Affordable Housing Investing

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Affordable Housing Investing

Insights into the US affordable housing market include the shortage of housing units for both buyers and renters, high land costs, high costs for labor and materials, and increased regulation of the housing industry. Investment opportunities are available for those who want to invest in affordable housing construction.

Housing Unit Shortage

  • The US housing market needs 2.5 million units of affordable housing to meet current demand, according to research by the Aspen Institute.
  • The housing supply in the US Housing remains constrained, which drives home prices and rents up, especially at the bottom of the housing market. "Nearly half of all renters spend more than 30 percent of their income on rent, and even those with the cheapest rents are struggling thanks to growing income inequality. And the worst of it is growing homelessness, especially in high-cost coastal cities."
  • High rents keep landlords focused on providing luxury buildings, which deters investors from building affordable housing.
  • "One in three US households—nearly 100 million people—struggle with housing costs that jeopardize their financial security. The problem is acute for virtually all low-income families and for the 1 in 4 renters who spend 50% or more of their income on housing—and its effects ripple throughout our communities and economy."

Negative Incentive for Affordable Rental Housing

  • During and after the Great Recession, "at least 7 million households lost their homes to foreclosure and entered the rental market, which created fierce competition for avail-able rental properties and pushed up rents."
  • Low vacancy rates because of competition for rentals meant landlords could raise rents higher and higher, since demand outpaced supply.
  • In 2019, the number of high-income renters increased as it has for eight consecutive years. "Between 2017 and 2018 alone, 311,000 new high-income renters entered the market, the latest in a crowd of 4.6 million such renters since 2010."
  • Most new multifamily housing is built to meet the demand of high-income renters, meaning fewer low- and middle-income rentals are created. "In 2018, 29 percent of newly completed multifamily housing units came with rents above $2,050...", far above what most renters can afford.
  • Affordable low-cost rentals are often found in older buildings, which investors like to demolish or renovate into higher price tiers. "That’s one of the reasons the supply of low-cost rentals has decreased 17 percent since 2011. Only 9 percent of new apartments in 2018 rent for under $1,050 a month, and less than 4 percent had rents less than $850. Less than 3 percent of new apartments over the last decade have been affordable to a median-income renter."

High Cost of Land, Labor, Materials, and Regulations

  • Between 2012 and 2017, "residential land costs increased in 80 percent of U.S. counties." Average land lot costs for a single-family home rose from $159,800 to $203,200--a 27 percent increase just for the land. In the western US, land value per acre jumped in Nevada (up 158 percent), Colorado (96 percent), California (88 percent), Arizona (81 percent), and Utah (81 percent) during the same time period.
  • Labor costs have increased. "Since 2011, average weekly earnings in the single-family residential construction industry increased by 36 percent, compared with a 24 percent increase across the private sector. Average weekly earnings of residential specialty contractors increased by 25 percent over the same period." In addition, workers are in short supply due to new, restrictive immigration laws that reduce the number of foreign workers available to the construction industry. "Historically, foreign-born workers have been disproportionately represented in the construction industry. The 2018 Bureau of Labor Statistics numbers indicate that 30.9 percent of workers in construction and extraction are foreign born, versus 17.4 percent of the overall labor force."
  • "Labor costs in New York City are 31.3 percent higher than the mean of the top 30 largest cities, 25.6 percent higher in San Francisco, and 16.8 percent higher in Chicago. The recent building boom has also been hampered in many cases by a persistent shortage of workers, which drives up wages and costs. "
  • "Rising costs of ... materials mean[s] affordable housing is expensive to build...." "The Bureau of Labor Statistics tracks the price of ... materials with its producer price index, which has risen 23.9 percent since the 2008 financial crisis...."
