More First-Time Buyers
Labor Shortage Bucket Brigade
There’s a bucket brigade being formed throughout the building industry.
This determined group has assembled to extinguish the fire that is
the construction industry’s labor shortage. Over the past few years,
individuals, corporations, lobbyists, and associations have coordinated
their efforts to address the problem.
“[During the recession,] I was going to various governors and
lieutenant governors warning there was a growing lack of labor in the
building industry and that this would slow any hope of an economic
recovery,” says Gerald Howard, chief executive officer of the National
Association of Home Builders (NAHB). “But they had bigger fish to fry
then. Now I talk with roughly 150 people a day about this crisis, and you
know what? They are all listening intently.”
More than two-thirds of construction firms in nearly every state
are having trouble finding skilled labor, according to a survey by The
Pew Charitable Trusts. “Every single person is important to forming a
solution,” Howard says. “We not only want to rebuild the industry, we
want to also build a better society in the process.”
While the sentiment may sound lofty, the NAHB, along with the Home
Builders Institute (HBI), is aiming to replenish the construction industry’s
labor pool by targeting three specific groups: immigrants, former military
personnel, and ex-offenders.
Recent volatility in monthly
housing starts data, including
December, merely functions to
revert starts to trend -- and the
underlying trend remains up.
The trend rises now mostly for
single-family construction and is
generally weakening for multifamily.
This is not an altogether
odd mix considering the rent/buy
calculation favors buy when, at
last, millennials entering prime
home-buying age just when the
expansion has raised employment
levels and income enough to
support eligibility for mortgage
The upshot is a strong year for
single-family home construction,
most notably for homes to be sold
to first-time buyers. A number
of builders of new homes, such
as DR Horton (DHI) , have
shifted market strategy in the past
several years towards first-time
buyers and away from moveup
purchasers, which was the
support of housing during the
early years of the recovery.
That’s a move, I would argue,
that still has a fair amount of
tailwind to it, and this should
increase in the coming year.
A number of analysts believe
higher mortgage rates may quash
demand, but this ignores the
why of rising rates. If, as I have
written before, rates are rising
because of improved growth, real
and expected, and this is carrying
the equity market higher as well,
there is more reason to believe
home buying accelerates.
30 | HBRA of Fairfield County | FEBRUARY 2017
New Fund to Address Labor Shortage
The housing industry has created the Skilled Labor
Fund to address the lack of skilled labor entering
the residential construction field.
NAHB, the National Housing Endowment, the
National Kitchen + Bath Association, the National
Association of the Remodeling Industry and SGC
Horizon announced the new fund during the
Builders’ Show in Orlando.
The fund will be launched with the support
of SGC Horizon, parent company of Professional
Builder and Professional Remodeler magazines.
The fund will be used to attract and train skilled
labor for the residential construction market by
providing scholarships for students to attend
accredited training schools and training facilities
across the country.
According to the latest data from the 2015
American Community Survey, the median age of
owner-occupied homes nationwide is 37 years.
The age of housing stock is not evenly distributed
across the United States. Among the states, New
York has the oldest homes with a median age of 57,
followed by Massachusetts at 53 years. The median
age of homes in the District of Columbia, which is
entirely urban, is 75 years.
The newest homes are in the West. The median
age of homes in Nevada is only 20, followed by
Arizona where half of all owner-occupied homes
were built in the last 24 years.
Older houses are less energy-efficient than new
construction and ultimately will require remodeling
and renovation in the future.
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Building Success with Happy
Happy home owners are the No. 1 referral source
for home builders and remodelers. Companies that
forget to keep that top of mind are in for a bumpy
ride, presenter Ed Earl of Priority One Projects told
attendees at an educational session during the 2017
NAHB International Builders’ Show.
“Quality construction does not guarantee a happy
home owner, because your home owner is going to
focus on the construction process rather than the
final product,” Earl said. “The home owner is part of
the project, and [he or she] is the best source of your
new business.” We need to communicate effectively
and make sure to manage expectations,” Earl said.
It does not matter how many DIY cable shows the
average home owner watches, or maybe because of
them, the average home owner “doesn’t understand
construction on a fundamental level. They don’t
understand it’s a process. You can’t go and buy a
kitchen in a box from Amazon.”
Continually managing customers’ expectations
and ensuring they understand the meaning and
impact of change orders will save them a lot of
heartache and bad feelings, he said.
Learn each customer’s communication preferences,
including which channels and how often. Sometimes
it’s one long email at the end of the day, or a series of
texts throughout the day, and for others it’s speaking
by phone. Make sure you find a method that works for
No matter what the form of communication,
document everything. “A group text is great for a lot of
conversations,” Earl said, “and a way to get husbands
and wives on the same page, but make sure you get
a screenshot of the conversation and put it in your
Investing in a cloud-based construction
management system is a great customer service tool
because your home owner can log in and see the
progress, view photos and see what’s on the schedule.
Audio recordings of IBS education sessions, like
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