(This is an excerpt from an article I originally published on Seeking Alpha on September 7, 2012. Click here to read the entire piece.)
In “Home Builders Don’t Have Enough Workers to Meet New Demand“, CNBC reports that housing markets with strong demand are reporting severe shortages of labor. These strong markets include the Western U.S. and Texas. This shortage is not only increasing the price of labor and putting pressure on margins, but also it is increasing the time it takes to build a house. CNBC quotes Ted Wilson of Residential Strategies as estimating the media labor wage hike at 4% with a maximum of 10%. The crash of the housing bubble forced many construction workers to move on to other jobs and put many production builder companies and subcontractors out of business.
These data points add yet more confirmation that the current inventory of housing is not sufficient to meet current demand in many U.S. housing markets. It also helps confirm Toll Brothers’s (TOL) report of pent-up demand in the housing market. The flip side of the labor shortage is the implication that the contractors who were once unemployed are now employed. As far as economic well-being is concerned, it is good news to hear those folks found jobs.
{snip}
Source: FreeStockCharts.com
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on September 7, 2012. Click here to read the entire piece.)
Full disclosure: long KBH shares, short KBH calls