  • Materials cost increases have greatly affected housing prices. The price of lumber alone has fluctuated in the past decade, "at times reaching more than twice its cost in 2008, according to a monthly lumber price index from Random Lengths. Lumber can represent anywhere from 5 to 10 percent of the cost of building a home, and the rise in lumber prices is in part a result of a decades-long trade dispute between the United States and Canada." One-third of the lumber used in US residential construction comes from Canadian forests, "and that supply has been devastated by mountain pine beetles, which can kill a tree within 48 hours, and by wildfires."
  • State, local, and federal regulations play an expensive role in affordable housing construction. "Today, policy seems to do more to restrict access to housing than to promote it. Many developers, for example, are eager to meet demand for market-rate housing but are constrained by restrictive zoning laws, inefficient permitting and approval processes, and NIMBYism, all of which raise the cost of new homes, inflate the value of existing homes, and increase rents."
  • State and local regulations affect the amounts charged to renters, allowing burdensome lease terms, large first- and last-month security deposits, and sudden evictions. "Between 1990 and 2017, there was a net loss of 4 million low-rent apartments, giving low-income households fewer options and more competition for available homes. In 2017, some 1.3 million renters across the country were forced to move."

Opportunities for Investors

  • "There is an opportunity for the private sector, including real estate investors, to help increase the supply of affordable housing while potentially receiving positive tax benefits and risk-adjusted returns."
  • Pooled investment funds (including "private equity funds, real estate investment trusts (REITs), [and] crowdfunding investments that focus on building or redeveloping properties") will create profits for investors while helping local communities. The “social impact investment firms” that offer pooled investment funds "find investment opportunities that meet strict underwriting criteria and that provide positive and impactful solutions to the primary needs of the local community, such as affordable housing, education, and healthcare."
  • These pooled investment funds include Turner Impact Capital, a private equity firm in Santa Monica, California; Building Opportunity, "a fund that was created from Seattle-based Bellwether Housing and funded through crowdfunding efforts"; AvalonBay Communities Inc. (NYSE: AVB), "adjusting a large percentage of its portfolio to developing and redeveloping Class-B and C multifamily properties"; Reven Housing (NYSE: RVEN), "which owns and operates over 1,000 single-family workforce rentals in the south"; and Sun Communities (NYSE: SUI), "which owns and operates manufactured housing communities offering homeownership and rental opportunities."
  • People who want to do socially responsible affordable housing investment can also invest in "Opportunity Zones through an Opportunity Fund. Investors can roll their eligible capital gains into a qualified fund and gain the ability to defer capital gains taxes until Dec. 31, 2026; a reduced tax payment on original capital gains on a step-up basis ranging from 10% to 15%, depending on the length of time the investment is held; and a 0% tax on profits derived from the Opportunity Fund if held for 10 years or more."

Sources
Sources

Quotes
  • "American homes are at their least affordable level in more than 10 years. ATTOM Data Solutions, a real estate and property data provider, reported that the median sale price of a house in 2018’s fourth quarter rose 9% from Q3 as wages grew by just 3% in the same time."
  • "24/7 Wall St. reviewed data from ATTOM Data Solutions on income needed to buy a home and average annual wages in each U.S. county to determine America’s 25 most affordable housing markets. The income needed to buy a house is calculated by assuming a 3% down payment and a 28% maximum “front-end” debt-to-income ratio."
  • "Ohio is home to five of the most affordable housing markets in the nation, the most of any state. Georgia has the second most affordable markets with four, followed by Alabama and Michigan, tied with three apiece."
Quotes
  • "Though residential real estate prices in many large American cities have become incredibly expensive, real estate brokerage firm Redfin says home prices remain affordable in most cities. Redfin has released a report on how affordable home prices are in different US metros. They found that in 68 of the 88 most populous US metros, a family with median income can afford a median-priced house. Here we take a look at the top 10 most affordable housing markets in the United States."
  • "Redfin ranked the US metro area based on the percentage of the city’s median household income needed to afford a median-priced house in the same city. The real estate brokerage firm calls a home affordable only if its cost is less than 30% of a family’s gross income. It means the affordability of the housing market depends on both the income of people and home prices."
