Infrastructure spending refers to money used to build and maintain the fundamental systems that help communities function. This includes roads, highways, bridges, public transportation, water systems, power lines, and broadband internet cables. When governments or private companies invest in these systems, they create the foundation for community growth and development.
In simple terms, infrastructure encompasses everything that keeps cities and towns running smoothly. Fixing potholes, building new bridges, installing faster internet, or upgrading water treatment plants all qualify as infrastructure projects that make daily life easier and safer.
Infrastructure spending typically represents a long-term investment. While building a new highway or rail line may take years, once completed, these projects can benefit communities for decades. In 2021, the United States government passed the Bipartisan Infrastructure Law, which allocated approximately $1.2 trillion for transportation, broadband internet, utilities, and various nationwide projects.
The Connection Between Infrastructure and Property Values
Infrastructure improvements don’t just enhance convenience—they can significantly increase property values. When an area receives better roads, transit options, or utilities, it becomes more attractive for both living and working. If a town gets a new highway exit or faster train service to a nearby city, commuting becomes easier, attracting more residents. This increased demand for housing naturally drives up home prices.
Throughout history, this effect has been consistently demonstrated. Over a century ago, new railroad construction across the country substantially boosted land values, often paying for themselves through rising property prices. Today, the same principle applies: modern highways and internet infrastructure can significantly increase the value of nearby properties by attracting people and businesses.
What Defines Emerging Real Estate Markets
In real estate, “emerging markets” refers to U.S. cities or regions that are up-and-coming—places where housing demand and prices are rising faster than the national average. These are often smaller or mid-sized cities offering good quality of life and strong local economies, but historically haven’t been as expensive as major metropolitan areas like New York or San Francisco.
A quarterly index by The Wall Street Journal and Realtor.com ranks top emerging housing markets in the United States. In summer 2023, places like Lafayette and Fort Wayne, Indiana, and Johnson City, Tennessee were among the top emerging markets. These areas attract attention because they offer lower-cost living with a high quality of life and typically feature “convenient commutes” thanks to good transportation infrastructure.
Many rising markets are located in the Midwest and South, including college towns, state capitals, and growing regional hubs. These areas benefit tremendously from infrastructure investments that help them manage growth while maintaining quality of life. When a mid-sized city builds a new beltway or improves public transit, it can prevent congestion as the population increases.
Population Shifts Driving Market Changes
The U.S. Census Bureau found that four southern states—Texas, Florida, North Carolina, and Georgia—accounted for 93% of U.S. population growth in 2022. This migration trend demonstrates how people are increasingly moving to Sun Belt regions. States like Texas and Florida, which have heavily invested in infrastructure to support their growing populations, saw the biggest gains.
Meanwhile, some high-cost states in the Northeast and West experienced population losses. This migration pattern is boosting housing demand in growing Southern and Midwestern markets. Cities like Austin, Raleigh, and Tampa have seen rising home values as newcomers arrive. These rapidly growing areas often respond by further expanding highways, schools, and other services to accommodate the influx.
Roads and Highways: Direct Impact on Property Growth
Among all infrastructure types, roads and highways have one of the most direct impacts on property values. New or improved roads can dramatically reduce travel times, making previously distant areas suddenly accessible. When a suburb gets a new highway interchange, cutting commute times from an hour to 30 minutes, houses in that suburb become substantially more attractive to city workers.
Road improvements also open up land for development. Previously inaccessible parcels can become sites for new neighborhoods once roads are extended. In fast-growing states, you’ll often see highways stretching outward from cities, with new subdivisions, shopping centers, and offices developing along these corridors.
In Texas, major loop roads around cities like Houston and Dallas have enabled suburban expansion, increasing the value of former undeveloped land. Similarly, in North Carolina and Tennessee, improved interstate highways have connected smaller cities to larger economic hubs, raising property values in those communities as commuters and businesses relocate.
