JUE Insight: The (Non-)Effect of Opportunity Zones on Housing Prices

TL;DR

This study evaluates the impact of America's Opportunity Zones policy on local housing prices, finding minimal effects on prices and some evidence of increased residential permitting, indicating limited neighborhood change.

Contribution

It provides the first rigorous empirical analysis of OZs' effects on housing prices and permits, comparing OZs with eligible non-included areas and neighboring regions.

Findings

OZs do not significantly increase housing prices.

OZ status may reduce prices in areas with little employment.

There is some evidence OZs increase residential permitting.

Abstract

Will the Opportunity Zones (OZ) program, America's largest new place-based policy in decades, generate neighborhood change? We compare single-family housing price growth in OZs with price growth in areas that were eligible but not included in the program. We also compare OZs to their nearest geographic neighbors. Our most credible estimates rule out price impacts greater than 0.5 percentage points with 95% confidence, suggesting that, so far, home buyers don't believe that this subsidy will generate major neighborhood change. OZ status reduces prices in areas with little employment, perhaps because buyers think that subsidizing new investment will increase housing supply. Mixed evidence suggests that OZs may have increased residential permitting.