  • "Detroit has been named the most affordable housing market for middle-class families in the United States. The median home price in the automobile city is $142,750, and the median household income is $56,339. You need to be earning only $26,690 – that’s 47.4% of $56,339 – to be able to afford a median-priced house."
  • "Other affordable housing cities in the top 10: Rochester NY, Dayton OH, Buffalo NY, Pittsburgh PA, St Louis MO, Camden NJ, Hartford CT, Cleveland OH, Oklahoma City OK."
Quotes
  • "Housing Affordability, or the financial ability to purchase a home, is driven largely by the gap between household income and home value. Housing affordability is a complex, multidimensional issue influenced by the balance between housing supply and demand, the labor market, and mortgage rates by way of Federal monetary policy. "
  • "Multiple definitions inspired Esri's Data Development team to create two complimentary approaches to understand housing affordability for an area."
  • "The first approach measures housing affordability using an index to quantify the ability of a typical resident to purchase an existing home in an area. We call this the Housing Affordability Index, or HAI. The model employs a national average effective mortgage rate from the Federal Housing Finance Agency, an interest rate of 4.5 percent, and a 30-year mortgage is assumed with a down payment of 20 percent of the home price. Regional property tax rates are determined from the latest American Community Survey and Esri’s model follows the Federal Housing Administration’s guidelines for debt service ratios."
  • " Esri's second approach for measuring housing affordability employs a monthly budget perspective. This measure uses the percentage of median household income dedicated to monthly payments on a home priced at the median value. We call this the Percent of Income for Mortgage (POIFM). Again, an interest rate of 4.5 percent, and a 30-year mortgage is assumed with a down payment of 20 percent of the home price."
  • "Looking at the U.S. as a whole, the 2018 HAI stands at 124, down from a peak of 158 in 2010. An HAI of 100 represents an area that on average has sufficient household income to qualify for a loan on a home valued at the median home price. "
  • "An index greater than 100 suggests homes are easily afforded by the average area resident. An HAI less than 100 indicates homes are less affordable (and the median income is not enough to purchase a median valued home). In these unaffordable areas, home buyers are likely to place a larger down payment or service high interest rate loans. In other words, homeowners would be stretching their income further, putting them at greater risk of default."
  • "Similarly, the U.S. Percent of Income for Mortgage is 18 percent. This means, on average, householders spend 18 percent of their household income on mortgage payments. The POIFM does not include home insurance, private mortgage insurance (PMI), or property taxes."
  • "In the last six-year post-recession period, housing affordability has waned. While mortgage rates have remained steady during most of this period, housing affordability has fallen lower than pre-recession, pre-housing boom levels. On average, the pace of recovery in household income has simply not kept up with the pace of recovery in the housing market. The recent decline in affordability is driven by rising interest rates, compounded by tight inventories."
  • "This article contains helpful maps of affordable and unaffordable areas of the US."
Quotes
  • "There wasn’t a county in the U.S. where a minimum wage worker clocking in 40 hours a week could afford to rent a two-bedroom apartment in 2019, according to a report by the National Low Income Housing Coalition. "
  • "In its 2019 Best States rankings, U.S. News determined which states offer the most affordable housing based on a Moody’s Analytics analysis, which compares a state’s median housing price to the median family income and mortgage interest rates. Each state has a housing score; 100 means that a family with a median income has exactly enough income to qualify for a mortgage on a median-priced home. A score above 100 means that a family has more than enough income to do so, assuming a 20 percent down payment."
Quotes
  • "Harvard’s Joint Center for Housing Studies provides an annual deep dive into America’s living situation with its State of the Nation’s Housing report. The 2019 edition, released today, suggests a number of trends both positive and negative continue to create a country of housing haves and have-nots. "
  • "The humming economy has led to steady growth in household formation, which in turn has kept housing demand strong. Homeownership is ticking upward as a result, yet the increase in homeownership hasn’t put a damper in rental demand, thanks to a growing number of high-income earners who choose to stay renters."
