🏡 Why Biden's $1T Infrastructure Act Will Supercharge Home Prices
🏡 Why Biden's $1T Infrastructure Act Will Supercharge Home Prices
More jobs, higher wages, fewer homes.
President Biden signed the $1.2 Trillion Infrastructure Investment and Jobs Act into law earlier this week, on November 15.
It allocates a total of $550 billion in new investments over the next 5 years.
This is long overdue, and it will push home prices up!
1. Increased Demand For Homes
Some projections from the White House state that this Infrastructure Act and the $1.75T Build Back Better package will create 2 million jobs every year in the 2020s.
Some major investments include:
$150B towards Roads and Public Transit that will improve commutes and increase housing demand in suburbs
$110B towards the Electric Grid and Climate Disasters that will free up state budgets to focus on other critical needs
$90B towards Railroads and Airports that will stimulate housing demand in smaller cities
$50B+ towards Clean Water that will improve the quality of life in distressed communities
All of these will increase housing demand and lead to a surge in home prices.
2. Reduced Supply of New Housing Inventory
Massive construction everywhere will exacerbate the shortage of skilled labor and increase labor costs, which will lead to fewer homes built at higher costs.
High Demand + Reduced Supply = Fast Growth in Home Prices.
3. The New Deal did the same in the 30s
Home prices grew almost 2x faster in the 15 years after FDR’s New Deal.
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Nice post, Nik 👍
The only concern is the real estate price pump. U.S. population growth rate is getting lower and shrank 5 times in 60 years: https://data.worldbank.org/indicator/SP.POP.GROW?locations=US
U.S. population grown +1.4%/year during 1930s and 1940s https://www.u-s-history.com/pages/h980.html , but now it's only 0.35%/year now.
It could lead to redistribution of the home prices between old and new fads (i.e. from NYC to FL, or from SF to Austin), but the close-to-zero population growth will add gravity to the overall RE market.