The Lowcountry’s improving real estate market and thinning housing inventory once again has triggered the sounds of hammers and power saws as new homes spring from the ground, reports The Post and Courier. But builders are discovering it’s no easy task to find the skilled labor they need to keep up with the burst of activity.
The lack of skilled construction labor, from framers to drywall installers, is an issue resonating on job sites across the region and the rest of the country. When the housing market cratered five years, sales stalled and construction companies were forced to lay off scores of skilled workers. Industry officials say some of those workers shifted to other industries, moved out of the region or remain leery about returning to the cyclical trade.
In the Lowcountry, some construction crews are bouncing between multiple job sites while developers are forced to stretch completion time lines that could raise home prices.
The U.S. Commerce Department said earlier this month that builders broke ground on houses and apartments last month at a seasonally adjusted annual rate of 954,000. That’s 12.1 percent higher than November’s annual rate, and nearly double the recession low reached in April 2009.
For the year, builders started work on 780,000 homes. That’s still roughly half of the annual number of starts consistent with healthier markets. But it is an increase of 28 percent from 2011. And it is the most since 2008, shortly after the housing market began to collapse in late 2006 and 2007.
Upturn’s downside
In the Lowcountry, Carolina One New Homes said in its latest report issued this month that more than 2,400 construction permits for houses were issued from January through October in the region, up 6 percent compared to the same period of 2011. Contractors have responded to the uptick by working longer hours and promising to expand their labor forces.
“Builders here are hiring and I’ve heard there is a problem with filling some jobs like framers,” said Phillip Ford, executive director of the Charleston Trident Home Builders Association. “Over time, if the market continues to improve, those workers who left will get back into it again.”
A recent survey by Associated General Contractors of America of Labor Department said construction firms are expected to add to their payrolls this year. “Construction spending has been rising for two full years, but contractors have been cautious about adding workers until they knew the upturn would last,” said Ken Simonson, the association’s chief economist. “In 2013, both residential and private nonresidential construction should rise enough to offset a further slowdown in public work, and contractors will be looking for more workers.”
The dearth of skilled labor in home construction is evident in the S.C. Department of Labor, Licensing and Regulation annual reports. The agency’s Residential Builders Commission reported total home residential builders licenses have decreased in comparison to the housing boom years ago.
The agency tallied a total of 21,992 builders licenses, from plumbing to electrical, in the state in its 2011-12 annual report, nearly 19 percent fewer from 2006-07. The agency, for example, counted 8,709 “home builder” licenses in its 2011-12 report, 1,664 fewer than its 2006-07 data.
Delays
The lack of workers has some area developers factoring in longer construction schedules, an adjustment that is tacked onto the list of other rising costs, such as building materials. The lack of contract workers also has prompted instances when a competing developer may try to siphon workers from another construction site with better pay. Charleston-based apartment developer Greystar has been affected by the labor shortage, said Todd Wigfield, the firm’s managing director of development.
“We have a ton of development projects around the country and the labor force is just not there,” he said. “Skilled labor is just hard to find. … With this run up, we just don’t have the skilled labor we’ve had.” Wigfield said the group has been relying on smaller construction crews, sometimes roving among projects in several states.
Greystar has more than 25 construction projects in the works across the country, including Elan Midtown near Meeting and Spring streets in downtown Charleston. The workforce issue has Greystar factoring in more time for project completions, including “just a few weeks” added to the Elan Midtown 200-apartment project that is planned to open later this year, Wigfield said. “We’re adding some padding into construction schedules to accommodate the lack of workforce,” he added.
Higher costs
The labor situation is echoed by several home builders throughout the Lowcountry, including large firms such as Ryland Homes, involved in several new homes projects in the region. Don McDonough, Ryland’s division president in Charleston, said the company has experienced some labor shortages and increased costs as a result.
The issue also goes for Crescent Homes, a local home builder working on a dozen subdivision projects stretching from Mount Pleasant to Summerville. “One of the big challenges is getting crews to jobs,” said Andru Blonquist, vice president of operations. He added that Crescent has seen shortages in skilled help for concrete, masonry, drywall installation and siding jobs.
The problems have meant increased costs, some of which have been passed on to the homeowner, he added. Real estate agents are talking with prospective buyers about the impact the shortage is having on the market. “There’s issues when heading into a downward spiral, and you have issues when coming out of a recession,” said Will Jenkinson, broker-in-charge for Carolina One New Homes.
Buyers can get emotionally tied to a home sale, and it often falls to their agent to make them aware of possible delays from permit approvals to construction timetables. “We have to be the buffer and to educate and manage expectations of the buyer,” he said.