  • "But there are plenty of downsides to the market, too. Housing supply remains constrained, which is driving up home prices and rents alike, particularly at the bottom of the market. Nearly half of all renters spend more than 30 percent of their income on rent, and even those with the cheapest rents are struggling thanks to growing income inequality. And the worst of it is growing homelessness, especially in high-cost coastal cities."
  • "High-income renters keeping rental demand strong while low-income renters continue to struggle. First, low vacancy rates mean landlords can push rents higher, since demand still outpaces supply. Second, the number of high-income renters has risen for eight consecutive years. Between 2017 and 2018, alone, 311,000 new high-income renters entered the market, the latest in a crowd of 4.6 million such renters since 2010. Third, most of the new production of multifamily housing has been to meet the demand of these high-income renters, meaning less production of low- and middle-income options. In 2018, 29 percent of newly completed multifamily housing units came with rents above $2,050, led by the northeast. "
  • "Because low-cost rentals tend to be in older buildings, they’re more at risk of being demolished or renovated into a higher price tier. That’s one of the reasons the supply of low-cost rentals has decreased 17 percent since 2011. Only 9 percent of new apartments in 2018 rent for under $1,050 a month, and less than 4 percent had rents less than $850. Less than 3 percent of new apartments over the last decade have been affordable to a median-income renter. And remember, despite living in what’s technically described as low-rent units, almost half of renters in those units are cost burdened, meaning they spend more than 30 percent of their income on rent."
  • "Housing construction mostly stalls, right as millennials prepare to settle down When it comes to housing construction in the United States, no news is actually bad news, as the slumps and demographic trends that have hurt housing production appear to limp forward, dragging down the overall housing market. Last year saw modest growth in new units overall, with 1.18 million units completed, a 2.8 percent gain from 2017. Multifamily starts showed anemic growth, but growth nonetheless, rising 5.6 percent year-over-year to hit 374,100 units (this somewhat offset the 3.6 percent decline in completions). In the face of a continued affordable housing shortage, at least the pipeline is growing. New construction of single-family homes was down 13 percent, based on the annual averages from 1980 to 2016, suggesting this isn’t a momentary blip. Underproduction and a focus on luxury, high-end product means a continued shortage of starter homes. Small homes under 1,800 square feet represented just 22 percent of single-family completions. "
  • "Residential land costs increased in 80 percent of U.S. counties. Land costs for a single-family home jumped from $159,800 in 2012 to $203,200 in 2017, and land value per acre absolutely skyrocketed in western states that, not coincidentally, have seen big housing shortages: Nevada (up 158 percent), Colorado (96 percent), California (88 percent), Arizona (81 percent), and Utah (81 percent). It doesn’t help that good labor is also in short supply: according to the latest National Association of Home Builders survey, 82 percent of respondents expect the cost and availability of workers will be among their most significant problems in 2019. "
  • "Homeownership: Good if you already own, increasingly worse if you’re buying The goods news when it comes to homeownership is that, after years of decline, homeownership rates have rebounded over the last two years. In 2018, the national rate increased half a percent to 64.4 percent, roughly even to where things were before the last housing boom and bust. It’s a great time to be a homeowner. Aggregate value of home equity more than doubled between 2011 and 2018, and home equity in the nation tops $15.5 trillion. "
  • "Real home prices were up 41 percent between 2011 to 2018 and stand within 2 percent of the 2006 peak, according to the FHA. That translates to a real median sales price of $259,300 for existing homes in 2018, up from $177,400 in 2011. These numbers aren’t altered by the inclusion of high-end homes; the median price for homes in the lowest price tier rose more rapidly than higher-cost units last year. "
