Land of opportunity : early indicators of the opportunity zone program's impact on real estate transaction prices
Author(s)Sage, Alan(Alan Robert)
Early indicators of the opportunity zone program's impact on real estate transaction prices
Massachusetts Institute of Technology. Department of Urban Studies and Planning.
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In December 2017, the U.S. Congress passed into law the Tax Cuts and Jobs Act, including provisions for the Opportunity Zone (OZ) program, which would offer significant tax benefits for investments in designated low-income census tracts. I specify a repeat sales price index using a Bayesian random walk model in order to compare the transaction prices of properties located in designated and eligible OZ census tracts and determine the premium associated with OZ designation. I find a significant positive impact on price levels associated with OZ designation ranging from 20% to 22%. I then analyze the performance of properties in designated and eligible tracts relative to properties in census tracts that narrowly missed the eligibility requirements, as a robustness check and to determine any expectation effect from OZ program eligibility. I find that the estimated impact of OZ designation remains relatively consistent, and that the estimated expectation impact of eligibility was insignificant in the best fit models. To interpret different magnitudes of price effects, I offer a framework of likely market causes and the impact on various stakeholders.
This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections.Thesis: M.C.P., Massachusetts Institute of Technology, Department of Urban Studies and Planning, 2019Cataloged from student-submitted PDF version of thesis.Includes bibliographical references (pages 97-110).
DepartmentMassachusetts Institute of Technology. Department of Urban Studies and Planning
Massachusetts Institute of Technology
Urban Studies and Planning.