Opportunity Zone Statistics

Last Updated: November 6, 2022

Highlights. The Opportunity Zone Program offers incentives to property investors in 8,861 Qualified Opportunity Zones in the U.S., including territories.

• Economic data indicates $6.1 trillion in unrealized capital in Opportunity Zones.
• 72.0% of U.S. counties contain at least one (1) Opportunity Zone.
• In the first financial quarter of 2022, Qualified Opportunity Fund equity grew at a 16.3% faster rate than in the previous quarter.
• 32 million people live in Opportunity Zones, where the average poverty rate is 27%.
• The average home costs $170,000, or 67.6% less expensive than the average price of homes sold in 2022Q1.

What is an Opportunity Zone?

An economic development initiative, investors and job creators within Qualified Opportunity Zones are eligible for special financial benefits, including “preferential tax treatment”.^[1]

To be designated an Opportunity Zone (OZ) by the U.S. Department of the Treasury, a census tract must meet one (1) of the following requirements:

• Have a poverty rate of at least 20% -OR-
• Have a median income below 80% of the state or metropolitan area -OR-
• Be contiguous with a qualifying census tract -AND- have a median income less than 125% of the qualifying tract’s median income.

Have Opportunity Zones Been Successful?

Short answer: yes, but the biggest benefits are yet to come.

The OZ Program is part of the Tax Cuts and Jobs Act of 2017 to increase commerce and decrease vacancies in low-income areas. It is too early to tell if the initiative will translate into long-term success, but early data is promising.

The U.S. Executive Office Council of Economic Advisers (EOCEA) concluded in their initial impact report of 2020 that the OZ program has the potential to “lift 1 million people out of poverty and into self-sufficiency, decreasing poverty in OZs by 11 percent.”^[2]

OZ designation alone increases housing values in the area by 1.1%. OZ homeowners stand to gain a cumulative $11 billion in wealth. Continued public and private investment in Opportunity Zones will further increase property values. In 2019, $75 billion in private capital entered OZs, and roughly 70% of OZ investors “consider the program’s incentives worthy of shareholders’ trust, regardless of the program’s novelty.”^[3]

 

Furthermore, private business investments grew equity at a 29% higher rate than those in comparable communities that were not designated OZs. Statistics indicate that successful early investments will attract more OZ investors.

While this data predates recent economic volatility, the federal government heavily supports the Opportunity Zone Program. Seventeen (17) federal agencies supply resources to OZs. Government support supplements private funding to prevent long-term losses.

Economic Development in Opportunity Zones

Multiple federal departments have invested millions of dollars in Opportunity Zones. Since January 2018, the Economic Development Administration (EDA) has invested $347 million in 239 projects in OZs.

• OZs are eligible for EDA funding via grants.
• Awards are a minimum of $100,000 and a maximum of $3 million.
• Other administrative assistance includes funding from the Environmental Protection Agency (EPA) and the Department of Housing and Urban Development (HUD).
• Taxpayers may defer tax on capital gains on a Qualified Opportunity Fund (QOF) until the QOF is sold/exchanged or until December 31, 2026, whichever comes sooner.
• For QOF investments held longer than 5 years, a 10% exclusion will be made for the deferred gain.
• For 7 years, this exclusion increases to 15%.
• If the investor holds the investment in the QOF for at least 10 years, they are eligible for an increase in basis of the QOF investment equal to its fair market value on the date the QOF investment is sold or exchanged.

Environmental Development in Opportunity Zones

In 2019, the EPA announced a $64.6 million grant project to rehabilitate environmental disaster areas within OZs. Qualified Opportunity Funds (QOF) and OZ businesses invest in these brownfield sites to ensure safety and compliance with environmental standards.

• 32% of the nation’s contaminated sites (brownfields) are located within Opportunity Zones.
• 108 communities within Opportunity Zones have been selected as recipients of EPA grants.
• 40% of communities receiving funding are first-time assistance recipients.
• The EPA has invested $12.4 million in 48 brownfield sites.
• In the year following the clean-up, an estimated $29 million in tax revenue alone was generated in these spaces.
• Property values of homes near brownfield sites increase between 5% and 15% after brownfield clean-up.

