Local HBAs tackle labor shortage; Architects see more amenities and size; CPWR snapshot of construction industry profiles an older workforce; Detroit joins the company of Turnaround Towns
By Mike Beirne, Editor | September 23, 2013
Local HBAs tackle labor shortage
As home building picks up from one of the worst downturns in history, builders face a new challenge: dealing with a labor shortage.
The share of builders reporting difficulty finding skilled workers increased in every category of labor, according to a March 2013 survey conducted by the National Association of Home Builders (NAHB). Averaged across all 12 labor categories, 27.8 percent of builders reported a shortage of directly employed workers, up from 19.6 percent in June 2012, and 30.7 percent reported a shortage of subcontractors compared with 22.6 percent in 2012. Meanwhile, housing starts nationwide jumped 54 percent by July 2013 to a seasonally adjusted annual rate of 896,000 compared with 581,000 in July 2009, according to the New Residential Construction Report by the U.S. Census Bureau.
With fewer workers and more projects, Home Builders Associations (HBAs) across the country are realizing the importance of finding both short-term and long-term solutions to this labor shortage.
Long-term, we have to backfill the aging worker with our students, said Alan Anderson, executive vice president of HBA Manatee-Sarasota in Florida. We need to identify and find avenues and opportunities for our young people to see the benefits of getting into our industry.
The Florida HBA has seen increasing interest in its Future Builders of America program as construction rebounds. The program has chapters at local schools and gives students both classroom and on-site education in the industry.
?We need to make sure our school districts and the department of [education] understand that career and technical education is important, and to fund it in the way we fund core curricula,? Anderson said.
The HBA of Michigan is supporting legislation (HB 4465 and HB 4466) that allows parents and schools more flexibility in choosing curriculum requirements that are geared toward construction or other trades, according to Bob Filka, CEO, HBA of Michigan.
Changing state laws is a long-term solution to drawing more students to the construction industry, but since work is available now, builders must also find a short-term answer.
The HBA Manatee-Sarasota works with the Suncoast Workforce Board, a non-profit corporation with a database of more than 1,000 people with construction backgrounds. The organization can help subcontractors grow their base.
"There are incentives for the subcontractor company?s manager and owner to work with [the board], [and] pull from this resource available names that are living within the zip codes that we have in our two counties," Anderson said.
One of these incentives is a $9,600 tax credit for hiring a veteran with experience and another $2,400 credit if the veteran is on food stamps, according to Anderson.
He also says the board will help reimburse the company for a worker?s training if financial assistance is needed, or partially reimburse a worker?s salary if he or she stays there for at least a year.
"Short term, we?re trying to help our sub-base grow their business," Anderson said. "The issue that we're having is somewhat of a good problem compared to the problem we've had in the past when we had an abundance of skilled workers and no work for them."
Architects see more amenities and size
Larger and more open are becoming increasingly popular attributes in new homes and additions, according to the American Institute of Architects Home Design Trends Survey.
As the housing market recovers, more architects reported that their first quarter projects included more square footage and volume (ceiling heights, two-story entryways) compared with the 2012 first quarter. They also noted a growing preference among homeowners for open-space layouts, with partial walls that allow more flexibility in the use of space, and a greater sense of informality in the home. Single-floor plans and designs that increased accessible movement within the home and accessibility in and out of the property also were popular.
The bigger houses were in demand despite shrinking lot sizes, as only 3 percent of respondents indicated that they worked with larger lots while 25 percent of architects noted lot sizes continued to decline.
?Declining lot sizes is a long-term trend fueled by the effort to keep homes affordable, but also likely reflecting emerging location preferences,? said Kermit Baker, AIA?s chief economist. ?In other (AIA trend surveys) residential architects reported the growing trend toward infill housing, emphasizing smaller developments in more desirable locations. Land prices for infill projects are typically higher than for larger developments in exurban locations, thereby encouraging small lots.?
Interest in blending indoor with outdoor living spaces through patios, decks, porches, and outdoor rooms remained steady with 63 percent of architects reporting increasing consumer interest, which was in line with 64 percent in the 2012 quarter.
?Because lot sizes don?t show any signs of increasing, it?s clear that homeowners want to maximize their current square footage to its highest potential, as opposed to increasing it,? Baker said.
High-end homes tend to be the projects in which architects report an increase in size?24 percent compared with 22 percent reporting declines. However, entry-level homes are not getting larger as only 4 percent of respondents reported an increase for this market segment.
That report is consistent with the average square-footage figures compiled from the 242 builders who participated in Professional Builder?s Housing Giants Survey (See PB May 2013 or ProBuilder.com). The average size of more expensive detached second move-up homes built during 2012 increased 61.2 percent to 4,908 square feet compared with 2011, and detached first move-up homes grew 59.2 percent to 3,791 square feet. The size of detached starter homes remained steady, increasing just 3.2 percent to 1,762 square feet.