  • "Adding to the price pressure, the average rate on a 30-year fixed-rate mortgage also rose to 4.54 percent, the highest level since 2010. That hike translates to higher monthly payments, taxes, and insurance; the new owner of a median-priced home pays 47 percent more than they did in 2011. The steady squeeze of rising prices explains why 60 percent of home mortgages in the later half of 2018 involved less than a 20 percent downpayment, and 40 percent entailed less than 10 percent. It’s also while the debt-to-income ratios for mortgages has increased sharply. "
  • "The report also points to continued struggles for low-income earners. Incomes for the bottom quartile of earners has increased 8 percent in real terms, compared with 12.1 percent for the top income quartile. Poverty is becoming more concentrated, growing fastest at the metropolitan fringe, as rising housing costs and gentrification push low-income earners out of urban cores. "
Quotes
  • "Rising costs of labor and materials mean affordable housing is expensive to build Home builders, like any manufacturer, charge a premium on top of the base cost of their labor and of raw materials. The Bureau of Labor Statistics tracks the price of such raw materials with its producer price index, which has risen 23.9 percent since the 2008 financial crisis; while the index has fluctuated some in the last year, it remains at elevated levels. The price of lumber alone has fluctuated wildly in recent years, at times reaching more than twice its cost n 2008, according to a monthly lumber price index from Random Lengths. Lumber can represent anywhere from 5 to 10 percent of the cost of building a home, and the rise in lumber prices is in part a result of a decades-long trade dispute between the United States and Canada. A third of the lumber used in residential construction comes from our northern neighbors, and that supply has been devastated by mountain pine beetles, which can kill a tree within 48 hours, and by wildfires."
  • "Affordable housing policy favors homeowners over renters—and our tax deductions prove it"
  • "Another factor is the increased price of undeveloped land in and around urban centers, where work is concentrated and demand is high. Many home builders and developers have focused on the high-end (and higher profit margin) luxury housing market, which means home builders are constructing fewer entry-level and starter homes. When such starter homes are built, their prices are ultimately bid up because demand far exceeds supply."
  • "Construction has always been a boom-and-bust industry, but the sector never fully recovered from the Great Recession. Factors like persistently low unemployment, efforts to ramp up deportations and curtail immigration (immigrants make up 25 percent of the sector’s workforce), and the construction industry’s growth over the last few years have converged to keep contractors and developers from getting ahead of rising demand. "
  • "Affordable housing suffers from a national “not in my backyard” problem Restrictive zoning codes are often an effective tool in the fight against new construction and, frequently, densification, helping to suppress housing supply even as demand rises. Whether by limiting the height of new buildings or deciding that large apartment buildings need a minimum number of parking spots, these restrictions make construction more difficult and more expensive. California cities like Los Angeles and San Francisco are known for impeding new construction through these methods, which has helped lead to the state’s severe housing shortage."
Quotes
  • "One in three US households—nearly 100 million people—struggle with housing costs that jeopardize their financial security. The problem is acute for virtually all low-income families and for the 1 in 4 renters who spend 50% or more of their income on housing—and its effects ripple throughout our communities and economy."
  • "Housing is the largest household expense for most Americans. "
  • "As a greater proportion of a family’s income goes to mortgage or rent, less is available for other necessities with fewer opportunities to save and invest for the future. Unaffordable housing costs directly contribute to poor health outcomes, reduced child well-being, and higher levels of financial insecurity."
