Charlotte-area homebuilders are eager to build more houses, but after laying off thousands of construction workers during the real estate meltdown, they say they can’t find enough new employees to meet rising demand.
Delays are creeping into projects, homebuilders say, and fear is growing that a lack of skilled tradesmen could artificially accelerate the already-rising prices of new homes.
“What’s going to happen is there’s going to be a shrinking availability of new homes,” said Alan Banks, president of the Home Builders Association of Charlotte. “And any time demand goes up and inventory doesn’t, … I fear there’s going to be unnecessary price increases.
“We’re beginning to see it. On this trajectory, it’s going to get worse.”
Homebuilders and subcontractors say they see multiple factors at play: Smaller outfits remain too uncertain of the economy to hire, and bigger ones are finding the labor pool thinned out by new rules tightening proof-of-citizenship requirements for workers.
The talk of shortages comes as pent-up demand for homes in May pushed prices up nearly 10 percent in Charlotte, according to real estate data firm CoreLogic.
Real estate brokers say it’s a seller’s market, with multiple offers landing on some homes. Experts say not enough new houses are getting built.
U.S. census figures show builders secured permits for 3,200 single-family homes in Mecklenburg County in 2012, compared to more than 9,200 in 2006, before the housing bubble burst.
The Charlotte market has a 6.7-month supply of new housing, said Bill Miley, Charlotte director for Metrostudy, a national firm that analyzes homebuilding trends.
It needs a seven-month supply, he added, since it takes about seven months to get new homes built and closed.
During the worst of the downturn, the region had a 10-month supply backed up.
The upturn in the local housing market started early this year, but it came after North Carolina construction firms had spent four years mired in the housing meltdown, shedding thousands of workers.
Construction jobs down
The number of workers remains down in the Charlotte metropolitan region, which the U.S. Bureau of Labor Statistics defines as including Gastonia and Rock Hill. Employment of carpenters, electricians, plumbers and other construction workers is down by about 1 percent, to 25,300, compared with May 2012.
That figure represents a 35 percent decline from the pre-recession high of May 2007, when 39,000 such workers had jobs.
Statewide, firms are still struggling to add construction workers. A recent report from the Associated General Contractors of America found construction employment in North Carolina fell by 6,000 jobs in the past year – a 3.5 percent decline. The industry group said that left North Carolina with the nation’s fifth-worst construction job loss over that span.
Experts say even though demand for new homes is rising, it might take awhile before construction employment catches up.
Miley said construction work in Charlotte hit such a low around 2010 that many carpenters, electricians, plumbers and other skilled tradesmen either left the area or moved on to other jobs.
“I know a number of them who went to work for Lowe’s or Home Depot, but that was a big hit financially,” he said.
Heidy Zavala, human resources manager at Caryl Mechanicals, said she was shocked recently when her firm posted electrician and air-conditioning technician jobs with the N.C. Employment Security Commission and got no applicants.
“Not one response,” she said. “I don’t know what to tell you. It’s just hard getting good qualified candidates who can meet our specifications.”
Banks, the homebuilders’ group president, said when the market finally began picking up at the beginning of this year, construction firms specifically noticed a shortage of low- to semi-skilled applicants for positions as framers, masons, roofers and drywall installers.
E-Verify requirements
Complicating matters, he said, is a 2011 state law requiring employers to use the federal E-Verify system to check work eligibility of new hires.
The law, which has been gradually phased in, took full effect Monday. It requires all employers with at least 25 full-time employees to run prospective hires’ information through E-Verify.
That didn’t present a problem when new construction remained at a standstill. “Now that it’s going back the other way, we’re finding that, wow, we need some of these 11 million people,” Banks said, referring to the estimated number of undocumented immigrants in the United States. “We need to put them back to work.”
Jess George, head of the Latin American Coalition, said North Carolina business leaders have been urging their representatives in Congress to pass comprehensive immigration reform that would put workers back on the job.
“Their message (to lawmakers) is for the businesses in Charlotte and in North Carolina, the jobs are here to be had, but we simply don’t have the workers,” she said.
Research suggests some of those workers might no longer be in the area. The Pew Hispanic Center counted an estimated 250,000 unauthorized immigrants in the North Carolina labor force in 2010, then one of the biggest such labor pools in the nation.
However, the center in 2012 noted that net migration flow from Mexico to the United States had stopped and might even have reversed.
Among the causes given: the sputtering U.S. job and housing construction market.
Shortages don’t hit all
Not everyone’s having labor shortages. Eastwood Homes sales so far this year are up nearly 75 percent over the same time last year, said Mike Conley, the builder’s Charlotte division president.
He said his staff pressed their subcontractors to add workers. The tradesmen feared that demand would slump again, but ultimately they added enough workers to keep pace.
“I have heard (about shortages) from many other competitors,” he said. “I think we’ve just been fortunate because of the longstanding relationships (with tradesmen) that have helped us.”
Smaller companies say the housing market upturn hasn’t yet accelerated to the point where it’s creating staffing problems for them.
Steven Whitlock, chief operating officer for 15-employee Whitlock Builders, said he isn’t having trouble finding enough workers.
Philip Dressler of Dressler Construction said business is picking up, but not enough yet for him to add to his three-member staff.
“The problem in the past has been that you’ll have three months bad, three months good. I’d have to see at least a six- to 12-month trend” of good news, he said.
David Dellinger of Tarheel Masonry said he’s heard talk of shortages, but he suggested the new E-Verify rules have culled from the labor pool the undocumented workers and “fly-by-night” contractors whom major homebuilders relied on for cheap labor.
“For us, there’s not a shortage of masons. There’s a shortage of work,” he said. “I’ve got a bunch of friends who are masons, and they’re still feeling the effects. … Maybe (the homebuilders) just aren’t calling the right people.”
Weather is a factor
The weather is also playing a role in the continued slump in construction employment, Wells Fargo economist Mark Vitner said.
“The overall jobs figures are going to look better later this year,” he said, “mainly because we expect construction employment to pick up as the weather gets back to normal.”
Finding the workers won’t be easy, even in a recovering housing market. Long before the recession, it was getting increasingly hard to get young people to choose construction-related careers, said Ken Simonson, chief economist for the Associated General Contractors of America.
“Those worries have really been intensified now,” he said.