The Economist September 4th 2021 pp57-58 |Finance & economics|Labor shortages|”Help Wanted” “Houses are in high demand” “So too are the people who build them”
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Reviewing the American Case-Shiller house-price index shows that going back to 1990 that the index has varied on % change from a year earlier between about -10% to nearly +20% now. From 1990, the index rose after the recession steadily until 2007 and then fell with the mortgage loan debacle. It then rose from the depths of about -12% upward to about +10% in 2014 fell slightly then leveled out at about +7%. It dipped to about +4% with the start of the COVID pandemic and then has climbed comparing 2021 with 2020 to nearly +20%.
The historic year-over-year increase has been fueled by material and labor shortages. The material shortfalls are expected to resolve sooner than that of labor. Interestingly the labor insufficiency has been observed in China, India, Britain, France, Germany, Canada and America. The root causes are an aging workforce retiring from construction, COVID, tighter immigration rules, a relative lack of automation in homebuilding and lack of interest in the profession by youngsters entering the workforce.
How bad is it out there?
“Don Horton, founder of America’s largest housebuilder, never thought he would have to turn away business in Texas.” They are now restricting sales due to material and labor shortages and see that as inflating prices as noted in the Case-Shiller house-price index. Prices are being pushed up by low interest rates and “enthusiasm for bigger homes.”
More worries on the horizon
With governments looking to invest in much needed renovations and infrastructure, experts worry this will only potentiate the pressure on the supply of workers. “Job vacancies, construction delays, bosses’ headaches-all may go through the roof.”
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