Record breaking real estate sales news is making the rounds in Florida from the publicly traded companies to the private, but what no one is talking about is how those homes are going to be built with a crippling shortage in construction labor.
“I cannot perform,” said Marco Raffaele, president of the Tampa based building contractor company Badger Construction. “If I don’t find labor, I cannot perform. Migrant workers made up 90 percent of our workforce before the bottom fell out. They have all left. And they’re not coming back,” he said.
One to two, maybe three guys make up the Badger Construction crews nowadays, crews that work on pouring slab, concrete block and framing. “I can’t even find field supervisors. They just don’t feel comfortable coming back yet. In the downturn it got really dark. We were all affected. These supervisors had a very difficult time. Most of them reinvented themselves and left. When I call them now to try and get them back they’re not ready to take that leap,” said Raffaele. He said if he could find them, he’d hire 50 slab masons, 50 block masons and 50 framers immediately, and have plenty of work for them all. “It’s across the board. Every contractor I know would tell you they would take minimum 10-15 guys right now, today. But they are not here,” he said.
The builders are feeling the pain. “This is one of the biggest risks to the housing recovery,” said Michael Storey, president of building at Neal Communities , one of the largest and most successful privately held home building companies in the state.
While sitting on a real estate panel recently in Lakewood Ranch, Neal Communities President Pat Neal said at the height of the boom there were 23,000 construction jobs in Sarasota and Manatee counties. That number has now dropped to 5,000, he said. In fact, at Neal, where home sales are breaking company records this year, they are back to limiting sales in some communities. “I can only sell homes that I can produce, and the industry doesn’t have the capacity to start all of the homes we can sell,” Storey said. At Neal, they currently have 313 homes under construction plus 126 that are sold, but not yet started. In addition there are 86 inventory homes also in the start pipeline. Homes that are going up are getting built slower with increasing costs due to the imbalance of supply and demand.
Peter Mason, the vice-president of sales and marketing at Lee Wetherington Homes , another Lakewood Ranch based builder, says the labor shortage is slowing down their production even before the homes go in for permit. “Trusses are a big problem. Layouts to go in to permitting used to take two weeks, now it’s up to six to eight weeks because the crews just aren’t there,” said Mason.
The demand for crews gives them pricing power. It reminds Michael Storey of what it was like to build homes back in 2005 at the height of the bubble. “At that time we had labor but we still couldn’t build homes fast enough. You’d have framers show up at 7 a.m. and call purchasing and say ‘give me another $500 to frame this house or I’m going down the street.’ Hence the astronomical price increases. Sure we did great, but our pricing was going up tremendously as well. It all ultimately trickles down to the consumer,” Storey said.
Home prices have already started going up again in Lakewood Ranch; much of it now due to the major labor shortage.
“It’s again getting to the point now that builders are going to have to pay,” said Raffaele. “Whoever pays more- that’s where the contractors are going. I’m gonna lose a guy for $1/hour and to get him back I’m going to have to pay $2/hour.”
“I don’t blame them,” said Storey. “Its business — you leverage your ability to do business. A lot of these guys have been living lean for the last seven years but the problem is it trickles down to the consumer. We have to get more qualified workers or pricing is going to go up and price most people out of the market. It won’t cure itself without more people,” he said.
For Storey, it’s a problem that plagues him daily. At Neal, they have seen many trade partners even decline to put in bids for work. One plumber who recently declined wrote to Storey saying, “as much as I am very interested in working with you, I have no interest in failure. Unless I can find additional workers, we would not perform at the level required by you or me.”
It’s a daily frustration that has him searching for new solutions. “For the first time in my career, I hired a professional recruiter for a builder position. We had four jobs to fill and we were going through unqualified resume after unqualified resume and could not find anyone. They’ve all either left the state or left the business.” He fears that companies will begin to cannibalize one another again. “We’ll start stealing the good people from one another and none of this is good for the industry or for the consumer,” he said.
So what is the solution? Raffaele is working on a presentation to try and attract younger workers from the Amish community from Tampa to Ft. Myers but says that “the state should realize there is a problem and spend money on vocational training. We can attract people if we have training. We have to create and train a new work force and we need to do it now.”
Storey thinks it’s marketing. Getting the word out to qualified laborers up North about the availability of jobs in Florida. “This community is pretty inviting,” he said. “If you’re sitting up north in the cold and snow, I would think this would be a great opportunity. We have got to get more people to build homes here in Sarasota and Manatee Counties. It’s not a quick fix.”