“What do we tell our customers? Missouri’s domestic supply shortage worsened during pandemic | KCUR 89.3

Demand for housing has skyrocketed during the pandemic, but home builders and renovators have not caught up due to labor shortages and long wait times for raw materials, tripling the duration of certain housing projects.

As people switched to working from home and avoided going out in public at the start of the pandemic, interest in housing increased. Americans wanted more space and other improvements as more of their lives moved through their homes.

During the initial surge in demand, the estimated number of active buyers rose 67.8% from March to June 2020, according to the Federal Reserve Bank.

Demand remains strong today. The Case-Shiller Index, which measures home prices in the United States, posted a record annual growth of 19.7% in July, the last month for which the index is available. This is the fourth month in a row that annual home price growth has set a new record.

Larry Wigger Jr. is professor of supply chain management at the University of Missouri-Kansas City and has managed large residential developments. He says the pandemic’s shift to more time spent at home has triggered an increase in demand for a wide range of reasons.

“(People) wanted home offices, they wanted to be entertained, they wanted outdoor play spaces, they wanted a different house, they wanted to live in a rural community and get out of urban centers,” he said. . “It’s all driving home building activity, whether it’s new homes and new communities because people want to move, or it’s just renovating. “

While homeowners and homebuyers have lined up to renovate existing homes or buy new ones, they have been forced to wait months to start and complete projects, in part because housing supply is lacking. not catch up. This shortage predates the pandemic, but has increased since the onset of COVID-19.

There was already a supply shortage of 3.84 million homes in early 2019, according to Realtor.com. The supply deficit rose to 5.24 million in June 2021, a jump of 36.4% in two years.

Lily dozier

Left: Alex Tripaldi, left, chats with colleague Jeff Martin on Friday, October 15, 2021, at a home they are renovating in Ashland, Missouri. Right: Jeff Martin cuts plywood at a job site in Ashland.

Declining workforce, scarce supply

Labor shortages are partly to blame for housing supply not catching up with demand.

Wigger says there are shortages at many levels of the residential construction supply chain, including truck drivers and workers who help pack and transport products for the home.

Further down the supply chain are workers like carpenters and electricians who use these products to build homes. There haven’t been enough of these workers over the past decade.

Wigger says one of the reasons for these shortages is a growing cultural trend in the United States to value white-collar jobs and four-year college degrees, which excludes commercial workers like carpenters, electricians and construction workers. plumbers.

“We haven’t supported good, honest, hard work – which sometimes involves manual labor – with the respect, dignity and esteem that we should,” Wigger said.

Meanwhile, home builders are getting older. A young workforce may be a sign that an industry is designed to have a constant flow of labor in the future, but the average age of construction workers is increasing. He went from 36 to almost 43 between 1985 and 2015, according to a study by the International Journal of Environmental Research and Medicine.

Orie Hemme, sales and business consultant at Hemme Construction, a Columbia-based home construction company, says it has been difficult to find younger workers.

“When your average age is this high, you just don’t have young people coming in to replace the people who are retiring,” Hemme said.

National House Price Index

Breaks in a complex chain

While skills shortages make it harder to build and renovate homes, wait times for materials also cause delays. The housing supply chain has been hit hard by the pandemic and labor shortages as it is interconnected with a wide range of industries and products.

Anthony Ross, a professor of management at the University of Missouri specializing in supply chain management, uses the hypothesis of a home buyer needing a plank of wood for a beam in a house to show the complexity of the housing supply chain.

First, logging companies go to a forest and extract the wood and bring it to a sawmill.

“And then you have other downstream supply chain participants who take that process log and then cut it into different sizes, different formats, or even process it to prevent different types of infestations,” Ross said. “Then you have trucks that transport that wood back to a distributor or a wood wholesaler. “

After that, the lumber still needs to be purchased by the house-building company and shipped to the house in the form of a beam.

When only one participant is disrupted in this process, it results in inefficiency and longer wait times for materials.

Saw cuts mark a sawhorse on Friday, October 15, 2021, during a home renovation in Ashland, Missouri.

Lily dozier

Saw cuts mark an easel on Friday, October 15, 2021, during a home renovation in Ashland, Missouri.

“What do we tell our customers? “

The Associated General Contractors of America’s annual workforce survey, released in September, showed that 88% of contractors experience project delays.

Hemme says a project that took three months before the pandemic takes about nine months today. For example, says Hemme, his business faces cabinet shortages.

“It takes 16 to 17 weeks on a lot of cabinets, and we switch manufacturers, but every other manufacturer in the US is doing it, too,” Hemme said. “And then this manufacturer gets bogged down, then it goes from an eight week lead time to (12 weeks).”

Barry Roewe is the owner of TrueSon Exteriors, a Columbia-based real estate entrepreneur. He says the windows used to take three to five weeks to ship, but that changed virtually overnight.

“The next day we get an email, and it’s been 16 weeks,” Roewe said. “So what do we tell our customers? “

Roewe says suppliers have limited their inventory and product diversity to reduce wait times and costs. However, entrepreneurs who reduce their product line limit the choice of homeowners and homebuyers.

As home builders like Hemme and Roewe say they are convinced wait times for raw materials will decrease as the pandemic subsides, experts expect the shortage of skilled labor to continue. to be a problem.

To counter this hurdle, Roewe says he’s hired more builders as full-time employees and worked to build relationships with subcontractors.

“We have a relationship with (our) subcontractors where they work almost primarily for us,” Roewe said, “so we can control their schedule a little more than the traditional subcontractor.”

Roewe says he approached hiring with an over-recruiting philosophy to ensure his company can keep up with workers leaving and increasing demand.

Colman Mitchell and Ian Laird of Missouri Business Alert contributed to this story.

This story is part of a series on housing issues in the Kansas City area produced by the KC Media Collective, an initiative designed to support and improve local journalism. Members of the KC Media Collective include KCUR 89.3, American Public Square, Kansas City PBS / Flatland, Missouri Business Alert, Startland News, and The Kansas City Beacon.

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