2 million construction jobs may be lost for good

[dkf]

(CBS News)  LOS ANGELES -Some Americans are giving up entirely on the idea of owning a house - choosing instead a condo or renting an apartment.  
In southern California, CBS News correspondent Bill Whitaker reports more of those homes are being built now - but they don't create as many construction jobs as single-family houses do.

Put on life support by the recession, housing construction in California is beginning to show a pulse. But the life blood is no longer single-family houses. There's a new driving force: apartment and condo

"There was a paradigm shift," said Kyle Donovan of City Constructors Inc. Donovan used to focus almost exclusively on single-family houses in the once booming Santa Clarita Valley in suburban Los Angeles. But with many of those houses underwater and new construction ground to a halt, apartments and condos now make up to 60 percent of his business.

"In order to stay alive and to stay working, you had to go where the money was," Donovan said. "And the money right now is in multi-family and apartment buildings."

This is good news for some, but not for all. 370,000 construction workers lost their jobs in California in the recession. Since building an apartment takes fewer workers than a whole development of single-family houses, it's likely 200,000 of those lost jobs are not coming back.

Nationwide, 2 million construction jobs seem lost for good. The states that have fallen the hardest, California, Nevada, Florida and Arizona, are the very states where construction expanded the most before the bubble burst. In the boom years, Delvin Knight built single-family houses in the suburbs. Now he feels lucky to have landed this job in Hollywood.

http://www.cbsnews.com/stories/2011/06/16/eveningnews/main20071786.shtml

[PATRICK]

1. Let's not forget

importing alien workers after Katrina who probably had a lot of their wages harvested back by the companies. Outsourcing is kind of limited in home construction. They'd pack trans-Pacific steamers with Chinese sandwiched among the barrels of apple juice concentrate all Americans are forced to drink if there was a buck in it or even at a loss if they could break the American worker.

[JustAnotherGen]

2. Not surprised at all - and I'm in NJ

My fiance is a juried Metal Sculptor Artist - but when he came to the US from Italy in 2001 - it was his iron/metal restoration experience with UNESCO landmarks that he found the money maker in. He also is HVAC certified. So two businesses: Custom Design/Restoration and Heating/Cooling.

His business are doing well for ONE Reason: People are staying put. They investing into their homes (if they have the cash to do it) for upgrades or updates.

The past two years he's done very little if ANY work with architects. It's all about bringing that iron work back to life, the custom made bar from copper, the iron pool fence, or a new heating/cooling system.

And truthfully - weather we buy a home in NJ or Bucks County PA next year? It will be old - solid and true. Too much of what has gone up in our area the past 7-10 years is just well? Cookie cutter crap. And waaaaaay overpriced at that.

[no_hypocrisy]

4. Also in NJ. Up until 5 years ago, property was purchased and small homes on those lots

demolished in order to build megamansions. Even if that meant 3 feet perimeter around the structure. The demand was for space, and lots of it. Builders were in their glory days back then (Hovnanian).

[LeftinOH]

3. Maybe there's been too much of building the 'wrong things'. Infrastructure, passenger rail lines,

sidewalks (MANY developents don't have sidewalks), denser walkable communities, older neighborhoods which desperately need physical improvements. Sprawled out housing developments with overpriced look-alike (ugly) houses aren't what we should be building in the first place. Same goes for all the damn shopping centers.

[JustAnotherGen]

5. Amen

I know a way we can put ALL of our skilled construction workers back to work - Infrastructure. How about some sidewalks AND some fixing of our bridges? Sound like a plan? :-)

[WatsonT]

7. Yes!

People are lamenting that we won't have quite as many mcmansions.

Why?

Suburbia is one of the worst inventions we've come up with. Inefficient, bland, and culturally devoid.

[dkf]

8. Apparently we have six times the retail space per capita than the next nation

"If I am correct, my bearishness for retailers (non-grocery, non-essential) will last much longer than those who run up said stocks on "early cycle" thesis, as they will do repeatedly in 2009 (as they have done prematurely multiple times in 2008). We are overbuilt in America - in almost everything; "right sizing" will be a long, painful process and those who dream this all gets solved in "6 months" due to easy money need to look back at our history. Remember, our country has SIX times more retail space, per capita than any other nation. If we take $800 Billion to $1 Trillion of spending (8 to 10% savings rate returns) out of the economy and into personal savings on a permanent basis - what do you think happens to a lot of that space? Will we approve 2 year, $800 Billion stimulus plans every 24 months to offset this? (kick the can forever?)"

http://seekingalpha.com/article/112604-what-will-happen-if-america-returns-to-an-historical-savings-rate

[locahungaria]

16. +1000! n/t

[WatsonT]

6. Condos still need to be built by someone

And frankly the housing sector in this country was insane. Not everyone should try to own their own homes. And suburbia couldn't keep pushing in to farmlands forever.

Maybe we could put them to work on infrastructure. Like was promised 2 years ago.

