Posted November 1, 2017

Has the labor shortage reached ‘Crisis’ status?

Builders across the country are struggling to find enough skilled laborers and there's no end in sight.

It’s been more than 10 years since there were this many unfilled construction jobs. And as NAHB Chief Economist Robert Dietz noted in a recent Eye On Housing article, the labor situation is likely to worsen in the months ahead.

Builders all across the country are struggling to find enough skilled laborers to keep up with housing demand. And nowhere is this more concerning than in the regions of Texas and Florida impacted by hurricanes Harvey and Irma, where the recovery efforts have only just begun.

Even the surrounding areas that sustained minimal storm damage are seeing the effects, as labor continues to be drawn to the storm-affected areas. But the labor shortage had been a primary concern long before this summer’s hurricanes made landfall.

“Everyone in our area is having trouble finding hands that want to work,” said Michael Grassi, project manager of Classic Builders in Wichita Falls, Texas, and president of the North Texas HBA. “Whether it’s bricklayers, framers, you name it — I’m having to [hire] guys from as far away as Oklahoma City to come [to Wichita Falls] and work. And most of them are happy to do it cause they’re getting paid more here where there’s even less competition.”

Grassi says he’s amazed by how much the cost per square foot of a home has increased recently. He’s gradually had to raise the sales prices of his homes as a result of rising costs, but Grassi says he and many builders just like him aren’t seeing an increase in profit margin.

“Prices for everything have increased significantly, and I’m scared for what’s to come over the next few years,” Grassi said. “A lot of our skilled trades aren’t far from retirement. And of the limited number of new guys I see coming in, many of them have a ways to go to refine their skills and work ethic.

“With everything from the cost of materials, to lots, to a dwindling pool of skilled workers — we have a crisis on our hands.”

The issue isn’t exclusive to less-densely populated areas. Not far away in the Dallas-Fort Worth area, builders are facing similar situations.

“The shortage of labor in our market has been going on for more than a year now,” said Justin Webb, president of Altura Homes. “We use 100% subcontractors, and many of them are stretched thin with more work than they can handle.”

Webb says his subs often times split their crews, enabling them to start multiple jobs simultaneously. But as could be expected, this typically results in extending the overall time to complete the home.

“[The scarcity and rising cost of labor] is our No. 1 challenge at the moment. That, and the dramatic cost increases of materials, have greatly contributed to the appreciation of house prices,” Webb said. “We’re concerned that as house prices rise to offset these higher costs, the broader issue of housing affordability will become even more problematic.”

For more analysis, visit Eye On Housing.