director of inventory.

Home values across Detroit rose 24% in the 12 months through April, according to Zillow. That has made it tougher for some potential buyers to find affordable homes.

Tekeela Daniels, a specialist at a Stellantis NV manufacturing plant, started working with a real-estate agent in November to find a house. But all of the houses were either in undesirable neighborhoods or were too small for her, her two teenagers and dog and cat.

“The good houses are instantly gone,” she said. “It’s hard out here getting a house.”

She has been outbid on land-bank properties a handful of times in recent months. Homes on auction typically start at $1,000, but Ms. Daniels has lost out to bidders offering tens of thousands of dollars, she said.

In some cases, rising prices might also squeeze investors looking to fix up properties to sell. Lisa N. Evans and Jason Young, business partners in Cleveland, have fixed up and sold more than a dozen houses in Ohio, according to Ms. Evans.

The prices that buyers are paying have gone up, and so have material costs. That is eating into their profit margins. Recently, they lost out on purchases in Cleveland, so they have shifted their focus to Youngstown, which is cheaper, she said.

“The challenge has been competing with people who if we can buy it for $40,000, they can buy it for $60,000,” Ms. Evans said.

Write to Ben Eisen at ben.eisen@wsj.com