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More Jobs in Housing, but Workers Aren’t Returning

Sat, 09 Mar 2013 02:50:39 +0000

“One of the reasons is because they are not paying well yet,” said Lisa Marquis Jackson, an analyst with John Burns Real Estate Consulting. “The wages were cut so much in the downturn, so until those prices get back to where they are attractive, the labor is not going to be attracted back to the industry.

Housing starts are up 24 percent from a year ago, but residential construction employment is up only 3.1 percent, according to the U.S. Commerce and Labor Departments. Former construction workers headed to higher paying jobs, such as the trucking industry. Some in the Southwest headed north to the newly thriving energy sector, said Marquis Jackson. Others headed to highway construction jobs in Texas.

(Read More: Job Creation Surges as Rate Falls to 7.7%)

In Las Vegas, where Pardee Homes is building 150 percent more homes this year than they did last year, finding workers is increasingly difficult.

“We lost quite a bit of labor to the oil fields and to places like Wyoming and North Dakota, where you would not expect it to go,” noted Klif Andrews, Pardee’s Las Vegas president.

Andrews said he is paying workers five to ten percent more now, and that has pushed his home prices higher. “We’ve raised median home prices up over 15 percent, so we’ve been able to stay a little bit ahead of it, but cost increases, it’s not just labor, it’s also materials,” he added.

Nationwide, the median price for newly built homes rose 2 percent in January and new home prices now far exceed the median price for existing homes.

(Read More: Housing: Picking Up the Pieces)

Another factor is weighing on workers. Contractors, who hire the specialty workers for builders, are small businessmen themselves. In order to fund their operations, they need to hire people to have ready, and that takes capital. Unfortunately, despite the housing recovery, banks are still not lending freely to builders. Builders are trying to find ways around that, by paying subcontractors more frequently, essentially bankrolling them so they can hire more workers.

“The wheels are starting to work, but all the gears are not working in alignment,” said Marquis Jackson.

Article source: http://www.cnbc.com/id/100537494

Are Construction Job Losses All About Pay?

Fri, 07 Sep 2012 22:15:38 +0000

Despite rising demand for newly built homes, construction employment in August remained flat, stuck at the same paltry pace for the past four months.

The numbers don’t make a lot of sense at face value, given that housing starts are up in both single and multi-family, and builders are reporting big jumps in new orders for homes.

“Since the ‘official’ end of the recession in June 2009, construction employment has fallen 8.2 percent, even though overall employment is up 2.1 percent,” notes Trulia.com’s Jed Kolko. “The share of national jobs in construction (4.14 percent) is at the lowest level since 1946.”

Yesterday we reported on how certain builders in Dallas, TX claimed there were not enough skilled workers to fill the construction jobs they have open. The story garnered a huge response, with most claiming that was impossible, but others noting that it is all about the pay scale. (Read the story:Home Builders Don’t Have Enough Workers to Meet New Demand)

“Only about 20 million out of work construction workers in the country. I think what they really mean is they can’t find enough workers who will do hard construction work for 8 dollars an hour,” wrote one respondent on the blog.

I’m a sub-contractor in South Florida,” wrote another. “The problem here is, the big builders are paying sub-contractors less than what they paid in 1998. On top of that there are more city and OSHA rules to abide by. There is no way for me to employ a crew and pay them what they need to support their families. The only crews that are working are illegals, and the only reason they can survive on these wages is because there living with 2 families in 1 bedroom apartments. That’s not my idea of job creation.”

Builders will argue that the rising cost of construction materials is making it harder for them to raise wages, not to mention that they are still competing with large supplies of cheaper, distressed properties, many of which are relatively new construction.

“Here locally, we’ve measured that the average price of a house has gone up 1.7 percent from last year, which is not nearly enough to cover the 9 percent increase in costs that has occurred since 1st of the year, so it’s coming right out of the margin,” says Stephen Brooks, CEO of Dallas-based Grand Homes.

The argument quickly turns to immigration policies, given that so many construction workers are not U.S. citizens, but it is also a matter of investment in the work force, which we see in so many sectors, like the auto industry, as reported by CNBC’s Phil LeBeau today. Apparently their aren’t enough skilled engineers to do the necessary work on cars. (Help Wanted: Engineers)

Says another blogger: “I’m thinking these folks need to rescrew on their heads on what it will take to grow their businesses, like maybe invest some resources to bring new folks on board and work with them to make sure they have those skills they want long term.”

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/48940258?__source=RSS*blog*&par=RSS

Home Builders Don’t Have Enough Workers to Meet New Demand

Fri, 07 Sep 2012 04:13:44 +0000

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.
“This industry has had a tough time in the last five years, and lot of people have left it and I guess gone into other things. We need ‘em back,” says Dallas, home builder Don Dykstra, president of Bloomfield Homes.

Dykstra sees buyers taking advantage of low interest rates and low home prices. He is building about forty houses a month now, but says he would build sixty if he had enough labor and contractor support. (Read More: Homebuilders Most Confident in More Than 5 Years)

It’s the same for Stephen Brooks, CEO of Grand Homes, also in Dallas. The shortage of skilled workers is hitting his bottom line.

“The cost of housing going up very, very fast,” says Brooks. “You sell a house, and you typically could deliver it within 6 months; now the cycle time, today, with the shortage of labor it takes 9 months. Instead of being 6 months of overhead, now your overhead is 9 months overhead for the same the house, so not only has the increased cycle time effect your margin, but the increase in labor cost effects your margin.”

Labor prices in some markets have increased as high as 10 percent with the median hike at 4 percent, according to Ted Wilson of Residential Strategies. He did a survey of Dallas/Ft. Worth builders.

“We lost over half of our production builder companies, and the subcontractors were enormously gutted as well,” notes Wilson. It’s not like these guys are waiting by the phone. It’s been six years. These guys have moved on and found other jobs.”

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. (Read More: US Home Builders Begin to See Credit Thaw)

“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.”

Home construction technology has changed dramatically just in the past decade, as builders must adhere to green building standards. Dykstra says it is especially important that his homes be built with the latest energy-efficient features because that gives him a leg up on his biggest competition, which is cheaper, foreclosed homes. Due to that competition, he can’t raise his prices much.

“Charging higher prices is a challenge because it can be difficult to get appraised values right now, so there’s a lot of pressure between being able to raise prices versus the need to increase what we are paying the labor,” says Dykstra.

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.

-Realty Check producer Stephanie Dhue contributed to this report

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/48926517?__source=RSS*blog*&par=RSS

homesmillbrae.com » Construction Workers

Seeking the Bay Area’s prettiest outdoor potties

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More Jobs in Housing, but Workers Aren’t Returning

Are Construction Job Losses All About Pay?

Home Builders Don’t Have Enough Workers to Meet New Demand