The housing market has been going crazy over the past year and a half. The demand for houses is increasing, which means prices are inflating rapidly with no signs of slowing down.
The rise in real estate and housing prices has been difficult to manage, with the demand for more workers only making matters worse.
The current Covid 19 pandemic is a major driver of this labor shortage, which makes it harder than ever to find quality staff members willing or able to work on construction sites and complete building projects.
What’s Causing This Labor Shortage?
When the pandemic first started it created a lot of fear in the market, especially among developers who were forced to lay off their employees without knowing when they could return.
Although housing development has increased, many workers did not go back to work because unemployment benefits were worth more than what they’d regularly be paid as salary.
The problem has gotten worse as more and more homes need to be built, therefore developers have to compete with each other to get skilled laborers. Salaries are increasing and those companies that do not match them will be at risk of losing whatever employees they have left.
What This Means For Prospective Homeowners
As the cost of construction increases, many home builders have decided to raise their prices accordingly. But because a new home is an expensive investment, only buyers who can afford these increased prices are buying homes. Even with limited buyers able to purchase at these higher prices, there is still more demand than inventory.
The shortage of construction workers is not only affecting real estate developers. It’s also causing trouble for homeowners who are left to deal with a lot of unknowns outside of just an increase in cost, such as the timeline and completion date on their new homes.
Homeowners who are trying to sell their existing houses or condos in order to build a brand-new one are also being affected by this shortage.
In some cases, the lack of workers is so significant that building can’t even begin. In these instances, home builders have to refund the deposit they received from buyers unless they can find suitable employees to work on their projects.
Homebuilders have missed deadlines because they cannot find workers to meet them. Homeowners who thought their new home would be ready are now finding themselves stuck without a place to stay while the builders struggle with labor shortages and higher costs for materials.
Effects on Multi-Family and Commercial Construction
The current labor shortages are also affecting commercial and multi-family construction. With companies struggling to find workers, larger projects are being put on hold.
With a shortage of available homes for sale, the cost to rent is increasing rapidly. As more and more people find themselves unable to find a home to purchase they are turning to renting instead.
This negative cycle will be difficult to break since construction companies are halting many multi-family projects with the current labor shortages.
Construction companies are willing to pay higher rates and even have sign-on bonuses. If someone was looking to get a job in the construction industry now, it may be a great time for them!
Labor shortages will need to be corrected before projects can continue. If companies can’t find workers to complete projects, they will have to slow down or stop their projects altogether.
The labor shortages are affecting both single-family and multi-family construction. With companies struggling to find workers, larger projects are being put on hold. With a shortage of available homes for sale, the cost to rent is also being affected.
These negative effects are difficult to break since construction companies are halting many multi-family projects due to labor uncertainty. The labor shortages in the current market show no signs of getting better.
If you are currently building new construction it will be important to stay in constant communication with your builder and just understand what they are dealing with.