Over the last few years the anomaly of low inventory has become a staple of the topography of the real estate market. Now there is another factor complicating this conspiracy of constriction: labor shortages within the construction industry.
According to a current report put out by the U.S. Chamber of Commerce, contractors are having to turn down work! Turning it down!!!
That is not all; over half of them are putting in higher bids to cover increased labor costs.
The labor shortage is hitting just about everyone: two-thirds of the contractors are grappling with labor shortages, making jobs more expensive and harder to finish on deadlines. So the pressures that companies are facing are forcing the employers to require more productivity out of their current work forces. There is no assembly line in construction; it used to be feast or famine, but now it’s feast, famine or shortage. According to the studies, the shortages are most noticeable in concrete, interior finishes, masonry, electrical and plumbing.
For the larger firms, there is great concern over the possibility of having to turn down some handsome projects that are being proposed by the Trump administration. According to some, this bonanza could total one trillion in government spending.
According to the U.S. Census Bureau, for the first four months of this year, construction spending amounted to $359.5 billion, 5.8% more than the same period in 2016.
So as the labor shortages are squeezing the ability of builders to provide needed new housing, the inventory factors are only making the demand drive prices higher than many first-time home buyers are willing or able to cover.
In New Jersey, for the month of May 2016, there were just over 39K homes for sale on the market. Compare this withj the 57K that were listed back in May 2011. This represents a reduction of 46%. This contracted market is also seeing buyer demand on a record pace, with over 7,329 closed sales in May 2017 as compared with just 3,916 closed sales for May 2011.
And back in May 2011, the average number of days on the market before sale was 135; compare this with the 70 days on the market for May 2017, nearly a 50% decrease.
Still, new listings in May 2017 are drawing new sellers out of the woodwork with over 14K listed on the market. This all points to a healthy, robust market for the real estate industry, without the artificial stimulants that were available back in 2004-7.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.