Opportunity Zones have quietly become America's most effective housing program

The Hill

16-06-2025

America is facing a major housing shortage. Experts say we're short about 7 million homes. While many government programs try to help by offering rent subsidies or putting limits on rent increases, the real problem is that we aren't building enough housing to meet demand.
Opportunity Zones weren't originally designed to solve this specific problem. They were created in 2017 as part of the Tax Cuts and Jobs Act to encourage broad private investment in struggling communities. But over time, they've become one of the most effective ways to add new housing across the country.
Here's how the program works: If investors put money from capital gains into projects in low-income areas and keep their investment for ten years, they receive a major tax advantage in return. Now, as Congress decides whether to renew or expand the program, we should look at the results.
So far, the results are promising. Opportunity Zones have helped create new housing in places that don't usually get much attention or funding — and they've done it at a much lower cost to taxpayers. Today, 23 percent of all new housing under development is in an Opportunity Zone.
These investments are happening in all kinds of places. In fast-growing cities like Austin, Texas, new housing is helping relieve pressure on sky-high rents. In Rust Belt communities like Erie, Pa., more than $100 million in Opportunity Zones investment has helped revive the downtown.
In mountain ski towns in Colorado, where workers struggle to afford to live, Opportunity Zone projects have brought enough workforce residents into the area that formerly budget-strapped schools can now afford to keep open for five-day weeks.
Of course, not everyone supports the program. In a recent op-ed for The New York Times, Kevin Corinth and Naomi Feldman argued that the money is going to neighborhoods that were already improving. But even they admit that Opportunity Zones have helped speed up housing construction — it just was, in their words, 'the wrong neighborhoods,' or places that 'didn't really need it.'
And yes, many Opportunity Zone investments were made in low-income neighborhoods showing signs of growth or revitalization. But it is not a failure to catalyze investment in those places — rather, it is a sign the program is working. It is smart to invest in neighborhoods just as they start to improve, so they don't slip backward.
Also, the criticism that this housing 'would have been built anyway' usually isn't true. A 2024 report by the Economic Innovation Group found that Opportunity Zone designations led to 313,000 new homes between 2019 and 2024 — almost half of all new homes built in those neighborhoods during that time.
Opportunity Zones also save money. Unlike other government programs that require big subsidies and long approval processes, Opportunity Zones rely on private capital. That makes them a faster and cheaper tool to build housing.
One study found that Opportunity Zone housing costs taxpayers about $26,000 per unit, compared to up to $1 million per unit government-subsidized affordable housing. A recent Washington Post article highlighted a government-funded housing development that cost $1.2 million per unit and didn't even include in-room washer-dryers.
For every dollar the government gives up in tax revenue, nearly $9 of private money is invested in these communities. That's a much better return than other major housing programs, which usually achieve one private dollar for each government dollar at best.
Finally, the idea that Opportunity Zone investors is a 'tax giveaway' is not financially true. Investors only get a tax advantage if their project succeeds.
Unlike major government programs that spend significant taxpayer money regardless of success or failure, if an Opportunity Zone project fails, taxpayers don't lose money — the investors do. For example, a Ritz-Carlton hotel project in Portland, Ore., was criticized for being too upscale for the Opportunity Zone program's intent. But when the project ran into trouble, the investors lost everything. That's how the system is supposed to work.
There's still room to make the program better. Stronger reporting rules and an updated map of eligible areas are two areas of bipartisan consensus, and Congress has been working for years on improvements. The House included an extension in its recent budget bill, and Sen. Tim Scott (R-S.C.) is leading efforts in the Senate to make the program stronger and more transparent. An updated and improved Opportunity Zone program must pass as a part of the final reconciliation bill if we have a shot at addressing America's housing crisis.
Leaders from government, business, philanthropy and universities all agree: Poor communities almost never turn around on their own without investment. Opportunity Zones aren't perfect, and they're not the only answer — but they're one of the few tools that are getting real results. As Congress works on the next budget, it should keep what's working — and make it even better.
Ross Baird is the CEO of Blueprint Local, a real estate investment firm which has invested over $200 million in distressed communities in the U.S. through the Opportunity Zone program.