Property values sometimes rise even before project completion, as buyers anticipate future improvements. If news breaks about a planned expressway or bypass, investors might start purchasing nearby land early. In other cases, value increases occur after completion, when residents experience the benefits of improved traffic flow. Either way, quality transportation infrastructure plays a crucial role in transforming emerging markets into thriving communities.
Public Transit and Urban Revitalization
Roads aren’t the only transportation infrastructure affecting property values. Public transit—subways, commuter trains, and bus rapid transit lines—can significantly increase property values, particularly in urban and suburban areas. When a new train station opens, surrounding neighborhoods often experience rapid development. Businesses and housing developers prioritize locations near transit stops because many residents prefer the convenience of walking to public transportation rather than driving.
Cities like Phoenix, Arizona and Charlotte, North Carolina have built modern light rail systems in recent years, sparking new apartment and retail development around their stations as people seek convenient transit access. The Atlanta BeltLine, a multi-use trail and planned streetcar loop, has transformed old railroad tracks into parks and paths, substantially increasing property values in areas along its route by improving walkability and connectivity.
Utility Infrastructure: The Invisible Value Driver
While transportation infrastructure often garners the most attention, utilities like water supply, sewage systems, and electricity are equally crucial in driving property values. If a town lacks sufficient water or sewer capacity, it simply cannot support additional homes or businesses. When local governments invest in expanding water lines, sewage treatment plants, or electrical grids, they establish the foundation for growth.
Consider a rural area on the edge of a city that relies on well water and septic tanks. If the city extends municipal water and sewer services to that area, developers can suddenly build entire subdivisions without each house requiring its own well and septic system—dramatically increasing the land’s value. Utility upgrades can also improve environmental quality, making communities healthier and more attractive.
The Broadband Revolution
Broadband internet access has emerged as a modern utility that plays an enormous role in property values, especially since the rise of remote work. High-speed internet is no longer a luxury but an essential service, and homebuyers are increasingly reluctant to purchase properties in areas with slow or unreliable connections.
During the COVID-19 pandemic, many workers discovered they could perform their jobs from home. This led to migration to suburban or rural areas, but only those with reliable internet connectivity. Areas that invested in fiber-optic networks or 5G technology gained a significant competitive advantage.
Chattanooga, Tennessee famously built a citywide gigabit fiber network, earning the nickname “Gig City.” This digital infrastructure attracted tech startups and remote workers, contributing to downtown revitalization and increasing property values. Today’s homebuyers often consider internet connectivity as important as water and electricity when choosing where to live.
The recent federal infrastructure initiative includes billions of dollars for expanding broadband to underserved parts of the U.S. Small towns previously limited to dial-up or satellite internet may soon receive high-speed broadband, potentially spurring housing demand. A family that can work remotely might consider relocating to a quiet rural town if they know they can reliably stream videos, participate in video conferences, and support their children’s online education.
Success Stories: Growing Markets Through Infrastructure
Several real-world examples demonstrate how infrastructure spending translates into higher property values in emerging U.S. markets:
Central Indiana: Lafayette and Fort Wayne
These mid-sized Indiana cities have emerged as hot markets in recent years. Lafayette (home to Purdue University) benefits from upgrades to Interstate 65, facilitating easier travel to Indianapolis and Chicago. Fort Wayne has improved its road network and maintains good highway connections to larger cities. Fort Wayne ranked second among Zillow’s most popular large city markets in 2023. As these cities continue investing in infrastructure, they’ve attracted employers, creating jobs and increasing housing demand.
Columbus, Ohio
Columbus has recently secured massive investments, partly due to infrastructure advantages. In 2022, Intel announced a major semiconductor factory project just outside the city. In response, state and local authorities committed to investing in roads, freeway interchanges, and water systems to support the facility and its workforce. This project is expected to generate thousands of jobs.
Even before the factory’s completion, anticipation has triggered a real estate boom in nearby communities. Small towns around Columbus are seeing developers plan new residential areas to house future employees. The improved highways and utilities benefit not only the Intel site but the entire region. Columbus rose to become the sixth emerging market in 2023 according to Realtor.com’s index, highlighting its strong outlook.
