November 26, 2019

Infrastructure is real concern in 2020

More controversial issues tend to dominate the headlines, but infrastructure is the true key to America’s future economic growth.

Hiding in plain sight, the U.S. has a growing need for replacement and/or proper maintenance of infrastructure, from roads and bridges to dams, to mass transportation and broadband access.

Beyond serving homes, infrastructure pumps the lifeblood of America, the movement of goods along the highways, railroads, runways and roads that make up the nation’s aging framework. They’re also key to keeping all of us safe.

Better infrastructure is required to support growth, and real estate values are tied to more sustainable growth.

Some cities have taken steps to begin their own infrastructure upgrades, levying taxes to build and expand their systems. On that front, developers have been asked to bear part of the load. But to encourage development, profits have to balance out regulatory fees, or it just leads to pricier homes.

It's a fine line which many local governments are unwilling to cross.

But without substantial infrastructure improvements, several large U.S. cities could find themselves struggling to attract more corporations, whose expansion plans rely on the ability to provide housing to re-locate workers.

In a recent survey, the Counselors of Real Estate (CRE), an association of housing industry experts, ranked infrastructure as the top issue facing real estate in 2020.

Local investment can help create important real estate development opportunities, but without sustained federal investment, it could be too little, too late.

In April 2019, Republicans and Democrats announced an agreement on a need for at least $2 trillion in infrastructure improvements, but other details – including how to pay for it – have not been worked out yet. The U.S. government has struggled for decades to move major infrastructure initiatives forward, to little avail.

The political divide “wasted a great opportunity” to borrow long-term at low interest rates to make progress on fixing crumbling roads, railways and other infrastructure needs, according to the CRE report on the survey results.

Unlike real estate, infrastructure investment doesn’t have any comparative value to other pieces of property, but in fact, it’s what makes real estate usable, even possible. Infrastructure improvements can positively impact property values, create livable communities, and enhance economic vitality.