Why Is There No New Construction?

There needs to be new home construction in San Diego to counter the pent up buyer demand, yet we are seeing only a bit of building of new homes.

Recent employment reports indicate that construction industry jobs are lagging while the housing industry recovers. Market uncertainty has left some companies cautious about adding workers since they were forced to cut staff during the recession. High costs for raw materials as well as developers’ fees are also likely factors. There has been a particularly big drop in public construction.

Countywide, the number of private residential-construction jobs has been more than halved since the peak of the housing market in 2005, according to job figures from the state.

Contractors who do manage to snag quality workers are struggling to retain them.

In certain trades, some companies have been trying to lure competitors’ workers by offering cash. Cash is attractive because workers tend not to pay the required taxes on that income, so they’re bagging more money.

Contractors in some cases have asked builders to pony up to $3 more an hour per worker so they can keep more from going to cash-only contractors.

The bottom line is that with the interest rate increase the market has cooled a bit however our inventory is still very low and we need builders to continue building so that we can have homes for buyers.