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San Francisco fighting over limited construction labor force

August 19, 2016

By Kelsey Ramírez : housingwire – excerpt

Construction constraints driving up home prices

San Francisco’s competitive employment market is causing many construction companies to lose workers and driving a trend towards more expensive housing, according to an article by Alison Vekshin for Bloomberg.

The city is in an office and condominium construction boom to accommodate the technology boom in the area, and these builders are contracting out construction workers by offering them $2, $3 or $4 more per hour than the residential real estate construction pays them, the article states.

“Everybody’s fighting for the same labor force,” said Sean Keighran, president of the Residential Builders Association of San Francisco. “There’s so much work going on. I would say this is a new high-water mark for work activity in San Francisco in decades, perhaps ever.”

Because of this increase in competition, single-family residential builders have been forced to move into a new market: luxury homes…

In San Francisco, costs are particularly high because access to the city is constrained by bridges and congested highways, making it difficult for contractors to come from outside the city, said Gregg Nelson, Trumark’s co-founder. There’s also a shortage of skilled workers who can handle large-scale commercial projects, he said, estimating that direct building expenses have increased 50% to 60% since 2012.

The result is that developers are forced to build luxury homes, Nelson said. His company, which has four San Francisco condo projects, has to project revenue of $1,400 to $1,600 per square foot to get a loan underwritten.

“Because the costs are higher, you can’t deliver product at an affordable price in those markets,” he said.

Technology jobs caused a boom in San Francisco’s market, but that could change as prices rise, and workers can no longer afford to live in one of the most expensive cities in the U.S…(more)

Some of us have been saying this for months. The shovel-ready government projects that were supposed to jump-start the economy with government bonds, are driving up the price of labor as well as public debt.  They need to slow down those programs.

We need to try to smooth the employment peaks and valleys by doing government programs during during economic downturns. Rushing to complete major government projects during peak employment makes no sense and is driving up prices for everyone.




One Comment leave one →
  1. August 19, 2016 12:22 am

    Reader comment: This is why we need to try to smooth the peaks and valleys in construction – better affordability for everyone and keep jobs for construction workers in the valleys


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