The US construction industry lost tens of thousands of construction jobs in the Great recession of 2007-2009. Building of all types of construction was cut back dramatically. Since then we have been under-building by millions of housing units, with too great a concentration on more expensive, more profitable homes. The causes of this are many and varied, but now anyone worried about home valuations needs to ponder the following when thinking about replacement costs:
The construction sector could be short of as many as 500,000 workers this year according to the Associated Builders and Contractors. The 'regular labor needs' for building housing and commercial buildings will be joined by:
1. Massive national infrastructure construction to repair and replace the US' neglected and crumbling infrastructure
2. Aging housing stock requiring renovation and retrofitting/updating.
3. A growing volume of weather-related damaged property that will require rebuilding and/or repairs.
Many of the construction jobs are the kind of work many Americans simply don't want to do. Many jobs require skills that take a long time to learn and perfect. The US needs to urgently grant work visas and address the often overly cumbersome requirements of construction projects if we want to resolve this crisis. Many construction jobs do not pay all that well and those doing them cannot find affordable housing where they work, especially in areas that have seen home price surges recently. That may be even tougher to resolve.
The other day I spoke to someone in a high-growth area who said they were unable to find a contractor to build their home, and were rightfully worried about the serious quality issues that may arise from a bad contractor. The one contractor that was available was a price-gouger offering to do the work at a 40% premium. Growing the labor pool for construction with urgency may be the most important inflation-fighter of all.