Why are newer houses so expensive?
Real Estate
New homes priced below $200K are now 0% of the market.
They were 40% of the market one decade ago.
$500K+ homes have grown from 17% of the market to 38% of the market during Covid.
One of the biggest problems facing builders today is a shortage of skilled labor. It’s a problem with suppliers to the construction industry and with contractors themselves. The government continues to pay able-bodied young people to sit at home smoking pot and playing X-box.
Many subcontractors and suppliers can’t pay these young people enough to get off the couch.
This is reducing the number of homes contactors like me can build therefore reducing the available inventory of new homes.
Of course in other areas there are plenty of subcontractors out there right now looking for work. Especially with how interest rates have affected new home builders and remodelers. Available inventory is down right now because there are less buyers and not less labor in many localities.
But in most US areas labor is scarce and expensive.
A quick glance at a population pyramid shows the shrinkage in the size of age cohorts. There are a lot fewer 20-24yo than there were five years ago. For the prior 15 years, the cohort size was increasing. At the same time, the economy continues to grow; so there are more job options, which is driving up pay and letting people avoid sectors seen as undesirable. Further reducing supply is that a large number of young people don’t even have driving licenses; or which seriously impairs their ability to travel to jobsites, further reducing labor supply. The pro-urban orientation of Millennials and Gen-Z toward more central locations; also means they are more remote from peripheral job sites.
Many subcontractors constantly struggle with getting their workers to show up to work.
During a typical week, only about 50% work every day in busy housing areas of the southwest and southeast. Some will only work enough so that they’re able to fall back on unemployment and receive full benefits. They’ve learned how to work the system.
