I get that home building fell hard in 2009 and stayed down for years but there's a serious supply problem running housing prices thru the roof, along with home insurance. Labor shortage is an often claimed reason for it all.


Where did all that labor go?

They're all working. Trades are in high demand and they can basically demand to be paid more for a job or they walk. Recent hailstorms didn't help the situation either.

But new home sales aren't exactly at some all time high. It looks like 1960s numbers, when the population was smaller yet the labor shortage is causing prices to go up

http://www.tradingeconomics.com/united-states/new-home-sales

See max data chart

Why aren't we building the hell out of houses

Could be talking out of my ass here but maybe a lot of that labor is going into commercial construction too? About 15 cranes within 3 miles of my office.

Maybe it's because people aren't willing to go into construction and it's left up to migrant labor?

That is national data. Texas isn't exactly par for the course with what's going on in America which is why everyone is moving here and clogging up our damn roads.

AggieFanatic09 said:

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Could be talking out of my ass here but maybe a lot of that labor is going into commercial construction too? About 15 cranes within 3 miles of my office.

Maybe it's because people aren't willing to go into construction and it's left up to migrant labor?

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I've considered that. I'm sure a lot of people that got burned in 2009 and have since found something they feel is more stable now, especially after such a long break in new homes.

If so, how long does the bigger money being offered take to rebuild a lost labor force.


Sucks....I want to buy a new house but **** these prices

Institutional money is flowing into Texas real estate, everywhere from west coast pension funds to mega Wall Street banks.

Commercial stuff is selling at 2.5% cap rates right now!

Unless there's a massive slow down, I don't see Texas slowing at all.

From what I'm seeing on the ground locally, land prices and availability in suburb areas is the issue, not labor.

Let's focus on the OPs specifIc concern - residential labor availability. I recently did diligence on a custom home builder (reputable and does great homes) in the Dallas area looking for a significant amount of capital.

Some metrics they had were that labor in this area is currently booked out at 120% - meaning jobs are completed understaffed and not on time. This is attributed to two things, which makes perfect sense.

First, there's a labor shortage due to increased demand related to the two years worth of above average rainfall in the spring. Thousands of homes across Texas were behind schedule because of the rain (can't pour slabs).

Also - with this new age of mega home builders (especially in the suburbs of Texas), labor would rather work for a builder that's building 20 homes on 1 street than 1 custom home guy that can't pay him until the draw comes from the bank. These large builders are appropriately capitalized and pay bills on time (mostly payroll).

I've heard the rain delays has been a part of the issue too, makes sense.


The new home sales numbers posted above were national, showing unimpressive numbers


I wonder how much is that local DFW sales are actually high. I've tried to find year by year numbers but no luck. I've seen mentions of as much as 20% increases in new home sales but that doesn't mean much by itself.....nationally 20% wouldn't get us anywhere near the peak

Huge building boom in Reno right now from people fleeing the bay.

That's what I'm thinking. Selling wife's old house now then I'm going to wait and see if prices come down

jake2011 said:

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AggieFanatic09 said:

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Institutional money is flowing into Texas real estate, everywhere from west coast pension funds to mega Wall Street banks.

Commercial stuff is selling at 2.5% cap rates right now!

Unless there's a massive slow down, I don't see Texas slowing at all.

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For the record these kind of comments are always uttered before a bubble pops. No one can predict the timing, but people were saying the same thing in California in 2004 through 2006.

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This is actually true. I can't wait for it to happen either - I'll finally be able to expand my holdings. Can't justify it at current prices.

that's right. However, even in 2008, housing didn't collapse in the DFW market, it flattened. Ebb and flow. People underwater in California moved here so in some respects, it actually kinda caused growth.

As long as interest rates stay where they are (and they will because our government and fiscal policies are whack), everyone and their brother will continue to flock here. Low cost of living and you can live in a 3,500 square foot home less than 10 years old on $150k of annual salary.

