BUILDER NEWS More First-Time Buyers Boost Homebuilders Steven Blitz Labor Shortage Bucket Brigade Vincent Aviani 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. Read More 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 credit. 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. Read More 30 | HBRA of Fairfield County | FEBRUARY 2017
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