[IndyPragmatist]

17. +1 trillion

Very few will doubt that we just came out of a massive housing bubble. We have no idea where the actual equilibrium will end up because we have been trying to force home ownership on people for far too long. Owning a home is great...if you can afford it, and it makes sense in your situation. But we've been hit over and over again with commercials, articles, and general propaganda that keeps telling us we have to buy a home. Buying a home is the only way to achieve the "American Dream". Buying a home is the best investment you could ever make. Home prices will always go up.

All of this stuff played into the massive bubble. I have no intentions of buying a home in the next 10 years. I could afford to, but there are way too many other factors that have convinced me that it's not a good idea for me. I am in my twenties, and if the right job offer came along, I would take it. This job offer may not be in Indianapolis, and if I owned a home, I would be seriously limiting my job prospects. But I've been told by realtors that it is in my best interests to buy a home. No...it's in the realtor's best interest for me to buy a home.

I actually blame realtors for a lot of the housing bubble. The town I grew up in was a booming suburb. We had all kinds of new growth when I was there. Businesses were popping up everywhere, a new subdivision broke ground every month. It was insane. When I was in 8th grade, we decided to move to a larger home. I went with my parents to look at the homes and I was amazed at the lies being told by each of the realtors we worked with. One tried to convince us that this cheaply made home with crap siding, shingles, and insulation was "the most energy efficient home that you can buy for under 1 million" (it was a 150k home). She told us that every house in town would appreciate because the schools were so good and everyone wanted to attend them. I remember another realtor spending the entire showing trying to convince my parents that we could afford a $500,000 home by just extending the length of our mortgage.

Realtors should have their income based on the completion of the mortgage. If you have read the book "Freakonomics", it talks about how a realtor is unlikely to work very hard to get you the best price. One thing the book didn't mention is the motivation to just get the person in the home. Once the sale is complete, the realtor's job is done. They get their commission taken out of the mortgage, and move on. The buyer could foreclose in 6 months, but the realtor still made their money. If a realtor's income were based on repayment of mortgages (for example, receiving a small commission every month that a payment is made to the bank), they wouldn't be trying to force people into homes they couldn't afford. They would have the motivation to find the right home for the buyer, not the most largest commission possible.

[Xithras]

9. Many of those jobs were the temporary creations of the bubble anyway.

As housing exploded, builders were hiring people at a record pace to keep up. Their ranks expanded massively in just a few years. Skilled carpenters were making $30+ an hour here in California, and people were walking away from other jobs to go build houses (one of my oldest friends quit his truck driving job and started painting new homes, because the money was almost double what he'd been making).

Unless we get housing back to a boom market, most of those jobs will never be seen again. They were the temporary creations of a temporary market condition (my friend is back to driving trucks today).

[dkf]

10. Which is why they won't be coming back soon.

[Jim Warren]

11. 2 million homes sit uninhabited tonght

unless you count the growing mold.

[tritsofme]

12. I don't understand how you can read a report like this and still have economists like Paul Krugman

scoff at the idea that our economy has a problem with structural unemployment.

[Major Hogwash]

13. Try to get a plumber out to unplug your toilet on the weekend after 2018.

4 year trade schools aren't seeing any new apprentices.
No need, no openings.
In 6 years the number of skilled journeyman plumbers will be 2/3rds of the number that exist today.
In 8 years, that number will be HALF!

The people who wouldn't hire them 20 years ago, won't hire anyone today.
Yet, the banks just keep getting richer and richer and richer.

JP Morgan is posed to become the largest bank in America by the end of the month according to an article available on Yahoo News.

[econoclast]

14. Demographics, housing and construction statistics.

Back in 1970 there were about 25 million families in America with 2 parents and 2 or more children. That is to say, the kinds of folks who need and can afford a home with three or more bedrooms. There were, in 1970 about 35 million housing units in America with three or more bedrooms. Roughly speaking, supply and demand were more or less in balance.

Fast forward to today. There are still about 25 million families with two parents and 2 or more children …. the kinds of folks who need and can afford a home with three or more bedrooms. But there are over 70 million housing units with three or more bedrooms.

Through a combination of government policies via tax incentives, deductions, subsidized interest rates via Fannie & Freddie “guarantees” and easy money, America has seriously, disastrously overinvested in housing over the past 50 years. Every time there was an economic slowdown, government goosed the housing market. But housing is not an earning asset. Once it is produced … it adds no additional productive capacity. Every dollar misallocated to housing was a dollar not invested in infrastructure, factories, technology etc.

Arguments about subprime loans and derivatives and banksters shananigans are fascinating … but ultimately miss the point. America has had a housing bubble 50 years in the making and it was going to burst whether there were subprime loans and derivatives or not. Witness Ireland and Spain. Massive housing bubbles and busts and nary a derivative or structured product to be found.

Unfortunately for those in the construction industry, I think it will be a long while before the excesses are cleared from the system and new construction has anything that looks like growth.

But, ultimately that will be a good thing as investment will find it’s way into more productive assets. Unless, of course, America decides to reinflate the housing bubble in which case we will have ourselves another bust.

[amborin]

15. I sure hope so! so much habitat destruction; So Cal is nearly trashed by subdivisions

same in so many, many places

overpopulation, too much energy consumption, habitat destruction, etc.....

yes, i'm sure concerned about unemployment, but there are ways to create jobs that don't destroy the environment