Construction starts will increase by 5 percent over 2016 to $713 Billion, according to Dodge Data & Analytics 2017 Construction Outlook. That’s all well and good, but the Dodge forecast was released in October 2016, before Donald Trump won the election. Now, with a Republican majority in the U.S. Congress and President Trump in the White House, many are wondering how the construction industry will be affected in 2017 and beyond.
President Trump has announced plans to address two key areas that will certainly affect construction: infrastructure and real estate.
Growing Infrastructure Opportunities
“We will rebuild our infrastructure, which will become second to none,” said President Trump in his election night victory speech. He echoed this sentiment in his inaugural address. “We will build new roads, and highways, and bridges, and airports, and tunnels, and railways all across our wonderful nation.”
Mr. Trump spoke about the need to rebuild our aging infrastructure throughout his presidential bid. Before taking office, he pledged a $1 trillion investment in infrastructure over the next decade. That investment may come sooner rather than later. Tuesday, January 24th, Senate Democrats are expected to introduce a $1 trillion infrastructure plan that includes their support for President Trump, if he backs it.
The plan allocates $180 billion to rail and bus transportation, $65 billion to ports, airports and waterways, $110 billion for water and sewer systems, $100 billion for energy infrastructure, and $20 billion for public and tribal lands.
Proponents of such a plan believe the resulting economic stimulus and creation of new jobs will give the measure the legs it needs to pass the Republican congress. If passed, the ripple effect of an estimated $100 billion a year in new infrastructure construction would undoubtedly be felt throughout the industry.
Rolling Back Home Builder Regulations
In May 2016, the National Association of Home Builders (NAHB) reported that, on average, 24.3 percent of new home prices go to regulatory costs. These costs stem from permitting, material tariffs, safety regulations and new home requirements such as sprinkler systems and carbon monoxide detection systems. President Trump cited the declining homeownership rate as a result of the high regulatory costs. Taking that a step further, the new President plans to rollback many of the regulations associated with these costs with the ultimate goal of cutting regulatory costs to 2 percent.
Congress is already on board, at least with removing outdated or unnecessary federal regulations. The SCRUB Act was passed in January 2016. SCRUB stands for Searching for and Cutting Regulations that are Unnecessarily Burdensome — though it was not a Trump initiative, the two are clearly aligned. It remains to be seen if Congress will get behind repealing real estate regulations.
Both of these agendas will require the political equivalent of moving mountains in Washington. With partisan politics being as they are, there’s no guarantee that any new legislation can pass Congress and then the White House. Nonetheless, the construction industry remains hopeful that legislators and the new administration can work together to bring both plans to fruition.