Labor Shortages Push New Construction Costs Higher

Labor Shortages Push New Construction Costs Higher
National Association of Home Builders | September 17, 2018

Builders are being forced to raise home prices and are having a more difficult time meeting project deadlines because of the ongoing labor shortage in the construction industry, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index. Eighty-four percent of builders say they have had to pay higher wages to subcontractor bids, 83 percent say they have had to raise home prices, and 73 percent say they can’t complete projects on time without more manpower. The number of single-family builders reporting labor and subcontractor shortages reached a record high in July.

House 1065“The steepest upward trend has been in the share of builders saying the labor/subcontractor shortages are causing higher home prices, which increased by 22 percentage points between 2015 and 2018—to the point where it is now nearly tied with higher wages/sub bids as the most widespread effect of the shortages,” NAHB reports on its Eye on Housing blog.

The survey also shows other effects of the labor shortage, such as builders saying that, in some cases, they’ve been forced to turn down projects. The share of builders who have slowed down on accepting incoming orders has doubled between 2015 and 2018, from 16 percent to 32 percent. The share of lost or canceled sales due to labor shortages also has been on the rise, up to 26 percent in July. “Shortages are having a significant impact on production levels,” according to the report.

Source: “Housing Market Index (HMI),” National Association of Home Builders/Eye on Housing (September 2018); REALTOR® Magazine 091718

4 Outdoor Projects That Offer the Most Paybacks

4 Outdoor Projects That Offer the Most Paybacks
realtor.com | June 25, 2018

Shower Image7Outdoor projects can help boost a home’s value by up to 10 percent, according to a new realtor.com® report. Outdoor showers, barbecue stations, entertainment pools, and firepits are the top projects that realtor.com® researchers found with the biggest potential increases to a home’s price.

For its research, realtor.com® analyzed listings at its site for summer-related outdoor features in single-family homes listed for $150,000 or more.

An outdoor shower offers the biggest return on investment, according to realtor.com®’s research. Researchers found that homes with outside bathing areas had a 97 percent price-per-square-foot premium. They speculate that such a feature may be appealing since it’s usually found in homes that are near a beach or an expensive property with other luxury amenities.

Researchers also found that homes with barbecue stations are 26 percent more expensive than those without. In Utah, homes with barbecue stations tend to be listed for 58 percent more per square foot than other homes in the state.

Also, entertainment pools—with enough space around them for others to lounge—could give a home a 26 percent increase in its value. In New York state, homes with such entertainment pools were 224 percent pricier per square foot than those without.

Firepits and backyard fireplaces are also proving to be a hot way for homeowners to boost their home prices. Homes with firepits or backyard fireplaces had a 25 percent premium, according to researchers.

“Outdoor features can give a home a special quality in the market,” says Javier Vivas, realtor.com®’s director of economic research. “And anytime you have a unique feature, it can bolster the prospective value of a home.”

Source: “Top Price-Boosting Summer Fun Home Features,” realtor.com® (June 21, 2018); REALTOR® Magazine 062518