Buyers Annoyed With New Homes

As reported to Daily Real Estate News in Realtor Mag on Tuesday, July 29, 2014

An increasing labor shortage among homebuilders reportedly is causing more new homes to be delivered late, and buyers say they're getting frustrated that builders don't come back to fix common issues such as sticky doors and loose floor tiles after they move in.

"Builder tardiness" is a growing problem because the economic downturn drove hundreds of thousands of craftsmen and laborers away from housing and into other industries — and they've yet to return to construction, the Los Angeles Times reports. The labor shortage has become "substantially more widespread" since last year, according to the National Association of Home Builders.

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"The incidence of reported shortages is now surprisingly high relative to the current state of new-home construction," NAHB economist Paul Emrath noted in a recent report. About two out of every three builders report paying higher wages due to the labor shortage. What's more, nearly as many say they've had to raise home prices, too. Builders report that their direct labor or employee costs have risen 2.9 percent over the last six months, while subcontractor costs have increased 3.8 percent, according to NAHB.

On average, single-family builders employ about 25 trades when constructing a residential house, and more than half of builders subcontract at least 75 percent of the construction work, according to NAHB. Builders report the greatest shortages in carpenters and framing contractors.

The shortage means that new-home buyers may have to be more patient, housing experts say. Some builders may require subcontractors who did the original work to follow up on any callbacks from buyers for requested repairs. Large builders often send their own maintenance crews to handle callbacks and may be able to respond more quickly to such requests. But for builders seeing an increase in construction and facing a labor shortage, they're response may be delayed and new-home buyers may find they'll have to be patient and follow up frequently.

Source: “Housing Labor Shortage Turning More Severe, Boosting Home Prices,” Los Angeles Times (July 26, 2014)