Builders Cite Their Top Challenges in 2016

Filed in Home Building, Labor, Safety and Health by on February 12, 2016 9 Comments

Topping the list of problems builders faced in 2015 and expect to face in 2016 is the cost/availability of labor, according to a recent survey that NAHB conducted of our members.

As NAHB economist Ashok Chaluvadi reported in a recent Eye on Housing blog post, 76% or builders expect this to be a major issue in 2016. Labor concerns have increased in importance during the past three years. In 2013, 53% of builders rated labor as a significant problem, followed by 61% in 2014 and 71% in 2015. An expected skilled labor shortage can constrain an improving housing market.

View the other top 10 problems builders expect to face this year.

Chart2-Labor-Costs-Availability

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  1. ken horton says:

    Appraisals are the most damaging item to our building.

    • Mark Litherland says:

      Agree. The low appraisals are a kind “hangover” problem from 2006. Mortgage Bankers now need to go through Appraisal Management Companies ( Loan Officers can no longer talk directly to appraisers) and Mortgage Underwriters are forced to be cautious on establishing values. Government regulations like Dodd Frank have added layers of compliance and regulations. Everyone knows a mortgage closing has pages and pages of forms to sign. Now a typical mortgage application can have 70 pages of forms. The average consumer cannot mentally handle that much information being thrown at them for just an application. Yes prior to 2006 we had stated income and stated asset loans. But now the pendulum has swung too far the other way. Government tyranny in appraisals and mortgage applications. Please vote this next election.

  2. This is a short-term problem that, while problematic, can be effectively addressed by the industry.

    Labor costs rise because there is a shortage of people in the construction industry, including experienced, skilled workers. This is the lagging cost of the housing downturn.

    There is a shortage of good paying jobs for young people and a drop in domestic manufacturing jobs as those jobs move overseas and automated.

    Construction jobs can’t move overseas, or be easily automated. By engaging in a marketing and advertising campaign focused on high school students and recent grads promoting the skilled, quality jobs available in all areas of construction, the shortage of labor can be addressed and the costs of labor managed.

    In an industry comprised of so many small companies individually unable to mount the sort of campaign necessary to influence the labor market, associations like NAHB should take the lead in getting the word out about the great middle-class jobs available in construction.

  3. In terms of appraisals being a “problem” one can track that issue to a couple of sources.
    1). In some but not all cases builders are reluctant to share data with appraisers. Just as homes cannot be built without labor and materials, appraisals cannot be developed without good relevant data. A better cooperate effort to share data by all sides is needed.
    2). Presently FNMA and many lenders either do not allow or frown upon the use of “assembled” or “combined” sales in an appraisal report. Market conditions have changed in the 13 years that have followed the “combined” sales edit issued by FNMA. That issue requires examination, discussion and some resolutions.

  4. Jonathan Smith says:

    I agree with Ken, Dodd/Frank created a world where the appraisers pull the strings. I’ve lost several big jobs due to bad appraisals. This is a bigger problem IMO.

  5. Dan Turner says:

    NAHB would be wise to work out a strategy between Suppliers and Tech Schools and Career Schools to influence the schools to begin the general labor trades again. I see the construction heavy equipment classes of “accredited schools” with full parking lots…but it’s been years since I’ve driven past a Tech or Career College that had classes in progress with setting out batter boards; forming concrete walls or laying CMU or bricks.

    I know some lawyers that make less money net per month than some of the mason teams that getting top dollar for varying abilities per square of brick. If $$money$$ doesn’t influence the knuckleheads to put down their IPhones and Pads for a common sense career in carpentry, masonry, finish and rough work for wallboard; painting; ceramics….we’re losing ground to lazy folks that have found a way to live off of their Federal or State entitlements in 1st Class postage to their mailbox each month.

