Thursday, September 06, 2012

More Evidence of Recovery: Home Builders Don't Have Enough Workers to Meet New Demand

CNBC's Diana Olick reports that:
After losing 70 percent of their business in the housing crash, the nation's home builders are breaking ground again. New orders for homes are rebounding strongly, and housing starts have shown sustained growth over the past year. The demand is there; unfortunately, in some areas, the workers to build these homes are not.

Many former construction workers moved on to facilities maintenance work or remodeling, or whatever jobs they could find. Replacing them is difficult because today's market demands highly skilled workers, and there is simply no available base. In the past, builders would hire workers and train them on the job. 


"They don’t have the luxury of that now," says John Courson, CEO of the Home Builders Institute, an industry training group. "They want workers that are available to them, that come out trained with a skill, and ready to hit the ground working. They don’t want the expense of on the job training.” 

The shortage is across the spectrum, but especially in need are framers, concrete workers, plumbers, roofers and painters. The shortage is also felt most in areas where housing is coming back strongest, and permitting is easiest, like Texas and much of the West. The situation is not nearly as dire in the Northeast, where home building volume is smaller, and it can take years to get a project off zoned and ready to build. Still, as construction across the nation pulls itself off life support, the bitter irony persists. After years of nobody knocking on the door, suddenly this industry is struggling to meet demand. 
Update: In today's Monster Employment report, they are reporting a 6% overall increase in online job postings for August compared to a year ago, while online listings for construction jobs increased by 9% versus last year. 

15 Comments:

At 9/06/2012 6:22 PM, Blogger rjs said...

you talked them all into moving to north dakota...

 
At 9/06/2012 6:30 PM, Blogger PeakTrader said...

If the cyclical bull market comes to an end this month, homebuilding will be choppy.

 
At 9/06/2012 6:42 PM, Blogger Methinks said...

Hang on a minute, Mark. I need a second to turn this news into something that proves we're imminently headed for catastrophe.

BTW, I don't have an article, but I talked to a friend of mine today who is a lawyer and his specific specialty is helping financial firms like broker dealers, hedge funds and proprietary trading firms set up shop and navigate through regulatory hell. According to him, for the first time since 2008, he's seen a huge uptick in the number of firms being established and the size of the firms is substantial as well (we measure firm size by the amount capital). Apparently, lots of money is coming in from Asia to back these firms. Activity is definitely picking up.

If you give me another minute, I'll figure out how this too spells the end of civilization.

 
At 9/06/2012 6:56 PM, Blogger Paul said...

Not enough workers? Best not to go looking for them at the Democratic National Convention.

 
At 9/06/2012 7:05 PM, Blogger hancke said...

Many of the framing, roofing and concrete workers went home to Mexico when there was no work available. They'll be back.

 
At 9/07/2012 1:45 AM, Blogger PeakTrader said...

It's hard to believe there's a general shortage of construction workers.

Chart of Construction Spending (not inflation adjusted):

http://www.census.gov/briefrm/esbr/www/esbr050.html

Spending should be much higher based on the pre-bubble trend.

 
At 9/07/2012 7:31 AM, Blogger knifecatcher said...

You walk away and Boomers

88% readily admitted they were "strategic defaulters".

I believe bank CEOs knew full well home prices would sink (not necessarily crash as I expected) but the lenders did not care because of their originate to securitize model. Of the loans that banks kept, the bankers probably hoped to make debt slaves for life.

Regardless of what the banks thought, the results were not pretty, either for the banks or those trapped. Moreover, a massive debt overhang still remains and the pending foreclosure pool is mammoth.

http://globaleconomicanalysis.blogspot.com/2012/09/baby-boomers-and-strategic-defaults.html?x#echocomments

 
At 9/07/2012 8:05 AM, Blogger VangelV said...


Spending should be much higher based on the pre-bubble trend.


On a related note, you might be interested in this.

 
At 9/07/2012 9:25 AM, Blogger Ed R said...

A poorly documented article. A few ad hoc selective quotes from one single city and we are back in a housing construction boom.

Here is a link that shows some real macro numbers for the construction industry:

http://www.zerohedge.com/news/spot-housing-recovery-building-construction-workers-one-year-lows

 
At 9/07/2012 9:30 AM, Blogger Buddy R Pacifico said...

How much does it cost myself for a competent plumber in the Puget Sound area now?

$195 per hour.

Many readerboards on plumbing companies are advertising jobs for experienced plumbers.