  • "Since the Great Recession, new housing construction has lagged in the areas with the greatest job growth, driving up housing costs faster than incomes. In other parts of the country, homes may be affordable but in disrepair, or mortgage financing has dried up. Nearly everywhere, renters are challenged to find housing they can afford and depend on. >"
  • "Local, state, and the federal governments have been involved in housing policy since the early 1800s, and our housing options today are deeply shaped by that history and current policies. Today, policy seems to do more to restrict access to housing than to promote it. Many developers, for example, are eager to meet demand for market-rate housing but are constrained by restrictive zoning laws, inefficient permitting and approval processes, and NIMBYism, all of which raise the cost of new homes, inflate the value of existing homes, and increase rents. >"
  • "State and local regulations often tilt the playing field against renters, allowing onerous lease terms, hefty security deposits, and evictions without cause. Between 1990 and 2017, there was a net loss of 4 million low-rent apartments,7 giving low-income households fewer options and more competition for available homes. In 2017, some 1.3 million renters across the country were forced to move."
  • "In the aftermath of the Great Recession, at least 7 million households lost their homes to foreclosure and entered the rental market,9 which created fierce competition for avail-able renta l properties and pushed up rents. Households higher up the income ladder became increasingly cost-bur-dened as housing costs outpaced income growth. Perverse incentives pushed developers to build more luxury housing for high-income individuals and slowed the growth of starter homes and rental options available to the typical worker. The reaction to the lax underwriting and risky loans that sparked the crisis has been to put more safeguards in place. The new regulations are mostly helpful but have made it more difficult for some people who can meet monthly housing payments to be approved for mortgages."
  • " America’s history of racist discrimination, from theft of Native American lands and slavery to modern predatory lending, has prevented families of color from building the same amount of wealth that has accrued to white Americans over many generations. Families with children, LGBTQ populations, the formerly incarcerated, and disabled people also face routine discrimination in housing markets."
  • "Federal, state, and local governments often subsidize developers in the form of tax breaks or credits, access to infrastructure and municipal land, low-interest loans, and zoning exceptions, even for market-rate housing. The federal government also subsidizes current homeowners through the Mortgage Interest Deduction. However, public funding for renters and would-be homebuyers has not kept up with inflation, population growth, or need. In particular, insufficient federal funding for rental assistance and down payment support for low-income households is a major driver of housing instability. As a result, 7.7 million very low-income households who should receive housing assistance receive no help.10>"
  • "The US needs to build at least 2.5 million additional housing units to meet long-term demand,11 and to do more to support the 38 million households with unaffordable housing costs."
Quotes
  • "Labor and Material Costs Led to the Affordability Crisis Leaving Behind a Legacy of Inefficiency, Insufficient Technology Reducing Material and Construction Costs Through Smarter Sourcing and Supply Chain Management"
Quotes
  • "There is an opportunity for the private sector, including real estate investors, to help increase the supply of affordable housing while potentially receiving positive tax benefits and risk-adjusted returns."
  • "Affordable housing is described as the cost of housing being 30% or less of annual income. According to Attom Data Solutions 2019 rental affordability survey, renting a home is more affordable than buying in 59% of the country. This is largely due to a lack of affordable housing inventory, in addition to housing prices outpacing income growth."
  • "The burden of affordable housing is particularly challenging for low-income families who primarily rent instead of own. Low income is defined when household income does not exceed 80% of the local median income. For a family of three in the United States, that would equate to $54,350 a year. According to The Center on Budget and Policy Priorities, four in 10 low-income people are either homeless or spend 50% or more of their income on housing. The National Low Income Housing Coalition (NLIHC) found that the United States needs more than 7 million affordable homes to meet the current housing demand for the nation's more than 11 million extremely low-income families."
  • "NIHLC has an interactive map that identifies the average wage that would be required to afford a two-bedroom rental across all 50 states. Their findings show there is no state or county where a full-time minimum wage job can be enough to afford a two-bedroom apartment."
  • "Approximately 5.2 million Americans receive rental assistance, 68% of whom are seniors, families with children, or people with disabilities. "
  • "There are several pooled investment funds such as private equity funds, real estate investment trusts (REITs), or crowdfunding investments that focus on building or redeveloping properties that will create profits with a purpose. These “social impact investment firms” find investment opportunities that meet strict underwriting criteria and that provide positive and impactful solutions to the primary needs of the local community, such as affordable housing, education, and healthcare."
