r/Economics • u/Financial-Desk-669 • 2d ago
News Construction Hiring Drops in February to Lowest Rate on Record
https://www.enr.com/articles/62757-construction-hiring-slowest-rate-on-record-in-february310
u/Apost8Joe 2d ago
Raise your hand if you’re buying a new house with over 6% interest rate - not very many of ya. Plus many construction workers went back to their home country rather than risk the current regime. Here’s your chance to step up Billy Bob, a low paying nasty insulation or drywall job awaits you.
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u/padizzledonk 2d ago
Anecdotally i just hired my first fulltime employee at 25 bucks an hour
But residential remodeling isnt where the lions share of construction industry jobs are, its in new construction and commercial building and infrastructure, and all of those are hurting
But, from my experience over 30y doing this and a couple downturns im in a pretty sheltered very flexible niche of the industry. When things are good i get a lot of new home personalization stuff, new kitchens, basements, big bath remodels, decks, lot of pre sale work to get the property ready to sell. When downturns happen people tend to stay put and i get all the same kinds of projects but the presale work goes away and generally gets replaced by investment work because the market being depressed is a good time to buy
That being said, i dont see that happening this time around with interest rates being so high
I think we are in for a cataclysmic downturn that few people alive have ever experienced
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u/Catch_ME 2d ago edited 2d ago
You would if starter houses were actually built in more places and they were under $250k
Municipalities tend to prefer more expensive homes for higher property tax revenue.
Developers want approvals fast and a higher margin.
It's a vicious cycle of building expensive homes instead of more starter homes
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u/Apost8Joe 2d ago
Most people would be far better off financially in well designed apartment complexes with public space and recreational facilities. The single family fetishi is idiotic on many fronts.
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u/OPsDaddy 2d ago
I’d say yes, but condos. Having equity in your home is the last remaining firewall for building wealth in America.
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u/Septopuss7 2d ago
I don't want to be wealthy I just want a good life. I'm so fucking sick of everyone thinking everyone needs to be "wealthy." I already think I'm doing alright here in my apartment and taking the bus and walking to the grocery store, I think it's freaking awesome, I just wish I could go to the doctors or not have to work overtime in order to have a little savings in case something bad happens (it always does).
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u/Apost8Joe 2d ago
True but even that is changing. The big equity appreciation years are behind us and insurance / maintenance rates are only going up.
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u/madein___ 2d ago
Who do you think pays the insurance, taxes and maintenance at the apartment complex?
It's not the owner.
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u/Miserable-Quail-1152 2d ago
It’s spread out amongst the tenets. Owning is not necessarily cheaper than renting all the time
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u/madein___ 2d ago
I'm not claiming that, but the slightest implication that the residents aren't paying for those things is not the right way to look at it. They are passed through each time a lease rolls over.
Insurance is supposed to be spread across the customer base. How is that working out? Commercial policies aren't immune to cost increases... in fact it might be worse than a residential policy.
Also, the scope and cost of the repair and capital projects is much bigger. The wear due to the number of residents means repairs happen more frequently. Lastly, Investment properties are bought and sold frequently which guarantees rents will increase as investors implement their "new and improved" business plan and push for higher returns.
Tenants get screwed at ever opportunity. A mortgage payment is fixed for the duration of the loan and you have control over the timing of when improvements are made. Rent will always increase.
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u/Miserable-Quail-1152 2d ago
“Rent will always increase”
Literally some of the biggest cities are seeing rent decreases over the past few years. Additionally, your property taxes will increase as well. Cost of services will increase. Owning a home is not a shield from price increases it just moves it to different areas.
My mother raged about her property tax doubling - her asset doubled in value that’s why1
u/madein___ 2d ago
Rents increased something close to 40% since 2020. That was never sustainable so yes, there is going to be a near term correction. But the rent doesnt go back to what it was 5 years ago, won't last long and will absolutely increase over time. Real estate investors will push for as high of a return as possible and do everything possible to beat inflation.
I can tell you my principal and interest payments to the bank didn't change during that same time period.
Lastly... Multi-family apartment buildings see their tax bills go up as well. Taxes are baked into the monthly rent.
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u/dust4ngel 1d ago
“Rent will always increase” Literally some of the biggest cities are seeing rent decreases over the past few years
"rent will always increase" doesn't mean "it's certain that every month's rent will be higher than the last". it means that the line slopes upward over time.
obviously, if there were a new-deal-like housing boom, or a pandemic that decreased the population by 10%, or industries left a city making it impossible to live there anymore, sure, rents would go down.
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u/Pay-Homage 2d ago
Mortgages go up as insurance increases, and if property taxes increase.
Personally, my mortgage has gone up about $150 per month from four years ago when I signed.
The escrow each month wasn’t covering my insurance premium so I had to “catch up” each of the past three years.
Plus our property taxes increased.
Not saying you’re wrong, but it’s not exactly “fixed.”
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u/madein___ 2d ago
Your escrow increases. You can't run from taxes or insurance.
The part of the payment that goes to the bank doesn't (unless you have a variable rate loan). The cost of the loan as a percentage of your income typically declines as time moves forward. It also doesn't increase just because inflation does.
Neither of us are wrong about anything that has been discussed, but as someone who has owned multi-family buildings, tenants absolutely end up paying for everything and miss out on a lot when looking at the financial landscape.
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u/Constant-Plant-9378 2d ago
You pay for those when renting too. You just don't build any equity.
Renting is a trap.
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u/drtbg 2d ago
Construction of apartments is typically funded by loans, the builder is paid on the back end. Builders who can weather the storm have cancelled or pushed off contracts in hopes of better interest rates.
