The Expert Podcast

For a couple of years, we've talked about the lack of skilled tradespeople and employees in the construction industry. Well, that's now starting to show up in the housing market. As we've discussed before, here's an article from the state of Oregon where one of the largest factors in getting more housing, lowering the cost of new homes, and also addressing homelessness is workers. The headline reads, "Workers Needed to Close Housing Gap." Sure, there were factors like supply chain issues, lumber prices, and other concerns, but many of those have been resolved. The supply chain is getting better, and lumber prices are way down. However, there’s still a housing shortage, which is worse today than it was before the pandemic.

The Economist for the state of Oregon was talking about ways to solve this problem, and some of the methods suggested include increasing land availability, turning land into buildable lots, allowing more units per lot, and stabilizing development costs. But he focused on another issue: increasing the construction workforce. "If we want to build more units, we have to have more workers," was the headline from his talk. It's really underappreciated how much this factor goes into getting new construction done. Right now, you can get lumber, materials, and land, but there's still a shortage of workers to construct the homes, manage subcontracting, and install mechanical systems. There are not enough skilled tradespeople out there. Developers, contractors, and construction companies are having a tough time filling roles.

Look, if you're a developer or contractor, put your message below and tell us what you're running into when it comes to getting good help. We see ads all the time for construction labor, whether it's basic hourly labor or skilled tradespeople. You know, paying $30, $40, $50 an hour. We've even seen skilled trades at the $60 or $70 an hour range. But there's just not enough workers to go around. Sometimes, the problem is that the workers who do show up only work for a day or two, and then disappear after getting a couple of days' worth of paychecks.

According to this article, just in the state of Oregon, it needs 13,000 more construction workers per year to close the gap. That's a lot of people. In two or three years, that's 50,000 people that need to be added to build these homes. The number of new homes needed is growing more and more dire every year. From 2019 to 2021, the number of households in Oregon increased. People broke out on their own, got rid of roommates, and wanted more space. They no longer wanted to be jammed in together during the pandemic, and now that people have done that, they realize the benefits of having more space and their own home.

Labor force is a big problem. It's often not talked about as much as some of the other factors, like the rising cost of lumber and materials, but the labor force is something that has been lurking for many years. It's chronic, and now it's starting to rear its head as a major factor in both the price of available homes and the number and availability of new inventory.