2 Reasons Why the New Infrastructure Bill Could Be a Win for Real Estate Investors
President Joe Biden signed HR 3684 on November 15, commonly known as the “bipartisan infrastructure bill,” which allows public infrastructure projects that have been waiting on endless lists to move forward. It’s a big win for America as aging infrastructure assets are increasingly at risk of becoming safety hazards and traffic bottlenecks, but this legislation is also a potentially big win for real estate investors.
Money has been allocated for all kinds of infrastructure upgrades – from power grids to broadband – as well as environmental clean-up and even replacement of lead water pipes in neighborhoods across the country. This will undoubtedly affect all types of property owners and investors. There are many reasons why the new infrastructure bill could be an asset to you.
Image source: Getty Images
The attractiveness of the neighborhood will increase in many areas
The Infrastructure Act is designed to contain a lot for everyone in all sorts of neighborhoods and communities. But it will disproportionately benefit older neighborhoods that have naturally deteriorated. The bill ultimately serves to repair and upgrade the infrastructure.
So, all of those neighborhoods that continue to struggle with broken streets and old power lines – and the lead water pipes mentioned above – are going to get a lot of attention. The people living there will experience a rising standard of living, which means that people outside of an up-and-coming district can also decide to look at the properties again.
All of a sudden, this older neighborhood that was falling apart has a ton of shiny new infrastructure, which increased interest in it. That can of course be both good and bad. Even though the goal is not to drive gentrification, it can still happen that neighborhoods suddenly become more desirable. Just as investors can see increases in rental returns and property valuations, so can homeowners see their homes increase in value. Hopefully there will be restraint systems to keep owners in their homes in the face of unexpectedly rising tax scores.
Spending on climate resilience will preserve real estate
The infrastructure bill also includes $ 47 billion to maintain properties affected by the changes caused by a warming planet, as well as funding for things that will result in more EVs getting onto the streets, such as stations. That $ 47 billion will go directly into investments in infrastructure and tools to directly protect people and property in areas at significant risk from new and persistent climate threats.
For example, the National Oceanic and Atmospheric Administration (NOAA) is to receive US $ 492 million for tools that help better predict and model flood potential for inland and coastal areas. Other organizations that should benefit from this money are the Federal Emergency Management Agency (FEMA) and the Department of Agriculture.
A changing climate is one of the greatest threats to property value across the country. Rising oceans threaten to render thousands of kilometers of coastline completely uninhabitable. Forest fires indiscriminately burn buildings. Floods force structural renovations and prompt tenants and buyers alike to seriously reconsider their interest in occupying real estate in the affected areas. This is all bad news for investors holding property in regions that were previously popular and are now facing an uncertain future.
And while $ 47 billion is likely just a very small percentage of what it will take to adequately address climate change in such a large country, this is a good place to start. The NOAA instruments already promised – for example funding – can help people in the affected areas to feel safer there instead of leaving these places because of the flood potential. This is always good news for investors.
The bipartisan infrastructure plan has a lot going for investors
While the bipartisan infrastructure plan doesn’t really seem like much for investors, that couldn’t be further from the truth. By supporting and building communities, everyone – renters, homeowners, and investors – benefits immensely. Even investors in more rural communities can get something out of this deal, considering how much money is being spent on projects like broadband for everyone and bridge and road improvements in areas that may have only one bridge that everyone depends on.
Your investment properties could soon experience a temporary upheaval as infrastructure improvements begin. Still, in the long run (after all, real estate is a long game), shiny new roads, faster internet, and early warning systems will all help make life better in urban and rural communities. And people want to be where their life gets better.