The rate of new home construction isn’t impacted only by a lack of qualified labor – it’s also slowed by a lack of local government staff who must approve permits before construction can begin.
The manpower shortage at city governments across the country has increased the time it takes for builders to get permits and other approvals. During the recession, construction declined and city budgets were cut. As a result, a skeleton crew today can’t keep up with the onslaught of new projects submitted for approval. Burned by the recession, however, many local governments don’t want to hire a lot of new employees to speed the process along.
This is according to an article in the Wall Street Journal the other day. Apparently this shortage is especially difficult in our market here in Florida. What does this mean to you and I? We are about to see this shortage of houses create higher demand. House prices are going to escalate, rapidly. If we don’t have that many houses currently on the market, large quantities of people are actively looking to buy homes and they are unable to build a house since it will take 6 months longer just for the permitting process…these buyers will be forced to pay more.
Basically, our market is about to swing from the ‘Buyers Market’ that it has been for the last decade to a strong ‘Sellers Market’.
We will also see an even higher rise in rents since many of those that are looking to buy or build can’t find anything and are forced to rent. Those Landlords that have been renting out homes waiting for the market to come back have been selling off those houses in recent months.
So what happens after that? Once the market shifts just enough, you will see the vacant lots that have been stagnating for a decade start to sell. Some of the housing developments that were lost and abandoned with only a handful of houses built will be revitalized. Our city is growing again.
So what comes first, the permits or the building demand? We need houses to be built again if nothing else to hold on to the stabilizing market. With this increased demand still being fairly new, our City and County is not going to rush out and hire a bunch of new employees in order to keep up, especially with the sting of the recession still fresh in our minds.
For now, growth will have to happen slowly, at the speed of the South…is that so bad? We’ll see…
Andrea Proeber is now a Broker Associate! She has been a Realtor in Marion County for over a decade and specializes in long term real estate investing and property management.