Real Estate & Opportunity Zones
Ending Disparate Impact & Growing Urban Wealth
Excluding a handful of well-known "first-tier" US cities, Urban American life proves... disappointing. The origin of what we see as "Urban problems" revolve around the "disparate impact" test of the Civil Rights Act("CRA").
Trump's EO rescinds "disparate impact" enforcement across the US, dropping the yoke from urban American.
Why Do I Care About "Disparate Impact"?
If you ever feel that certain groups of people "get away" with things for which you would be punished - that's a result of "disparate impact".
Specifically, the demolition of public schooling, loss of public space to antisocial behavior, and a higher tolerance for lawlessness - all these negative social effects issue from Federal enforcement of "disparate impact" on outcomes - police encounter, incarceration, public school attendance, graduation rates - all of these outcomes have, for a generation, faced undermining by the pernicious "disparate impact" test.
Oh, and if you wonder how ending "disparate impact" enforcement affects real estate values, are not crime and public school quality the two greatest determinants of a location's desirability, all else equal?
Home Prices & the End of Disparate Impact
Because developers had no incentive to invest in new housing stock in failing urban America, migration inflows resulted in drastically higher housing prices. No developer will build a brand-new residential complex in a condemned ghetto - it simply does not occur.
However, developers will build in a neighborhood where crime decreases, yearly, and the public schools regain their luster.
That's the intention of the rescission of "disparate impact" and its rejuvenating effect on urban America.
Opportunity Zones & Tax Credits
Upon ratification of the "Big, Beautiful Bill", Opportunity Zones become a permanent fixture of the US tax code. These zones, adjusted every decade, focus on providing real estate developers in blighted urban America concrete financial incentives, through tax credits, that enable the much more cheaply finance their projects.
How To Profit from the Clean-Up of Urban America
Restoring urban America means the restoration of public life in these communities: entertainment returns, residents casual stroll, shop, and entertain themselves in the downtown. Look at the pre-war history of the currently blighted cities in America, and you see a civic life that looks alien, today, but will become more familiar, in the future.
Time to Act
Developers prepare to build massive amounts of affordable, new housing in blighted urban America, with the Federal government supporting local efforts to improve crime and public schools. You already see cities, even in "deep blue" states, demolishing blighted buildings on their own dime, as they await the big developer push...
Assets to Buy vs. Sell
Commercial: storefront commercial real-estate in downtown areas and entertainment venues, whether in downtown or vicinity. Parking lots also hold promise, too, and are cheap to carry while you wait for the developers to "flip" the neighborhood.
AVOID multifamily - KEEP AWAY - with a notable exception of units that can be converted to luxury condos or single-family townhomes.
For single-family units, focus on properties that with parking: urbanization makes this a key feature and highly-prized luxury. Garages, especially, prove decisive in distinguishing from a "nice" unit to "high-end luxury" townhome (e.g. compare townhomes in tier-1 cities with built-in garages and those without - it's a substantial difference).