Article
Unlocking Opportunity Zones’ potential to address the housing shortage
March 27, 2026 · Authored by Jolena Presti
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Article
March 27, 2026 · Authored by Jolena Presti
America’s housing shortage is a present-day constraint on economic growth and household stability. Communities across the country are grappling with a lack of moderately priced, well-built housing, even as rising energy costs and climate-driven insurance increases push monthly expenses higher. For local leaders, the challenge is not a lack of need, but a lack of tools that reliably deliver the right kind of housing in the right places.
Enacted by the 2017 Tax Cuts and Jobs Act (TCJA) as a broad economic development incentive, the Opportunity Zone (OZ) program has, in practice, become a major driver of housing investment, attracting more than $100 billion in private capital as of 2025. The program was made permanent in 2025 under the One Big Beautiful Bill Act (OBBBA). In July 2026, governors will again designate Opportunity Zones, determining where this capital can flow for years to come. This redesignation takes place every 10 years.
Those decisions matter. Without careful planning, OZs will continue to deliver housing; but not necessarily housing that meets community needs.
The results tell a constructive story. Even with imperfect reporting, it is clear that OZs have been highly effective at mobilizing private capital and accelerating housing production. Between 2019 and early 2025, the incentive helped drive a roughly 70% increase in new housing construction in designated communities; more than 416,000 new homes, largely multifamily rentals, delivered in markets that needed supply.
This outcome isn’t accidental. OZs were designed to attract patient, long-term capital, and investors responded by backing projects with durable fundamentals and real growth potential. That has meant building in neighborhoods already gaining momentum, places where new housing, modernized buildings and an expanded tax base can reinforce broader economic progress. OZs were never a silver bullet for affordability or a substitute for subsidized housing programs. But judged on their actual purpose, they have worked by unlocking private investment at scale and accelerating development.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.
Governors’ 2026 Opportunity Zones 2.0 designations will take place under stricter eligibility rules than in 2017. Only census tracts that qualify as low-income communities will be eligible, and contiguous tracts will no longer qualify by default. Governors may designate no more than 25% of eligible tracts statewide. This makes early engagement essential.
Local leaders who want OZ investment to advance community priorities should already be in conversation with their governors’ offices, understanding how designation decisions will be made and where local input can influence outcomes. They should be mapping likely eligible tracts and assessing how those areas align with comprehensive plans, housing strategies, climate action plans and major institutional investments.
Equally important is a clear-eyed assessment of past OZ activity. Where has OZ capital flowed locally? What did it produce? Who benefited? That history should inform where new designations—and new incentives—are most likely to deliver value.
Opportunity Zones 2.0: Public sector readiness checklist
Take Action: Opportunity Zones will shape community outcomes whether public sector leaders act or not. The Opportunity Zones 2.0 Public Sector Readiness Checklist offers a tactical way to ensure those designations advance housing and broader community priorities—strategically, not accidentally.
Opportunity Zones are a source of capital, not a regulatory framework. Local governments cannot dictate how OZ funds are structured. But they retain meaningful influence through zoning, land use, permitting, infrastructure investment and local incentive design.
Cities and counties that want better outcomes should focus less on attracting any OZ investment and be more strategic about attracting the right investment. That means pairing OZ designations with local incentives that encourage moderately priced housing, energy-efficient construction, and resilience to flooding, heat and extreme weather. It also means using permitting and land-use authority to support projects that align with long-term community goals rather than short-term speculation.
Opportunity Zones will continue to shape housing markets, and local leaders have a meaningful opportunity to guide that influence. With thoughtful planning and early action, OZs can help deliver housing that is not only financially viable, but also more affordable to working households, more resilient to climate risk and better aligned with community priorities. The designation window is approaching. The time to shape the outcome is now.
