Sep 235 min read

#10 Politics in Real Estate: How Infrastructure Investments Impact Property Values

Updated: Sep 25

Infrastructure investment is one of the most important drivers of economic growth and housing market development. When governments invest in roads, public transportation, schools, and utilities, they not only improve the quality of life for residents but can also significantly raise property values. This is why infrastructure plans are often central to political campaigns, as they directly impact both local communities and housing markets.

As the 2024 election approaches, candidates are highlighting their infrastructure plans, knowing that these investments can make certain areas more desirable for homebuyers. However, there are stark differences in how Republicans and Democrats approach infrastructure funding, who benefits from these investments, and how these projects are financed.

1. The Impact of Infrastructure on Property Values

Infrastructure improvements have a direct effect on property values. When an area has better roads, public transportation, schools, and utilities, it becomes more attractive to homebuyers and businesses. This demand drives up property prices and increases the overall value of real estate in the area.

Public Transportation: Areas close to public transit hubs tend to see a rise in property values because they offer easy access to city centers and workplaces. Studies show that homes near public transportation can see property value increases of up to 20%.
Roads and Highways: New or improved road infrastructure can make previously inaccessible areas more attractive to buyers, leading to development and higher property values.
Schools: Access to high-quality schools is one of the biggest factors that drive up property values. Neighborhoods with well-funded schools are often in high demand, as families prioritize education when choosing where to live.

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2. Republican Approach to Infrastructure Investment

The Republican Party generally favors private-sector involvement in infrastructure projects, with the belief that the market should dictate where and how infrastructure is developed. They argue that the government should play a limited role in funding, with the private sector leading the way through public-private partnerships (PPPs).

Key Policies:

Public-Private Partnerships: Republicans often advocate for PPPs, where private companies fund and build infrastructure projects in exchange for future revenues, such as toll roads or user fees.
Reduced Government Spending: Republicans prefer to keep government spending low, focusing infrastructure investment on essential projects that stimulate economic growth.

Examples:

Texas: Republican leadership has supported the construction of toll roads through public-private partnerships. This approach allows the state to expand road networks without heavily increasing taxes or relying solely on public funds.
Florida: Florida’s SunRail commuter rail system is an example of a project that was partly funded through a combination of public and private investment, reflecting the Republican stance on shared financial responsibility.

Funding Sources:

Republicans typically rely on private investment and local government funding for infrastructure projects. By reducing federal spending, they argue that lower taxes will encourage economic growth, leaving more room for private sector involvement in housing development and public projects.

3. Democratic Approach to Infrastructure Investment

The Democratic Party supports large-scale federal investment in infrastructure, arguing that it is the government’s responsibility to improve public amenities, which they see as critical to economic equality and long-term growth. They believe infrastructure improvements should be focused on creating sustainable and inclusive communities.

Key Policies:

Federal Investment in Public Transit: Democrats advocate for increasing federal funding for public transportation, which reduces reliance on cars and makes cities more accessible and environmentally friendly.
School Investments: Democrats also push for more federal funding for public schools, particularly in underserved communities. This, they argue, helps to reduce inequality and makes housing more accessible in areas that have historically lacked high-quality education.
Green Infrastructure: The Democratic Party also supports investments in green infrastructure, such as renewable energy projects and climate-resilient infrastructure, which they argue will increase property values in a sustainable way.

Examples:

New York City: Under Democratic leadership, New York City has invested heavily in public transportation, such as the expansion of the Second Avenue Subway line. These projects increase property values in areas that were previously harder to reach by subway.
California: California’s high-speed rail project, which aims to connect major cities like Los Angeles and San Francisco, reflects the Democratic commitment to large-scale, environmentally-friendly infrastructure projects. Although controversial, this project could boost property values along the rail route by improving access to key economic hubs.

Funding Sources:

Democrats often propose paying for infrastructure through federal spending, supported by higher taxes on corporations and wealthier individuals. For example, President Biden’s American Jobs Plan proposed using higher corporate taxes to fund $2 trillion in infrastructure improvements over the next decade. Democrats believe that these investments will pay for themselves over time by stimulating the economy and raising property values.

4. The Political Divide on Infrastructure and Real Estate

The differences between Republican and Democratic approaches to infrastructure investments are stark, especially in how these projects are financed and prioritized. Republicans argue for smaller government and private sector leadership, while Democrats push for federal funding and inclusive infrastructure that benefits all socioeconomic classes.

Examples of Restrictive and Less Restrictive Cities:

San Francisco, California (Democratic): San Francisco has been a leader in green infrastructure and public transit investments. The city's ongoing efforts to improve public transit and reduce carbon emissions have raised property values in neighborhoods connected to these projects. However, critics argue that high taxes and restrictive zoning policies have also limited affordable housing development.
Dallas, Texas (Republican): Dallas, by contrast, has taken a more free-market approach, favoring toll roads and private sector involvement in infrastructure. The city’s infrastructure investments have made suburban areas more accessible, leading to rising property values in those areas without placing a heavy burden on taxpayers.

Infrastructure Investments and Property Values in the 2024 Election

Infrastructure investment is a key issue in the 2024 election, with both Republicans and Democrats presenting different visions for the future. Republicans focus on reducing government involvement and encouraging private sector partnerships, while Democrats advocate for federal investment in sustainable, equitable infrastructure projects. These investments have a direct impact on property values and the overall housing market, making infrastructure a critical part of the political debate around real estate.

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Disclaimer:

This article is for informational purposes only and does not constitute financial or legal advice. Homeowners should consult with a real estate expert or tax advisor to understand how infrastructure investments may impact property values in their area.