EP#26 Barrett Linburg | Opportunity Zones & The Wizard of Oz
Mar 20, 2025
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Barrett Linburg, a Dallas-based apartment developer at Savoy Equity Partners, specializes in Opportunity Zone investments and discusses their transformative impact on housing. He and Jay Parsons explore the win/win situation for both investors and renters, addressing the effectiveness of Opportunity Zones in generating housing since 2018. They also predict potential improvements with OZ 2.0 legislation as Congress moves forward. Additionally, the conversation touches on trends in rental housing, migration patterns, and the challenges posed by new rent control proposals.
The landmark study reveals opportunity zones effectively increased housing supply, creating over 313,000 new units at low federal costs since 2018.
Despite misconceptions, opportunity zones involve significant developer risk, requiring property retention for ten years to access tax benefits.
Legislation discussions for opportunity zones emphasize potential expansions, aiming to enhance investment access and sustain housing development beyond 2026.
Deep dives
Understanding Opportunity Zones
Opportunity zones are currently a focal point in D.C., garnering bipartisan support due to their potential to stimulate investment in economically distressed areas. This podcast episode discusses a landmark study that highlights the impacts of the opportunity zone legislation passed in 2017, particularly the significant increase in housing supply. Since the certification of opportunity zones in 2018, over 313,000 new housing units have been created in these areas, which previously experienced stagnation for a decade. This growth is noteworthy as it has occurred at a remarkably low cost to the federal government, illustrating a successful model for incentivizing development.
Latest Inflation and Population Data Insights
Recent consumer price index (CPI) data shows that rent inflation is cooling down, returning to pre-COVID levels, which is significant for rental markets. By February, CPI rent inflation reflected only a slight increase above the normal range, indicating an easing trend likely influenced by high apartment supply levels. Furthermore, new census data reveals significant population growth in metropolitan areas, particularly in Texas and Florida, with regions like Lakeland, Florida, showing notable increases. This demographic shift indicates the continual migration towards warmer climates and economically thriving regions.
Impact of the Opportunity Zone Study
The discussion of the opportunity zone study reveals surprising efficacy in generating housing supply while maintaining affordability for current residents. The study indicates that opportunity zones account for 48% of new housing within these designated areas and are responsible for 4% of new housing nationally, which suggests that these zones are playing a pivotal role in broader housing developments. Interestingly, the federal government is achieving this at an average cost of just $26,000 per housing unit, significantly lower than other housing programs. As a result, the opportunity zone incentives have attracted private capital investments, proving effective in fostering growth in underdeveloped neighborhoods.
Challenges and Misconceptions of Opportunity Zones
The podcast addresses common misconceptions surrounding opportunity zones, particularly concerns that they serve as handouts for developers. It emphasizes that investments in these areas involve substantial risk under the current structure, as developers must hold properties for ten years to reap the tax benefits. Additionally, the episode clarifies that the areas designated as opportunity zones truly are low-income, countering claims that they comprise affluent neighborhoods. It highlights the importance of relying on factual data and research to dispel myths, promoting the true purpose of opportunity zones as tools for economic revitalization.
Future of Opportunity Zones and Legislative Efforts
The conversation turns towards the future of opportunity zones, particularly regarding the impending expiration of the current legislation in 2026. Opportunity zone advocates emphasize the need for an extension and possible expansion to further encourage investment in housing across the country. Suggestions include allowing broader access for investors, even those without capital gains, and the potential introduction of a mechanism similar to a 1031 exchange that would facilitate the continual development of housing. Legislative discussions are gaining traction, highlighting the bipartisan appeal of opportunity zones and their impact on addressing the ongoing housing crisis.
Rental housing economist Jay Parsons breaks down a new groundbreaking study on Opportunity Zones, which have proven to be remarkably effective — and efficient — in producing housing. Jay shares key takeaways from the study and then welcomes in "The Wizard of OZ" — Opportunity Zone apartment developer Barrett Linburg. Barrett and Jay talk about why the program has been a win/win for investors and for renters, and also previews what OZ 2.0 might look like as Congress works on potentially expanding and extending the Opportunity Zone legislation. Additionally, Jay reviews the latest headlines impacting rental housing — including two states discussing new rent control programs — and offers up another edition of "Rental Housing Trivia" and "Complaints Department."
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