Although final tax rules for Opportunity Zones (OZs) have yet to be released, the effects of the program are already being felt in some census tracts.
A recent Zillow analysis takes a look at how the increased attention directed to OZs has affected the residential housing market in those areas. Home sales prices have increased by 20 percent in OZ-designated census tracts nationwide, indicating an increased likelihood of investment in residential development in those areas; meanwhile, census tracts which could've qualified for the designation but were not selected have seen price growth slow.
The local census tract where this OZ effect is most pronounced is Prince George's County's Glassmanor neighborhood, which ranks 12th nationwide. The second local census tract where the OZ effect has been most observable encompasses Benning in the District; this tract ranks 200th nationwide. It will be interesting to see how the market continues to develop in those and other OZs in the region, particularly because the current Zillow rankings may indicate hesitance on the part of some investors while rules remain pending.
“It’s still early, but we’re already seeing some signals that folks have begun to take up Uncle Sam on this offer,” Zillow Policy Advisor Alexander Casey says. “What’s clear in the meantime is that among the vast array of neighborhoods selected as Opportunity Zones we’ve witnessed wildly different housing market trends up to this point, which might hint at the future of these communities.”
The OZ tool enables investors to deposit capital gains from asset sales into a fund which facilitates targeted investments in designated lower-income census tracts. DC's 25 designated Opportunity Zones were announced last year and the city is exploring creation of a property database similar to Maryland's.
These rankings use the Zillow Home Value Index, comparing home values in the seven months since the zones were announced (June-December 2018) to the seven months prior to zones being announced (September 2017-March 2018). The study is limited to the 200 largest metro areas and does not examine census tracts that have minimal residential development, like commercial- and industrial-heavy areas, nor tracts with fewer than 10 home sales in the past year. Between these and other criteria, only 3,474 out of a nationwide total of 8,700 tracts were eligible for analysis.
This article originally published at https://dc.urbanturf.com/articles/blog/the-opportunity-zone-effect-sales-prices-up-20-percent-in-ozs-nationwide/15208.
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