Deep Dive with Dan — Trending Topics in September’s Housing News

Hurricane Harvey will only add to the labor shortage and increase materials costs.

Each month, we use IBM Watson’s tools to assess the sentiment of hundreds of housing news articles about the US housing market. Overseeing that process is Tides analyst Dan Allen. Insightful and observant, he follows the media and helps us keep a pulse on what’s going on out there. Here are his observations on the top housing media trends in September 2017:

September Housing News Summary

Houston Flooding Leaves Labor Pool Dry

Following the unprecedented damage of Hurricane Harvey, there’s great concern that Houston will face a severe construction labor shortage. Even before Harvey, Houston homebuilders and subcontractors were struggling to hire enough employees to keep pace with construction.

With billions of dollars of additional damage to repair, the already-tight construction labor pool will be stretched thinner. Furthermore, the rest of the nation was already grappling with a construction labor shortage and this will make it difficult to draw outside help to Houston.

Damage from hurricane Harvey. Image courtesy NOAA.

As homebuilders and homeowners compete to hire construction workers, wages in the industry are expected to rise. An analysis by John Burns Consulting found that wages for construction workers in Mississippi rose 12% following Katrina. There’s also expected to be a surge in demand for building materials such as drywall, possibly outstripping supply and driving material costs up as well.

There’s expected to be a lag effect before the full wage and price increases hit Houston, caused primarily by the time it will take for insurance and government relief payments to be made.

Jill Carlson, Flickr http://bit.ly/2yd3Aj3, license https://creativecommons.org/licenses/by/2.0/
Jill Carlson, Flickr http://bit.ly/2yVPrDS, license https://creativecommons.org/licenses/by/2.0/

California legislation

California lawmakers took steps in September to ease their own housing crisis. Housing in coastal California is chronically unaffordable due to residential construction failing to keep pace with population growth. California’s largest job centers are along the coast, while construction has occurred primarily inland. San Francisco, for example, added 500,000 fewer housing units than jobs since 2011.

Part of the difficulty of building housing in these coastal cities is natural: they’re sandwiched between the Pacific Ocean and the rugged coastal mountain ranges. The other challenge is a web of restrictive development policies that make building new housing slower and costlier than for most American cities. Growth-resistant NIMBY (not in my backyard) groups have proven adept at leveraging these policies to block construction that they feel would change their neighborhood character or hurt property values.

Much of the new legislation intends to ease this restrictive development environment. The hope is that will lead to greater housing construction and eventually improve affordability. Other measures include increased funding for construction of low-income housing and increased accountability for cities to meet housing construction goals.


About the Author: Dan Allen

Dan is an analyst for Housing Tides. He brings to Tides a background in both economics and journalism, drawing from both disciplines to ensure that Tides is highly accurate and deeply informative. Dan double-checks the data that moves through Tides and works to fine-tune its processes to produce a continuously more insightful product.


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