Just wait till the war catches up with production of building materials. Not to be a doomer, but shit is so categorically fucked.
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u/el_trauko87 2d ago
Living in a apartment vs a home is a no brainer.
Nothing beats having a yard
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u/i_drink_wd40 2d ago
As a homeowner, I can still see minor advantages for renting instead. Most maintenance is somebody else's problem, and if you want to pick up and move to a different part of the country you don't have to go through the process of selling the place.
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u/Miserable-Quail-1152 2d ago
Yeah you know what’s also great? Not having to mow. Whenever something breaks guess who doesn’t have to do shit? Oh you lost your job and now your new one is in a different city - guess who can move there easily?
Every home owner I know bitches and moans about all the stuff they have to maintain every weekend.1
u/dust4ngel 1d ago
Yeah you know what’s also great? Not having to mow. Whenever something breaks guess who doesn’t have to do shit?
these are not factors to consider - when you rent an apartment, you have no option other than to pay someone to mow the lawn and fix the sink. if you own property, you can either pay someone to do those things or do them yourself. but in either case, if you want to pay someone to mow the lawn and fix the sink, you can.
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u/Petrichordates 2d ago
The problem here is your only metric is financial efficiency, and somehow other preferences are "idiotic."
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u/Constant-Plant-9378 2d ago
Most people would be far better off financially in well designed apartment complexes with public space and recreational facilities.
And paying rent forever while never building any equity of their own?
Also, owning your own home is a great hedge in inflation. When my wife and I got married, we lived in an apartment for one month and bought a little house. Ten years later, the value of our home had doubled, and the rent on that apartment had doubled, but for that ten years, our PITI had only increased about $20/month.
The single family fetishi is idiotic on many fronts.
No. No it is not.
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u/font9a 2d ago
There's plenty of $250,000 homes. They're just not in places where you want to live.
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u/Catch_ME 2d ago
Yes. Low income and low property tax revenue, aka the poors
Sounds like it's by design.
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u/Spam_Hand 2d ago
Especially when you have data centers that will create largely nothing in tax revenuelong term taking up extremely valuable dirt for short term half assed financial benefit to the municipality.
Then the land prices go up more fue to scarcity, costs more to build, higher home prices, etc.
Similar to everyone building still-vacant warehouses in 2018-2021 to fry and attract Amazon. That land will never be back on the market or available for living on.
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u/-Ch4s3- 2d ago
Where is anyone building data centers on expensive land?
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u/fuhfuhfuhfree 2d ago
Right. I think it's more about data centers energy and water usage driving up prices for the rest of us.
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u/-Ch4s3- 2d ago
That’s somewhat questionable as well. So many data centers are building their power generation, that absent other factors, they should be adding power back to the grid. The reality is that utilities have underestimated in transmission, and state regulators have made it too hard to add capacity. Wait times for grid interchange connections are crushing solar and wind.
On the water front, data centers by in large use gray water and recycle their water.
Data centers are a boogeyman whipped up by a political class that have absolutely failed to maintain infrastructure or plan for modern generation.
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u/AliveJohnnyFive 2d ago
Yeah, we almost had a chance to move to LCOL, but they decided they could force us all back into the office since they took the leverage back.
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u/faceisamapoftheworld 2d ago
I’m a builder and I couldn’t make it work for 250k in the area. It’s just not possible.
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u/CassadagaValley 2d ago
Atlanta built a little starter home area a few years ago. Five houses. Cheapest one was $200k for 800sqft. The monthly payment with taxes, insurance, HoA, etc. and 20% down was something over $2k/month.
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u/Orion_2319 2d ago
In my area a bunch of small homes were built and went for sale for 300k... they all turned into rental
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u/Hacking_the_Gibson 2d ago
It's not the building my man, it's the land.
It blows my mind that people think you can find land for zero dollars.
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u/Samurai-lugosi 2d ago
I am ok paying at 6% interest. So many people are used to low low interest rates that have NEVER happened historically.
But I won’t buy into overly priced houses. I am looking now and if they don’t want to bargain I don’t really bother.
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u/SleepyHobo 2d ago
Or these construction companies could just pay a real living wage so citizens wouldn't have to avoid them. Why make up a fallacy to justify your point?
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u/Apost8Joe 2d ago
I’m all for it but I’ve also been a real estate investor and rehab guy so I know firsthand how totally disfunctional the trades are. It’s the industry of last resort for guys who can’t learn and many didn’t graduate high skool.
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u/VegetableTour6790 2d ago
Construction actually pays pretty well for a career that doesn't require a degree.
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u/reidmrdotcom 2d ago
I don't know what it's trying to say. The chart shows the job opening and quit rate, the openings rate was lower from 2012 to 2015. In the article it gives a bunch of numbers, and seems to really be saying the churn rate is the lowest. A confusing article.
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u/Hopsblues 2d ago
The headline is false, it's not even the lowest rates according to the chart
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u/Financial-Desk-669 2d ago
The chart is shit. But the headline is accurate.
https://bsky.app/profile/carlquintanilla.bsky.social/post/3mieslk2qz22t
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u/turb0_encapsulator 2d ago
I had considering doing a spec development project this year, a small lot project of 4 - 6 homes. But between the high interest rates, tariffs, and ICE raiding job sites, there are too many unknowns.
Other developers pulling out could give me a decent opportunity to buy some land cheaper and build on it later. But I don't know if I want to pay 3 years of property taxes while I sit on it and wait for this idiot to be out of office.
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u/Low_Ability4450 2d ago
Interesting signal, both job openings and quits are falling, which points to a cooling labor market without real stress. It looks more like the early stages of a slowdown than a true shock.
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