  • "Turner Impact Capital, a private equity firm out of Santa Monica, California has been publicly praised for the impact they’ve made in communities across the United States and for connecting high risk-adjusted yields with positive social change. Additionally, Building Opportunity, a fund that was created from Seattle-based Bellwether Housing and funded through crowdfunding efforts, is one of the first crowdfunding investments focused solely on providing affordable housing. Crowdfunding and private equity firms require investors to be accredited, which limits who is able to invest in them. But there are other options."
  • "AvalonBay Communities Inc. (NYSE: AVB), known for the high-end Class-A apartments, is adjusting a large percentage of its portfolio to developing and redeveloping Class-B and C multifamily properties. The company’s aim is to focus on areas that are undersupplied in affordable housing and meet that demand through apartment buildings."
  • "There is also Reven Housing (NYSE: RVEN), which owns and operates over 1,000 single-family workforce rentals in the south. By investing in areas that have stable jobs and population growth in a price point that is lower than its high-end competitors, Reven Housing is able to provide teachers, police officers, firefighters, and other working families with affordable housing."
  • "Another large contributor in this space is Sun Communities (NYSE: SUI), which owns and operates manufactured housing communities offering homeownership and rental opportunities. "
  • "Invest in Opportunity Zones through an Opportunity Fund. Investors can roll their eligible capital gains into a qualified fund and gain: The ability to defer capital gains taxes until Dec. 31, 2026. A reduced tax payment on original capital gains on a step-up basis ranging from 10% to 15%, depending on the length of time the investment is held. A 0% tax on profits derived from the Opportunity Fund if held for 10 years or more."
  • " Acquiring the land or property for cheap while keeping capital costs, building costs, expenses, and management fees as low as possible are all crucial factors to being able to create affordable housing."
  • "If you own rental properties, consider offering rental assistance through the housing choice voucher program offered by the federal government. This program, commonly referred to as Section-8 Housing, is funded through the U.S. Department of Housing and Urban Development (HUD) and allows qualified tenants to choose housing in any area, paying the balance of rent that exceeds 30% of the renter's monthly income. Each month the government pays a subsidy of rent to the landlord in addition to the tenant."
  • "since the early 1970's real estate has beat the stock market nearly 2:1."
Quotes
  • "Average weekly earnings growth across employees in the single-family construction industry has outstripped that of the private sector overall. Since 2011, average weekly earnings in the single-family residential construction industry increased by 36 percent, compared with a 24 percent increase across the private sector. Average weekly earnings of residential specialty contractors increased by 25 percent over the same period."
  • "Historically, foreign-born workers have been disproportionately represented in the construction industry. The 2018 Bureau of Labor Statistics numbers indicate that 30.9 percent of workers in construction and extraction are foreign born, versus 17.4 percent of the overall labor force. Changes in immigration policy have sharply reduced the new supply of foreign workers. Moreover, survey results of millennials ages 25–34 suggest younger people are relatively less drawn to the industry, posing concerns about its future."
Quotes
  • "Construction costs have jumped 23.6 percent since 2004, according to “What’s Up With Construction Costs?” a new report by BuildZoom economist Issi Romem. The housing cost spike that started in the mid-2000s at the tail end of the pre-Recession building boom was initially caused by increases in material costs; the continued rise is now mostly a factor of rising labor costs. "
  • "Romem notes that the key drivers of construction costs are still “lots and local regulations,” the combination of high land prices and restrictive land-use policy. But in especially expensive metros, labor costs have also vastly accelerated the cost of construction. "
  • "In expensive, often unionized, metros, labor costs run far above the national average. Labor costs in New York City are 31.3 percent higher than the mean of the top 30 largest cities, 25.6 percent higher in San Francisco, and 16.8 percent higher in Chicago. The recent building boom has also been hampered in many cases by a persistent shortage of workers, which drives up wages and costs. "