Where else in America can you get that? Yes people will say it's cheap to live in ABQ, NM but the reason why it's booming here so much is because along with the supply and demand of housing there are JOBS JOBS and MORE JOBS coming here.

I live in Plano and my home has appreciated over 10% in the last year. People looking to buy in the Lakewood area of Dallas are paying absolutely insane prices. Real estate and labor markets are out of sync when people can afford to buy $500k homes, tear them down and build a $1.2M property there and STILL sell it for profit.

There is also the element that builders aren't paying their subs more, they are still trying to buy at pre-boom rates. What's the incentive for a sub or labor to take on more work if that's the case, they are overloaded with work as it is?

Charlotte, Atlanta and Houston are more expensive at the moment - from what I've heard from a lot of people.

It's why people are moving to DFW. Houston housing took a bit of a hit but homes in the heights are still more crappy and more expensive then homes in the M streets.

Just checked out zillow for Houston, looks about like Dallas. Not many newer homes and the ones they have are half million or so


One thing that sticks out is all the new houses are 2400 sq ft or bigger...up to 4000 sq ft. Absolutely nothing under 2000 sq ft


Very little under that size

gotta move out to the sticks to live in a new 2000 sqft home - this is 'Merica.

People want 4 beds 3 baths gamerooms media rooms huge master closets and bathrooms.

Free money - why not buy more?

Yeah...lol....if you ain't house poor, you ain't trying

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before a bubble pops

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I have a hard time seeing a bubble. This is pure supply and demand driven by increased population need and not by easier to acquire credit as we saw during the last actual bubble. In fact, the lack of supply is keeping MORE purchasing from going on. Realtors tell me they have tons of buyers but few sellers. We would move in a heartbeat but there just isn't anywhere to go for what we'd like to pay.

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People want 4 beds 3 baths gamerooms media rooms huge master closets and bathrooms.

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I can live without the media room and make the game room my office. But this is pretty much what I'd like to move into.

Credit is unbelievably easy and cheap to acquire. In fact, it's as easy and cheap to acquire as any point in modern history. Residential real estate groups like Berkshire Hathaway's are buying up a ton of properties, some sight unseen.

Thankfully we have reigned in some of the double pass-through securities and slightly reduced the number of subprime and deep subprime mortgages. However to pretend there isn't a bubble is crazy.

It may be driven by cheap money (a central bankers bubble, if you will) but as interest rates rise (assuming the Fed has the guts to do what they need to), demand will go down and prices will be depressed as well.

Some areas and price points will be less affected, but some will be hit hard. All of thi boils down to incentives, and we haven't shifted the incentives enough to prevent another bubble. I hope I'm wrong.

91AggieLawyer said:

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Quote:

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before a bubble pops

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I have a hard time seeing a bubble. This is pure supply and demand driven by increased population need and not by easier to acquire credit as we saw during the last actual bubble. In fact, the lack of supply is keeping MORE purchasing from going on. Realtors tell me they have tons of buyers but few sellers. We would move in a heartbeat but there just isn't anywhere to go for what we'd like to pay.

Quote:

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People want 4 beds 3 baths gamerooms media rooms huge master closets and bathrooms.

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I can live without the media room and make the game room my office. But this is pretty much what I'd like to move into.

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Perhaps not a bubble technically but if the demand is ever met by increased building, slow down in people moving in, the rain stops....etc....prices will fall.


Right now it's a straight up bidding war


We put my wife's 1995, 1480 sq ft, 2 story house on the market Saturday at 10 am and had 5 offers in 32 hours.

Anybody that thinks stocks, real estate, etc. aren't in a bubble are in for a big surprise when the Fed tries to raise interest rates again.

Previous recoveries weren't manufactured with near zero interest rates but this one was. If interest rates go up the main reason housing and stocks went up will be gone too.

Another reason for tight home building labor is a dry Wall guy and foundation guy with a cement truck is a lot more valuable to Americans than some chick with an art history degree or ancient literature degree. Many of our young people wasted their time and daddy's money and aren't a factor in our system and aren't helping row the boat.