I don't know the plumbers take from $195 per hour but it must be at least 25% of that (~$50 an hour). So, $50 X 2000 hours = yep, $100,000 per annum.

Plumb, baby, plumb.

 
At 9/07/2012 12:25 PM, Blogger Ron H. said...

"It's hard to believe there's a general shortage of construction workers.

Chart of Construction Spending (not inflation adjusted):

http://www.census.gov/briefrm/esbr/www/esbr050.html

Spending should be much higher based on the pre-bubble trend.
"

Well, I'm sure those builders who believe they can't find workers are wrong. Maybe when they see the chart you cited they'll understand that.

Maybe construction spending is low because there aren't enough workers available.

 
At 9/09/2012 12:28 PM, Blogger sethstorm said...


Maybe construction spending is low because there aren't enough workers available that want to be treated with disrespect and paid like they were illegals

 
At 9/09/2012 4:59 PM, Blogger Ron H. said...

"Maybe construction spending is low because there aren't enough workers available that want to be treated with disrespect and paid like they were illegals"

Oh, hi sethstorm. You've been really busy here lately, and I can't help but wonder if you're reaching the limit on your mother's data plan. Please go upstairs and ask her to check, because she will be upset with you if you incur extra charges.

 
At 9/13/2012 12:50 AM, Blogger james said...

The danger with housing is that theirs much pent up demand in the system since 2007 the housing market has been in decline not just price wise declines have taken place in the movement of inventory on the market. On the other hand household formation has been expanding since 2007 by how much at least 1% a year. Their are very few new homes being constructed so the real potential exsists for another housing boom to occur because of low mortgage rates. The problem is the federal reserve needs to act now to head of another potential housing boom and bust. What many folks forget is that the price of homes in the united states is far lower now than any other industrialized country in the world. I recently was listening to some news story about the housing market in miami its red hot they were saying foreigners are buying everything in sight in some areas of miami This foreign demand along with domestic demand along with super low interest rates has the real potential to run off the rails if caution is not carefully exercised by the government by buyers and sellers by banks and mortgage companies and realtors. I can hear the chatter once again buy now theirs never been a better time to buy the young couple in their twenties is hearing it from the real estate guy in the office this will be a once in a lifetime opportunity what happened over the last five years was an extraordinary coincidence it will never happen again in are lifetime. So says that seeming bright eyed realtor with the frickes that looks like he's twentyone but is really twentyeight.

 
At 9/13/2012 8:18 AM, Blogger VangelV said...

The danger with housing is that theirs much pent up demand in the system since 2007 the housing market has been in decline not just price wise declines have taken place in the movement of inventory on the market. On the other hand household formation has been expanding since 2007 by how much at least 1% a year.

Adult children are moving in with their parents because they cannot find jobs that allow them to pay for a home. Labour participation is at the same levels as the 1980 contraction. New jobs pay a lot less than the jobs that were being destroyed. Sorry but I don't see an argument based on fundamentals.

Their are very few new homes being constructed so the real potential exsists for another housing boom to occur because of low mortgage rates.

Rates have been at record lows but that has not helped because people can't afford the down payments or the operating costs. With gas prices being very high many suburbs are looking a lot less attractive than they used to.

The problem is the federal reserve needs to act now to head of another potential housing boom and bust.

Reality check time; the Fed created a bubble by keeping rates very low for a long period of time. The current 'recovery' has been financed by zero interest rates. If they could not help before I don't see what the Fed can do without destroying the currency or the economy collapsing outright.

What many folks forget is that the price of homes in the united states is far lower now than any other industrialized country in the world.

True. But that does not mean that the prices cannot fall a lot more in real terms.

I recently was listening to some news story about the housing market in miami its red hot they were saying foreigners are buying everything in sight in some areas of miami

I read the same thing about Russians in Spain. That turned out not to be accurate.

This foreign demand along with domestic demand along with super low interest rates has the real potential to run off the rails if caution is not carefully exercised by the government by buyers and sellers by banks and mortgage companies and realtors.

Foreign demand can be explained by a desire to escape holding USDs. While that may mean higher nominal prices it also may mean a loss in purchasing power is on the way.

I can hear the chatter once again buy now theirs never been a better time to buy the young couple in their twenties is hearing it from the real estate guy in the office this will be a once in a lifetime opportunity what happened over the last five years was an extraordinary coincidence it will never happen again in are lifetime. So says that seeming bright eyed realtor with the frickes that looks like he's twentyone but is really twentyeight.

The realtor needs a broader education and some more experience.

 

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