From booming metros to small towns, the U.S. faces a severe housing shortage. Depending on the estimate, we’re short between 4 and 7 million homes. That gap is fueling historic rent increases, pricing out families, slowing economic growth, and pushing people away from the communities where they work and hope to build a life.

This isn’t a red state or blue state issue. It’s a national crisis cutting across every region and income level. And for decades, federal housing policy has tried, with limited success, to address it.

Programs like the Low-Income Housing Tax Credit (LIHTC) have helped build affordable housing. Zoning reform efforts have chipped away at the regulatory red tape that limits supply. Place-based initiatives like Empowerment Zones have tried to target investment. But most of these efforts are costly, slow, and difficult to scale. They rely on layers of bureaucracy, upfront government spending, and often take years to deliver results.

That’s what makes Opportunity Zones so intriguing – and promising in their early success.

Launched in 2017 as part of the federal tax code, Opportunity Zones (OZs) offer a market-based solution to a decades-old problem. Rather than spend taxpayer dollars directly, OZs use tax incentives to redirect private capital gains and capital into long-overlooked communities. Investors who reinvest their gains and capital into qualified OZ projects can receive tax benefits - but only if they commit for the long term.

It’s an aligned bet on American communities. And nearly a decade in, the bet is starting to pay off.

Since their launch, over $100 billion has flowed into more than 5,600 OZ communities. While the policy has been controversial at times, often criticized as too broad or too unproven, the results, particularly when it comes to new housing added, are hard to ignore.

First, OZs are reaching the places they were designed to help.

Unlike many economic development programs that end up concentrating in already-thriving cities, OZs have steered capital toward tracts with higher poverty rates, lower incomes, and greater racial disparities than other eligible areas. Over time, investment patterns have become more geographically balanced, spreading into rural towns, second-tier cities, and historically underinvested neighborhoods.

This geographic diversity matters. It means OZs are not just reinforcing existing patterns of development - they’re expanding the map of investment and opportunity.

Second, OZs are helping solve the root problem: not enough housing.

In zip codes that include OZs, the rate of new housing construction has doubled compared to similar neighborhoods. Before the program, just 12% of U.S. housing was being built in OZ tracts. Today, that number is 23%.

And unlike past housing booms that have led to gentrification and displacement, OZ-driven development has mostly avoided those pitfalls. Rents near new OZ developments have remained close to constant and steady and studies show little evidence of people being pushed out. In fact, some long-time homeowners have seen their property values rise, building wealth in the process.

OZs are not a concessionary or philanthropic program, which strengthens their ability to move more efficiently to deliver housing. Unlike many housing programs that rely on annual Congressional allocations, private foundation grants, or byzantine application and approval processes, Opportunity Zones are market-driven and private investment-led. That’s why, in just five years, the OZ program has catalyzed the development of more than 300,000 housing units across the country, without requiring ongoing federal outlays or administrative bottlenecks. If the private sector sees a project as viable, it can move forward. This built-in efficiency and flexibility allow OZs to respond quickly to local housing demand.

This kind of housing growth, with stability, is what cities across America with housing shortages need.

Third, OZs are delivering all of this at a lower cost to taxpayers.

The average Opportunity Zone housing unit costs approximately $26,000 in foregone tax revenue. While that is a cost, it is not government spending, it is foregone future revenue that would be realized in approximately ten years. And in the interim ten years, we estimate that the federal, state, and local governments actually realize more than that $26,000 in revenue through property taxes, sales taxes, income tax from the thousands of jobs created by Opportunity Zone projects, and more. The private sector is funding the development, and when successful, creates more economic value for all.

Compare that to programs like LIHTC. The most expensive LIHTC developments cost the government up to $1M in direct spending and foregone tax revenue. While LIHTC can play a meaningful role in deeply distressed communities, the simple math is that Opportunity Zones are as much as 97% less expensive per unit produced, with no government funded subsidy and the risk taken by the private sector.

There is also the question of leverage - not debt leverage - but the multiplier effect of private capital being invested. For every $1 in forgone federal tax revenue, Opportunity Zones have attracted about $7.50 in private investment. That’s a far higher ratio than traditional programs like LIHTC, which typically match $1 of subsidy with $1 of private capital and require billions in annual government spending. And the OZ cost is future cost forgone – not upfront cost spent.

OZs work differently than past government-backed programs. There’s no upfront cost to the government. And there’s no government agency creating red tape. OZs are harnessing private capital for public good. And the program is aligned - investors only get a tax break if they commit for the long haul, and profit is dependent on if the project succeeds. If it fails, the benefit disappears as well. That’s a radically different model from most federal subsidies, which provide guaranteed funding or fees regardless of outcome.

Moreover, OZs are simple. They avoid the maze of red tape that can delay or kill affordable housing projects. With lower administrative costs and fewer bureaucratic barriers, more money goes directly into construction.

And the program has bipartisan support to expand given its success to date.

Congress could allow one of the few bipartisan, market-based housing success stories in recent memory to sunset. Or it can extend and improve the program, building on what’s working and targeting it even more precisely to areas of need. Legislation has been introduced with bipartisan support to significantly expand the program,

There’s room for improvement. Greater transparency, tighter rules to prevent abuse, and better alignment with local priorities are all reasonable and achievable goals. But the core model of Opportunity Zones is working.

In a moment when America needs more housing, more jobs, and more investment in communities that want to grow, we are excited to play a role investing in OZs and meeting that need.