There's good news for some of the low-income and high-poverty areas that were designated as opportunity zones last spring. According to an analysis by Zillow , these areas have seen a surge in sale prices since they received the designation as investors, keen to receive a discount on capital gains taxes for investing within these areas, flock to these opportunity zones.
According to Zillow, sale prices in all eligible areas "grew faster than prices in places that weren't, but after opportunity zones were selected, price-growth trends diverged among eligible tracts."
The report revealed that areas that were eligible but had not been chosen as opportunity zones saw a slowdown in sale price appreciation, while prices in designated opportunity zones grew by more than 20 percent annually.
The government's opportunity zones program is intended to revitalize low-income or high-poverty areas by spurring investments in them. The report indicated that of the tens of thousands of eligible census tracts, 8,700 areas across the country were selected by state governors and certified by the Treasury Department as opportunity zones.
Since there are no rules that investments must be spread equally across the zones, the report indicated that some opportunity zones could see more residential real estate development activity than others.
"Proponents argue that a lot of the money generated as capital gains could be used as seed money [to revitalize] traditionally neglected communities. But whether this tax break will direct funds to the communities that need them the most–or what happens when the money arrives–remain open questions," said Alexander Casey, Policy Advisor for Zillow. "But 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 analysis also looked at the top 10 Zones that were hot for investments. According to Zillow's research, five of the 10 opportunity zones "primed for investment" are in New York. Of these, four are in Brooklyn and one is in Queens.
It noted that Boston metro opportunity zones had the "highest average rank among all zones included in the analysis." With two other metros among the 10 highest averages, Massachusetts had the highest statewide average rank.