Opportunity Zones Could Propel More Affordable Housing
November 6, 2020
Real estate professionals can play a critical role in expanding affordable housing by facilitating transactions in opportunity zones, areas ripe for economic investment and new development, Christopher Coes, vice president of land use and development at Smart Growth America, said Friday at the Housing Opportunity Committee during the virtual 2020 REALTORS® Conference & Expo.
The federal Opportunity Zone program, which was created under the 2017 Tax Cuts and Jobs Act, aims to revitalize distressed areas by offering investors significant tax breaks over the long haul. More than 8,700 communities nationwide have been designated as opportunity zones. Projects in opportunity zones that focus on residential and commercial real estate, as opposed to parks or other recreational amenities, have raised the most equity since the program began, Coes said.
Opportunity zones can be used to create greater walkability in high-density areas, Coes said. Developers can build more units in areas with higher density. Abandoned or underutilized buildings can be repurposed to allow for greater equitable development. Some of the greatest opportunities for these smart growth initiatives are in Oregon, California, Washington, Pennsylvania, and Maryland, according to a Smart Growth of America report.
Coes said the kinds of opportunity zones that are most attractive to investors include:
- Areas located in or near high-traffic corridor.
- Areas where public and nonprofit-controlled land can be leveraged.
- Areas where investors can protect existing affordable housing stock.
- Areas that allow investors to engage with non-traditional stakeholders and the community to help close gaps in funding.
Real estate professionals know how to bring multiple stakeholders together to get transactions done, which is needed for smart growth initiatives within opportunity zones, Coes added. “REALTORS® play a huge role. Affordable housing and opportunity zones need to have a deal maker, someone who knows how to put these deals together. That is a REALTOR®.
“Affordable housing is not easy,” Coes continued. “Opportunity zones are not making it easier, but they are bringing more people to the table to talk about it. Housing affordability is not going to be addressed unless the REALTOR® community recognizes it as a priority and makes it an issue.”