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Where is the opportunity in opportunity zones?

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  • Alan Sage
  • Mike Langen
  • Alex van de Minne

Abstract

In December 2017, the U.S. Congress passed into law the Opportunity Zone (OZ) program. As an OZ, designated low‐income census tracts provide considerable tax breaks to property investors, intending to attract investments and spur economic growth. As the success of the program is dependent on investors' responses, we analyze market reactions in a difference‐in‐differences framework. We identify two potential effects on property markets: tax breaks for investors and expected land value appreciation. Our results show that tax breaks are priced efficiently. Qualified properties increase by 7–20% in price, while vacant land increase up to 37%. In contrast, we find limited signs of expected land value appreciation.

Suggested Citation

  • Alan Sage & Mike Langen & Alex van de Minne, 2023. "Where is the opportunity in opportunity zones?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(2), pages 338-371, March.
    • Handle: RePEc:bla:reesec:v:51:y:2023:i:2:p:338-371
    DOI: 10.1111/1540-6229.12429
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    1. James Alm & Trey Dronyk‐Trosper & Sean Larkin, 2024. "Do opportunity zones create opportunities? The impact of opportunity zones on real estate prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 52(1), pages 214-238, January.

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