Real Estate Meeting

Real Estate Industry In Need Of Affordable Housing Solutions

The real estate industry is like the stock market, one day you’re way up, and the next you’re crashing. The housing market always fluctuates with the economy and today is no different. Due to a slew of combined issues, the real estate industry is suffering to find and maintain affordable housing in the US for clients looking to live in metropolitan areas. Phoenix, Arizona is seeing some of the worst of it currently, according to Chamber Business News (CBN).  A combination of lack of labor, high demand for properties to be built fast, and rising development costs is taking a hit on the entire industry, (CBN).

“I refer to it as the perfect storm. It isn’t just building and labor costs, but building products have gone up, too, and, today, the most severe labor shortage is for lot development, the folks that put in the sewer, concrete curbs and gutters, dry utilities, everything underneath the house, and the infrastructure to get to and from the home site,”  said Jim Belfiore, President of the firm Belfiore Real Estate Consulting in Phoenix. 

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Homeowners themselves are trying to take some of the heat off the companies they work with by providing additional costs, but even the real estate agents working with them know that what they’re paying additionally is way above what’s considered “normal”. The lack of labor is one of the biggest hurdles the industry is trying to get past, especially in Phoenix. According to CBN, construction costs overall have increased almost 40% over the past four years, give or take based on the specific residential market of course. Since a majority of the market’s clients can’t keep up with the rising costs, more labor workers are left without jobs. 

The labor shortage is affecting the whole country, but Arizona is especially feeling the negative effects. With an increase in anti-immigration laws and stricter policies regarding immigrant workers, many individuals have fled the state to avoid any threat of deportation. 

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“The labor shortage has really affected the schedule that home builders can deliver on because of a lack of contractors. There are projects that are going out to bid and getting zero bidders responding with proposals. It’s not unusual once you find bidders who can’t meet their schedule,” said Ron Hilgart, managing principal of a Phoenix construction management firm, to CBN.

Arizona alone has seen one of the highest influxes in population throughout the country, but they’re definitely not alone in the struggle of maintaining the growing clientele. According to a survey done by Freddie Mac, two-thirds of renters in this country can’t currently afford to become a homeowner, this is a 59% increase compared to last years renter statistics. The biggest and simplest solution to this growing problem is acquiring more land to develop properties. The need for property space is one of the leading causes to the decline in everything else within the industry. Agents are attempting to fulfill their clients specific limitations while finding them a proper space to call their own. Clients are demanding large and extravagant additions to be made to their homes that just aren’t necessary, such as large porches, grand foyer entrances, and garage spaces. These additions increase property value, which is currently being viewed as a bad thing due to a lack of clients that can afford those spaces.

“At the end of the day, anywhere there is land to build on today that is appropriate for residential use, I think our municipal leaders and our builders need to come together and allocate some share of that remaining land towards affordable housing and we need to have different requirements” concludes Belfiore.