Construction labor shortage may slow new home building for years in Michigan

Aug 25, 2014

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Michigan has a serious labor shortage in home construction which will slow the pace of new home building for at least the next six years.

Usually some 28,000 new homes are built each year in Michigan. This past year, there were just 13,000. Bob Filka, CEO of the Homebuilders Association of Michigan, says this is in part because of a workforce shortage.

That shortage of labor include framers, carpenters, plumbers, and electricians. According to Filka, Michigan lost approximately 60,000 workers in the industry during the downturn. They left the state, retired, or changed careers, and many of them are not coming back to the job in the sector.

“As a result, [the labor shortage] is going to put pressure on how long it takes to get a new home built, and how long it takes to get someone to come out and check your house if you have a problem with plumbing or electrical systems,” says Filka.

Meanwhile, there are not many lenders out there who are providing loans for speculative homes. Before the downturn, a builder could get a bank loan to start a development with speculative homes. That kind of opportunity is not there anymore. Small and medium builders are now self-financing speculative construction, or not building in a speculative manner at all.

“As a result, in many communities, especially where there’s job creation and people moving in to the area, there may not be any newly constructed homes for people to look at,” says Filka.

To ease the challenge, the governor just signed into law changes to the core curriculum that will provide greater flexibility for students to start enrolling in vocational education programs again.

On the other hand, Filka is partnering with other associations and hoping to change the perceptions toward construction jobs in general.

“These types of jobs are available. And someone can make a pretty good living and career with a modest amount of training and hard work,” says Filka.