CPWR snapshot of construction industry profiles an older workforce
The construction workforce is rapidly aging, and workers 55 years and older will compose 25.2 percent of the sector?s labor force by 2020 compared with 19.5 percent in 2010, according to ?The Construction Chart Book? published by the Center for Construction Research and Training, or the CPWR.
Formerly called the Center to Protect Workers? Rights, the CPWR is the health research and training arm of the AFL-CIO?s Building Construction Trade Department. The labor group has published ?The Construction Chart Book? every five years since 1997 by compiling industry data pertaining to economics, safety, and worker health from such sources as the Census Bureau, Bureau of Labor Statistics, Harvard University?s Joint Center for Housing Studies, and the U.S. Green Building Council.
According to the CPWR, baby boomers will continue to work because their retirement wealth has diminished and the age for collecting Social Security benefits gradually increases. Additionally, younger construction workers may be more likely to lose their jobs and less likely to find a job. Those factors pushed the average age of construction workers from 36 years old in 1985 to 41.5 years old by 2010.
Health issues will be a concern for an older workforce considering that among construction workers 55 years and older in 2010, , 56 percent had hypertension, 18 percent had diabetes, and 15 percent had heart disease. Seventy-one percent of all industry employees were either overweight or obese, 30 percent had hypertension, and 8 percent had diabetes.
The industry?which includes residential and commercial as well as roads, sewage and waste disposal, and other construction sectors?contributed 3.5 percent to the nation?s gross domestic product in 2010 compared with 4.9 percent in 2005. However, construction employment is projected to grow by 1.84 million wage and salary jobs, or 33 percent, between 2010 and 2020, more than double the 14-percent growth rate forecast for the overall economy.
Between 2007 and 2009, 1.1 million longtime workers lost their construction jobs. Forty-four percent were re-employed by January 2010, but only 21 percent found jobs in construction. Total construction employment decreased from 11.8 million in 2007 to 9.1 million by 2010, while the number of Hispanic workers declined by 755,000 during the same period. More than 75 percent of Hispanic workers were born outside the United States, and only 22 percent carried employment-based health insurance compared with 47 percent of all construction wage and salary workers.
Other findings from ?The Construction Chart Book? include:
? More than 70 percent of construction companies used at least one green technology or practice in 2010. The industry had 92,100 jobs in all-green establishments, as defined by the Bureau of Labor Statistics, and 1.2 million jobs in some-green establishments. The residential building sector participation in green jobs was 5.6 percent of all construction jobs, compared with 9.9 percent for building equipment contractors, the largest construction subsector with green jobs.
? Almost 80 percent of construction businesses with a payroll during 2007 were companies employing between one and nine workers.
? The percentage of self-employed construction workers increased to 19 percent in 2010 from 16 percent in 2007.
? About 12 percent of construction firms used day laborers; 22 percent had no full-time employees on their payroll; and 8 percent hired temporary workers through agencies.
Detroit joins the company of Turnaround Towns
Just weeks after filing for bankruptcy, Detroit posted some good news by breaking into the list of the top ten housing markets that saw the largest improvement in median list prices and for-sale inventories during the second quarter, according to Realtor.com.
California dominated the Turnaround Towns list with Oakland, Orange County, Santa Barbara-Santa Maria-Lompoc, and San Jose claiming the top four spots. The Motor City ranked seventh overall and had the second-lowest figure in the nation for median age of inventory at just 45 days. Oakland had the youngest stock with 15 days.
Nationally, the median age of inventory decreased 14.4 percent from the comparable 2012 second quarter with typical homes selling in 83 days. Median list price rose 5.4 percent year-over-year to $196,000. The number of homes on the market nationwide dropped 10.3 percent with an average of 1.8 million houses on the market between April and June.
Realtor.com?s Top Turnaround Towns are listed below and compare the second quarters of 2013 and last year (percent increase in median price/percent decline in inventory):
1) Oakland, Calif.
+ 41.3 percent/-34.4 percent
2) Orange County, Calif.
+29.4 percent/-36.6 percent
3) Santa Barbara-Santa Maria-Lompoc, Calif.
+ 34.3 /-27.8 percent
4) San Jose, Calif.
+25 percent/-35.4 percent
5) Seattle-Bellevue-Everett, Wash.
+17.2 percent/-29.9 percent
6) Los Angeles-Long Beach, Calif.
+30.3 percent/-28.9 percent
7) Detroit, Mich.
+37.8 percent/-26.5 percent
8) Portland-Vancouver, Ore.
+12 percent/-23.5 percent
9) San Diego, Calif.
+21.1 percent/-28.5 percent
10) Reno, Nev.
+26 percent/-29.1 percent