Opportunity Zone Real Estate

Homes and commercial properties in Opportunity Zones share certain statistical characteristics, such as increased vacancy and other economic indicators. For example, residents of OZs are 31.6% less likely to own their homes compared to all U.S. residents.

Low home values and a lack of community resources are definitive characteristics of OZs. Among areas designated OZs by 2018, 38.7% saw median home values decline between 2006-10 and 2014-18.

• The average OZ housing vacancy rate is 12.8%.
• 45% of OZ residents are homeowners; the national homeownership rate is 65.8%.
• 10.4% of U.S. census tracts (including territories) are designated OZs.
• 40% of OZs have a median home value below $100,000.
• Current OZs represent 10.4% of the nation’s census tracts.
• 23% of OZs are rural.
• 294 or 3.4% of OZs include Native American lands.
• 3.7% of OZs showed signs of gentrification at the time of designation, including:
  • Population growth of at least 7.8% or higher.
  • Median family incomes grew 11.1% or higher.
  • Initial poverty rates are at least 1.5 times the national level.

Number of Opportunity Zones Per State

Location	Number of Opportunity Zones	% Counties with Opportunity Zones
Alabama	158	100%
Alaska	24	51.7%
American Samoa (T)	16	60.0%
Arizona	168	100%
Arkansas	85	65.3%
California	884	96.6%
Colorado	126	71.9%
Connecticut	72	100%
Delaware	25	100%
District of Columbia	25	100%
Florida	427	100%
Georgia	260	49.7%
Guam (T)	25	100%
Hawaii	25	80.0%
Idaho	28	47.7%
Illinois	327	86.3%
Indiana	156	63.0%
Iowa	61	38.4%
Kansas	74	33.3%
Kentucky	144	70.0%
Louisiana	150	76.6%
Maine	32	81.3%
Maryland	149	100%
Massachusetts	137	85.7%
Michigan	288	97.6%
Minnesota	127	72.4%
Mississippi	100	52.4%
Missouri	158	34.8%
Montana	25	42.9%
Nebraska	44	19.4%
Nevada	61	47.1%
New Hampshire	27	100%
New Jersey	169	100%
New Mexico	63	66.7%
New York	514	90.3%
North Carolina	253	100%
North Dakota	25	28.3%
Northern Mariana Islands (T)	20	NA
Ohio	320	83.0%
Oklahoma	117	61.0%
Oregon	86	86.1%
Pennsylvania	300	67.2%
Puerto Rico (T)	844	100%
Rhode Island	25	100%
South Carolina	135	100%
South Dakota	25	25.8%
Tennessee	176	79.0%
Texas	628	57.1%
Utah	46	62.1%
Vermont	25	85.7%
Virginia	211	69.9%
Virgin Islands (T)	14	66.7%
Washington	139	92.3%
West Virginia	55	54.6%
Wisconsin	138	61.1%
Wyoming	26	54.2%

Prohibited Development

The IRS can utilize the “general anti-abuse rule” to determine if an investment has not been in line with the purpose of the Opportunity Zone program.

• A Qualified Opportunity Zone Business Property must have at least 50% of its total gross income derived from actively conducting trade and business.
• Employees or independent contractors and their employees must reside within the OZ.
• Certain businesses are barred from Opportunity Zones.
  • Racetracks or other gambling facilities.
  • Liquor stores or businesses selling alcohol for consumption off-premises.
  • Suntan, massage, and hot tub facilities.
  • Country clubs and private/commercial golf courses.

Opportunity Zone Grant Eligibility

The EDA is not authorized to provide grants or cooperative agreements to individuals or to for-profit entities.

• Public and private institutions of higher education may be eligible for grants.
• State, county, city, and township governments.
• Special district governments and Native American tribal governments.
• Nonprofits – with or without 501(c)(3) status – other than institutions of higher education.

