Every person needs a home. In the United States, even a basic necessity becomes harder to come by. What is the common reason for the housing crisis? What can construction companies do?
1. Labor Shortage
In any business, the lifeblood is its people. The problem with construction is there are not enough professionals. Construction staffing is indeed critical these days, especially for a recovering economy like the United States. It is even more vital to make housing more affordable.
In the country, though, the lack of construction workers is severe. The data from the Bureau of Labor Statistics (BLS) revealed more than 250,000 vacancies as of June 2019. By 2026, the number will grow to 747,000.
Other construction firms are feeling the effects. In a recent survey involving 2,200 respondents, 80% said they’re having difficulty filling positions. That includes salaried and hourly workers.
That’s not all. Another labor-related challenge is technology. More companies like yours are investing in software and equipment like drones. These can somehow help close the gap from the labor crisis. On the downside, it means construction workers also need to be more tech-savvy.
Fortunately, contractors can now work with staffing agencies to match their business needs with the human resource pool.
2. Housing Demand
The housing market is not immune to the basic principle of economics. If the demand is high but the supply is low, then prices go up. The United States has a shrinking population. In 2018, it increased by only 0.62%. That’s the lowest over the last 80 years. That doesn’t mean people are not buying homes. Two years ago, the country sold 5.34 million units. By 2020, it will grow to 5.46 million.
Foreigners are also a vast real estate market in the United States. From March 2016 to March 2017, they closed over $150 billion worth of residences. It was an increase of 49% compared to the previous year based on the National Association of Realtors data.
Many of these foreigners are baby boomers. This generation is not only increasing in number, but it also has a high disposable income. A lot also decide to buy a few more homes to downsize.
3. Supply Shortage
It’s not only the demand that’s the problem. So is the supply. Freddie Mac reported that the annual construction rate is over 350,000 units below the ideal figure for long-term housing demand.
The Joint Center for Housing Studies of Harvard University identified the probable reasons for the crisis.
- There are fewer newly constructed properties as recession left a significant excess of homes.
- Land prices are increasing while regulations are tight. These prevent developers from pushing for construction.
- Labor shortage also contributes to the supply shortage.
Many Americans still dream of owning a home. The rising prices of houses can mean many things:
- The mortgage will be a huge burden for them.
- It will take them years to buy a home.
- They can eventually forego the idea of buying a house.
As a contractor or construction company, you can do something to make it happen. You can begin by augmenting your labor shortage.