    We’ve had a decade of labor doldrums….good guys got out; older guys gave it up and the lack of work hasn’t given the young bloods any opportunity to learn. When this started, the kids were just kids but have had 10 years of non-opportunity to learn the basics such as I found a few weeks ago….two twenty plus year olds were told to broom off and shovel out debris from a slab to be sealed. When I checked in with them 45 minutes later…the numbies chose the wrong tools; a cross sweeping broom instead of a push broom and a #2 pointed shovel instead of the square (flat) shovel…everything hung up next to each other in the tool shed.

    They’re not stupid….just ignorant because they never got the opportunity at home or on a job site. When I was knee deep in manual labor in my early teens…all I thought about was “how could this be done faster?” or without as much effort…or what tool or machine would do this better than what I’m doing.

    Each time that light bulb clicked on…I moved on up a rung. The same for holding the dumb end of the tape…once I was trusted (lost the boss’s confidence by picking the wrong corner…a cantilever corner nearby the foundation corner) on helping the boss find the diagonal square measure on everything.

    Ten years is probably TWO generations of dead head labor that we’re now lacking. The subs are lacking as well. I hate begging for someone to come to work on a project…and it’s still against the law to hold a gun on them to keep them on the site. The young guys and gals that are never going to be white collar professionals could use a shove in the right direction by the Feds and State to push the schools to teach the basics.

  6. Gene Raley says:

    For years, higher education has stressed that all students should be educated to be Doctors, Lawyers or Indian Chief. Even as a teenager, that philosophy seemed unrealistic to me. My chosen field was to be a home builder that not only knew how to use my hands but also to use my brain.

    That particular trait is something that I have instilled in my son, who by the way is a far better builder than I am. We need to get back to teaching the trades to our children or we will be doomed to failure.

    We also need to eliminate the fillers in our industry that pretend to know what they are doing or simply have the basic skills and are willing to work for 75 or 50 percent of what the job is worth simply because they work for cash and do not pay the taxes or other fees that is required to be a citizen of this country. In some instances they are also collecting government assistance which puts them in an income bracket greater then what they deserve. My family has made sacrifices preserving the structure of this country and I am totally against awarding citizenship to any person that has no “skin” in the game and I am totally against any politician that is willing to “give away” the birthright of my children and grandchildren. Thanks

    • Dan Turner says:

      The old joke of the attorney and brick mason when the attorney gets his bill:
      ===================================

      Attorney: “$1000 for 3 hours work? That’s more money than I make as a Lawyer!!”

      Brick Mason: “Yeah, funny isn’t it. That’s exactly what I said when I was a Lawyer.”

      ===================================

      All we seem to have now in steady supply are SERVICE companies….that dislike New Installations because the quick money is in Service. Boiler Room operations where there huge page size ad for any plumber, HVAC or electrician usually winds up as a wall phone in someone’s kitchen next to a list of “technicians” and a stockpile of magnetic signs to slap on the side of a truck.

      it’s hard to blame the end result of utility sub-contractors that couldn’t wait any longer for the builders and had to take another avenue. Their whole day is based on volume and increasing their area/range. However…the yellow pages (such as they are) are getting as full of pages of these subs as they are of Lawyers.

      We’re lacking finish trades for interior masonry, ceramics, wallboard, millwork & trim molding. Painters, flooring and cabinets are never in as big a slump as the rest of the crews. The tough ones to locate and snare are framing crews, brick masons and almost all the exterior works with the exception of landscaping…they survive just in general yard work.

      Getting the “retail tradespeople” to either come down to a “Builders Price” is going to be a pain. However with a demand of new homes…should that ever happen again….some of the retail gougers will lose their employees who will strike out on their own to service new homes under construction.

      There may be an unending supply of existing service work…but there’s also a mentality of those that really and truly hate working in an occupied structure…I’ll be the first to put my name in as one. I like to tell remod clients…”you may want to find another location to live during the demolition and construction process.” The reality is….I should say “for your own personal safety, don’t talk to me while I’ve got a hammer or saw in my hand….or anytime I’m carrying anything on my shoulders, or by the bucket in each hand.”

      I also warn them on the subs…..”furthermore, for your own personal safety…don’t stand between the subs and any food or coffee that you put out.”

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