Opportunity Zone Communities

By definition, OZs have fewer community resources available. This gives residents fewer opportunities to aid themselves and care for their families.

• Nearly 380 or 7.2% of universities and colleges are located within OZs.
• Nearly 480 or 2.4% of public airports are near or adjacent to OZs.
• 745 or 8.5% of OZs have a transit station.
• 28% of Opportunity Zones qualify as food deserts (without a full-service grocery store within a 1-mile radius in urban areas and 10 miles in rural areas).

Opportunity Zone Demographics

Demographics in Opportunity Zones may reflect resource availability within that area.

• 31.5 million people live in Opportunity Zones.
• The median family income is $49,900.
• 23.6% of residents are under the age of 18.
• 13.61% are 65 years and older.
• 83% have a life expectancy below the national average.
• 37% of residents in Opportunity Zones are obese.
• 79.5% of adults graduate high school; the national average graduation rate is 88.1%.
• 18.6% of adults have a bachelor’s degree or higher; nationally, 39.3% have a bachelor’s degree or higher.
• 43.0% of OZ residents are Caucasian.
• 26.0% of residents are Hispanic.
• 23.0% are Black.
• 3.0% are Asian or Pacific Islander.
• 3.0% of residents identify as another race or as multiracial.

Poverty in Opportunity Zones

Opportunity Zones are characterized by a lack of upward mobility among residents. Some OZs have an extensive history of poverty.

• OZs have a 26.4% average poverty rate compared to 13.4% nationwide.
• 7.5 million or 21.4% of OZ residents live in poverty.
• The median family income is 35.4% below the national median.
• 24 million jobs are located within OZs.
• The unemployment rate among adults aged 25-54 averages 30.0%; the national average unemployment rate for that age group is 22.0%.
• More than 1 in 5 Opportunity Zones have a poverty rate of over 40%.
• 71% of Opportunity Zones meet the federal definition of “severely distressed” with a poverty rate of 30% or median family income no greater than 60% of the area benchmark.
• 53% of renters in Opportunity Zones are rent-burdened (spend more than 30% of household income on rent).
• OZ residents spend an average of 53% of their income on housing and transportation.
• 38% of census tracts that have been consistently poor since 1980 have been designated OZs.
• 49% of concentrated persistent poverty census tracts (where 40% of the population has lived in poverty since 1980) have been designated OZs.
• Poverty rates rose in over half of OZs from 2006 to 2018, the program’s first year.
• The average family living in an OZ saw half of the buying power of their income decrease between 2006-10 and 2014-2018.
• Nearly 2.4 million people (27% of HUD residents and 7.6% of people in OZs) live in HUD-assisted housing within OZs, occupying 898,000 units.
  • 738,000 people in OZs live in 371,000 public housing units (38% of HUD’s total inventory).
  • 465,000 units (22% of HUD total) are Section 8 Housing Choice Voucher (HCV) tenants.
  • 62,000 units are Section 8 Project Housing.

Sources

1. Internal Revenue Service (IRS), Opportunity Zones
2. Opportunity Zones Database, Now Available: 2022 Opportunity Zones Special Report from JTC Americas
3. Economic Innovation Group, Opportunity Zones: Tapping into a $6 Trillion Market
4. Federal Reserve Bank of St. Louis, Economic Data: Average Sales Price of Houses Sold for the United States
5. Novogradac, Opportunity Zones Resource Center: Bullish Opportunity Zones Equity Raising Continues Despite End of Basis Step-Up Benefit
6. IRS, Internal Revenue Code § 1400Z–2 Notice 2018 – 48: Designated Qualified Opportunity Zones
7. U.S. Department of Housing and Urban Development, Opportunity Now
8. U.S. Economic Development Administration, The Opportunity Zones Initiative
9. EducationData.org, Education Attainment Statistics
10. United States Department of Transportation, Bureau of Transportation Statistics, Number of U.S. Airports
11. Environmental Protection Agency, Types of EPA Brownfield Grant Funding
12. Economic Innovation Group, Opportunity Zones
13. U.S. Census Bureau, QuickFacts: United States