Labor Shortage Causing Higher Home Prices
May 7, 2014
A shortage of skilled construction labor has led contractors to boost pay scales, reports the Wall Street Journal.
While homebuilding markets are recovering in many cities, many contractors are having difficulty finding skilled workers. They have boosted worker pay in order to attract labor, passing those higher wage costs onto home buyers. In recent months, buyers have started to balk at the higher prices, stalling home sales.
The labor shortage has hit Denver especially hard.
- Last year, the median price of a new home in Denver was $373,605 -- a 22 percent increase from 2011.
- Nationally, the median home price was $268,900 last year, up 18.4 percent from 2011 levels.
- Last year, Denver home builders constructed 6,700 homes. While this is up from the 2009 low of 3,200 homes, it is far short of the 20,000 home permits that the area saw in 2005.
Texas markets are also suffering from the labor shortage, as are Minneapolis and Oklahoma -- all of which are losing workers to oil and gas jobs. South Florida and Charlotte, North Carolina, builders have also had trouble finding an adequate supply of labor. And Ed Brady, president of Brady Homes Illinois, Inc. in Bloomington, says that the shortage has increased his home build time to 120 to 150 days, up from 90.
According to the Department of Labor, wages across all industries increased an average of 2.2 percent between February 2013 and February 2014. Wages for construction workers, however, rose a full 6.3 percent over that period.
Nationally, the unemployment rate for construction workers sits at 11.3 percent, but economists point out that the figure includes both skilled and unskilled workers. There are very few unemployed skilled construction workers.
James Bolger, a high-end electrical contractor, has spent months trying to add four more electricians to his staff. "It's like looking for a unicorn or jackalope," he says.
Source: Kris Hudson, "Labor Shortage Besets Home Builders," Wall Street Journal, May 1, 2014.
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