Construction labor shortages and supply chain issues are creating delays for eager homebuilders across the state. Many sites are sitting empty, or half finished, with materials waiting for contractors to find the labor to finish building the homes.
Grace Keliher is Executive Vice President of the Builders Association of Minnesota and says the pandemic is highlighting systemic issues when it comes to construction and worker shortages. Mirroring what has been dubbed the “Great Resignation” across the U.S., Keliher says they just need people to work on these jobs, and not enough people are taking up skilled labor positions.
“I don’t want to say if you’re breathing you get a job, but my folks across the state are seeing huge challenges,” she told WCCO’s Mark Freie. “And a lot of folks are just retiring.”
Keliher also says outdated child labor laws in Minnesota are keeping 16 and 17 year-olds out of construction sites, and that won't help to mitigate the need for workers in the future.
“Can't use an air hammer, can't do anything that might be at all dangerous there,” explains Keliher. “So those opportunities to see what the work is like, to talk to people in the business, to learn more in this field for construction, doesn't happen. You’re going to have to use a hammer on that house. There’s concerns about how you put up scaffolding and who puts up the roof and that endangering a child. Where kids got their hands on experience, doesn’t happen in Minnesota until they get to college.”
Keliher says Minnesota needs to rethink its approach and offer real world experience to students in K-12 to attract more workers to trade jobs directly out of high school.
Meanwhile, April was the best-on-record for home builders in the Twin Cities with surge of activity after what was a slow start to 2022.
Multifamily construction in the metro area was way up from last April according to Housing First Minnesota. There were 750 permits pulled for new single-family homes for the month, a 12% increase over April of last year. Permits were pulled for 2,859 multifamily units, more than a 1,000% increase from last April.
“We continue to have a shortage of homes for sale in our region, which is why even with the supply chain constraints, labor shortage, and climbing mortgage rates, we continue to see growth in new home production,” said James Julkowski, who is the president of Housing First Minnesota.
Clearly the need for housing is there with home prices and rents skyrocketing across the region. Median sales prices for homes in Minneapolis have risen nearly 8% year-over-year and a lack of inventory is one of the main issues. Over the past five years home values in Minneapolis have increased by more than 46%.
Despite the Federal Reserve raising interest rates, and with a promise to continue to raise them from historic lows, the housing market just hasn’t slowed down and that is driving the need for more housing across the region. Something the builders are struggling to keep up with.