Buyers of distressed properties on Auction.com have purchased more than 15,000 homes in Opportunity Zones since the program launched in 2018, but that represents just 18% of all properties purchased by auction buyers in underserved neighborhoods as defined by the Federal Housing Finance Agency (FHFA) during that same period.
Expanding Opportunity Zones to other underserved neighborhoods where local community developers are already buying and renovating distressed homes would accelerate the effort to provide more affordable housing supply and revitalize communities.
Opportunity Zones were created as part of the Tax and Jobs Act of 2017, with more than 8,700 Census tracts designated as these zones in April 2018. According to the IRS, these zones “are an economic development tool that allows people to invest in distressed areas in the United States. The purpose is to spur economic growth and job creation in low-income communities while providing tax benefits to investors.”
Of the more than 15,000 Opportunity Zone properties purchased via Auction.com since 2018, more than half — 53% — were resold, and 68% of those resales are now owner-occupied. The owner-occupancy rate held steady between 65% and 70% from 2018 and 2023, and the dip to 63% in 2024 is likely due to a lag in county assessor data that provides property occupancy status.
The average resale price of the renovate-and-resold foreclosures in Opportunity Zones was less than $200,000, and families living in the surrounding Census tract would need to spend a relatively affordable 27% of their income to buy those homes. The monthly house payment in that affordability calculation includes estimates for property taxes and insurance along with the mortgage payment.
The local community developers who buy, renovate and resell these homes within a year are adding about 40 points in property value over about seven months (196 days) and walking away with a gross profit of more than $83,000 — not including their renovation and holding costs.
This is helping to raise surrounding property values in the neighborhood even while building generational wealth for local entrepreneurs who often invest that wealth back into the community in the form of more property renovations and job creation. This win-win-win scenario is playing out in many other underserved neighborhoods not yet designated as Opportunity Zones.
Since 2018, when the program began, nearly 90,000 properties have been purchased via Auction.com in Census tracts designated as underserved by the FHFA — usually low-income, or those composed of marginalized communities. Those buyers are producing similar outcomes in neighborhoods in terms of homeownership rates, affordable housing and improved property values.
Among the nearly 90,000 properties purchased in underserved Census tracts, 59% have been resold, and 70% of those renovated foreclosure resales are now owner-occupied.
The average resale price of renovated foreclosure resales in underserved tracts was $259,493, and the monthly house payment to purchase those homes — including mortgage, property taxes and insurance — would require 32.6% of the median local family income.
Among those who resell within one year of buying at foreclosure auction, the local community developers buying distressed properties in underserved areas are adding 38 percentage points in value over a period of about six months (188 days). They are walking away with an average gross profit of more than $88,000, which can be invested back into the community in the form of more property renovations and job creation.
Expanding the Opportunity Zone program to include more of these underserved neighborhoods should attract more investors, helping to accelerate and amplify the results produced by the Auction.com buyers already operating in these communities.
This in turn will expand the impact of the Opportunity Zone program, helping to revitalize more communities across the country with quality, affordable housing, higher homeownership rates and jobs created by local community developers who are building generational wealth and investing back into the communities where they live and work.