Raleigh-Durham, North Carolina
This high-growth region added new highways and expanded its airport, fueling expansion in technology and biotechnology sectors. Outlying towns became hot markets as soon as new road connections opened, causing home prices to increase significantly over the past decade. North Carolina was among the states with the largest population gains from in-migration recently, and the Raleigh area’s growth exemplifies that trend.
Challenges and Potential Drawbacks
While infrastructure spending generally boosts property values, it doesn’t guarantee success for every project or community. Several risks deserve consideration:
Overbuilding and Financial Risk
One significant risk involves overbuilding or overspending for anticipated growth that may not materialize as expected. If a city borrows heavily to construct a major highway or bridge that sees minimal use, the result is wasted resources and accumulated debt with little benefit. Infrastructure development often follows a “build it and hope they come” approach—typically growth follows, but when it doesn’t, local taxpayers bear the financial burden.
Large projects can take years to complete, meaning residents may not see immediate benefits despite paying for them through taxes or tolls. During construction, disruptions like detours and noise can temporarily depress property values, with real gains only appearing after completion.
Uneven Benefits and Gentrification
Infrastructure improvements don’t always benefit everyone equally. A new highway might increase values in one community while reducing them in another by diverting traffic. Within cities, improvements like new transit stations or parks can trigger gentrification—rising prices that benefit property owners but displace renters or lower-income residents.
Not all infrastructure changes positively affect everyone. For instance, highways built too close to residential areas can introduce noise and pollution, making those homes less desirable despite improved connectivity. Careful planning is essential to ensure new infrastructure enhances community value without compromising quality of life.
Economic Vulnerability
Economic conditions can significantly influence outcomes. If a recession follows major infrastructure development, housing demand might temporarily decline—as occurred after the 2008 downturn—leaving new subdivisions partially vacant until economic recovery.
Future Outlook and Continuing Trends
Looking ahead, infrastructure spending will likely continue significantly impacting U.S. real estate markets. The recent $1.2 trillion federal investment through the Bipartisan Infrastructure Law is funding thousands of projects over the next decade—from urban transit systems to rural broadband installations. As these projects reach completion, we can expect new real estate hotspots to emerge.
Emerging markets stand to benefit the most. These smaller and mid-sized markets have room for growth and typically welcome development. If they receive infrastructure funding—for regional airport upgrades, water system improvements, or downtown revitalization—they could become the next major hubs. We may see currently lesser-known cities rise in population and property values. Mid-sized cities in the Mountain West or Midwest could leverage new highways or internet projects to attract remote workers seeking affordability with modern amenities.
Real estate professionals closely monitor infrastructure developments. The National Association of Realtors and companies like Zillow and Redfin frequently mention infrastructure in market analyses, recognizing that areas with new infrastructure projects typically experience growth. Market experts often note that leading housing markets usually have significant projects underway—whether new highways, technology facilities, or civic improvements. These investments create positive momentum and signal that a community is ascending.
Conclusion: Building Tomorrow’s Property Values Today
Infrastructure spending powerfully drives property values, especially in America’s emerging markets. By developing the transportation networks, utility systems, and internet connectivity of the future, these communities establish the foundation for prosperous real estate markets.
Buyers and investors recognize when a community invests in itself. They view improved highways or faster internet as indicators that a place is forward-looking and prepared for growth. This confidence attracts additional residents and businesses, creating a positive cycle. While challenges exist, the overall pattern is clear: strategic infrastructure investment can transform previously overlooked areas into real estate hotspots, with rising home values reflecting improved quality of life.
References
- Infrastructure-based development – Wikipedia
- The Wall Street Journal and Realtor.com® Release Summer 2023 Emerging Housing Markets Index Report – Globe Newswire
- U.S. Population Trends Return to Pre-Pandemic Norms – U.S. Census Bureau
- Migration Drives Highest Population Growth in Decades – U.S. Census Bureau
- Zillow’s Most Popular Markets of 2023 – Zillow Research
