By Mike Bodeen · 10 January 2017
Labor Pool Shortage Continues…
Maricopa County December sales numbers are in and they’re impressive! New home sales climbed to 1535, which was the highest monthly total since 2007 – almost a decade! And December is usually a quiet month, sales-wise. Not now. New homes took 17.7% of the unit sales, up from 15.6% in December last year and the highest percentage since October 2008.
Because new homes are gaining considerable market share from re-sales, the overall median made good progress over the past 12 months, rising 5.9% from $230,000 to $243,500.
Given the strong increase in closed sales, you would think new home builders would be celebrating. “However,” according to Michael Orr of the Cromford Report, “they are struggling to make good margins even with the higher volume because land prices have risen faster than home prices and labor costs are escalating due to the chronic shortage of construction labor. With the proposed massive increase in government infrastructure construction (not to mention the border wall), we could find the construction labor shortage becomes even more extreme over the next few years.”
Should Young People Learn a Trade?
Do you know any young people who want to learn a trade, make a pretty decent income, and have consistent work? With an ever increasing labor shortage, new construction could be a solid future or at least a 2-4 year bridge to learn a trade, save some bucks, then pursue higher education, or whatever. And by the way, learning a trade these days isn’t just carpentry, the same labor shortage applies to plumbing, electrical, and AC / Heating too to name a few.
My son and now business partner Jonathan did exactly that. His exit from under our roof following high school took him to Colfax in Northern California where he spent a couple of years working for a builder. He knew nothing of the trades, particularly because dad could barely hold the right side of a hammer;-) and never taught him. But he worked hard and learned. I’m amazed my son could develop these handy skills coming from my DNA.
From there he spent a couple years in Bible college in Europe and Israel where he met his future bride to be, Sarah. Upon their return to the states, he moved to Boise, Idaho, rented a room from a — real estate broker, who just happened to need an assistant. He hired Jon and he and Sarah spent another year after they were married ministering at the bible college in Hungary. Oh yea, he worked for a year with Direct TV while in Boise, and learned invaluable phone skills.
After graduating from Bible College, they came back to stay with us in Phoenix over the Christmas holidays where I made him a job offer to assist me in the business. The cool thing is that he gained experience by doing many different things, all of which have made him invaluable to me. (Shhh, not too loud though)
Market data referenced in this article comes from The Cromford Report.