Housing Inventory Looking Bullish
Seven years later, the Great Recession now a memory, and as many years of construction growth behind us, the US housing situation is “critical.” We have added fewer new single family homes over the last decade than any of the previous five decades. At the current pace of building, the industry is not keeping up with demand and is falling further behind.
Just to keep up with population growth, and longer life expectancy, we need more new home construction not less. The current state of the housing market is an aging, energy inefficient, costly to maintain, existing home inventory and an inadequate pace of affordable new home supply.
Builders cite two reasons for the current housing crisis: shortage of skilled labor and land to develop for building lots and new communities.
I would like to submit a five-year plan that is a solution for both.
Solution to Labor Issue
Local communities all across America are amply supplied with community colleges. Those institutions will create curriculum and two-year degrees for any industry that needs workers and can guarantee job placement.
The component industry in conjunction with the NAHB could easily develop a college curriculum that would instruct students to be proficient in reading blueprints, advanced jobsite skills, including math calculations, proper power tool handling and safety, precision cutting and assembly technique, jobsite preparation and maintenance during the project, importance and safety of jobsite cleanliness and order, efficiency of team building skills, how to eliminate waste, working in different climates and weather conditions.
There is no shortage of willing workers, only a shortage of ways to become qualified.
The Land Issue
We have noticed over the past several years, particularly since the rise and threat of terrorist activity, the desire to live closer together and closer to established government infrastructure that provides public safety, i.e., fire and rescue and advanced law enforcement.
What else do major metropolitan areas have that makes them desirable? Two things: an international airport and a road system that makes that airport accessible. Currently, the picture looks like a ringed target. The original downtown is the bullseye; 10–20 miles from the bullseye is an interstate beltway around the city, with an inside and outside the beltway designation. Inside the beltway is considered more fortified. The beltway is the first ring on the target. The airport lies somewhere on that ring.
Outside that beltway ring is where the current housing market is expanding. So how does new home construction hit its next critical mass? It adds another ring, a larger perimeter, 20 miles further out that annexes the outlying rural areas. Build another beltway with another airport on the opposite side and expand the existing infrastructure. Now we have created the maxi-metro. The next ring adds more than double the capacity as the inner ring. Another 100 years from now, maybe we need a third ring.
The 5-Year Plan
- Year One—Develop the curriculum and identify the second ring to be annexed, identify airport location with FAA. Sell 20-year municipal bonds to private equity investors at 4% interest rates.
- Year Two—The first class of students are enrolled and city planners begin infrastructure expansion. Airport planning finalized.
- Year Three—First class of qualified framer graduates are on the job, beltway construction begins, airport construction begins.
- Year Four—Second class of qualified graduates are on the job, site preparation for new communities follows beltway completion around the perimeter.
- Year Five—Third class graduates, labor issue is relieved, establish organization to see education and construction projects through 20 years. Continue to build, following second ring beltway around the city.
Who will take the first step or was that it?
A veteran lumberman, Matt Layman publishes Layman's Lumber Guide, the weekly forecasts and buying advisories that help component manufacturers save money on lumber purchases every day. You can reach Matt at 336-516-6684 or matt@laymansguide.org.