New Constructions: Why Aren’t We Building More Homes in Albuquerque?
(Transcript Snippet): “Tego:
Can we talk about new construction a little bit.
Tracy:
So new construction Tego, why aren’t we just building more houses?
Tego:
Thank you for that setup. That was a lovely, just lob that, that ball over the net. Just make it really easy to hit. That was great.
Tracy:
We’ve been doing this for eight years. I know, you know, I thought that’s what you needed.
Tego:
I did. I, I appreciate that. So I get a lot of questions, you know, why don’t, you know, why don’t we have more homes or why aren’t we getting more homes in the market? Why don’t we just build more homes? And there there’s a lot of reasons, you know, we’ve talked about the lost decade, right? Which in, in new cons, in real estate world and new construction, that’s basically from about 2009 until whatever 2019, we just didn’t build as many homes as we needed. You know, all the builders got very conservative in new construction, you know, after what happened in 2008 and nine, and we just had, haven’t been building enough homes. So it just hasn’t been ramping up national association of realtors, estimates somewhere between five and 6 million homes short nationally, basically, you know, household units that have not been built in those 10 years and we’re just behind.
Tego:
But, but why don’t we just say, okay, well, let’s go build more. Well, I got a few things for you. One of ’em is a labor and I wrote it down here. The national association of home builders did a projection. They just came out with their latest data on this. They say that there’s 380,000 open construction positions nationwide. That’s up from 300,000 a year ago. So it’s going in the wrong direction. There’s a lot of need for skilled basically tradesmen LA labor, you know, people that, that build homes, they just don’t have. There’s just not enough. People out there to, to do that. I know here locally are local. Home builders to association is, is working on some programs with you know, education programs to help like
Tracy:
With CNM. Yeah.
Tego:
I’m not sure if it’s with CNM, but I know they’re working on some programs that, that, that bring people into the trades and help them learn those, those programs to get ’em into the deal. So that’s, that’s one thing, right? Is it is just labor. We don’t have enough people to build a home. Second is the materials. And we all know about the supply chain issues that we’ve had nationwide. We know about the, the challenges in, in all different types of things. But, but some of these stats, yeah, you look at this, look at this chart. I just pulled it up, Tracy, which I heard jaw dropped. So what is average lead time for each product CA category when they’re looking at different products that go into a new home and you look at appliances, they’re saying 55% of appliances are taking 16 weeks or longer to build, even if you go
Tracy:
To, to arrive,
Tego:
To arrive once you order. Yeah. Yeah. And, and, you know, cabinetry is, is one of the big ones they’re saying anywhere from 12 weeks plus is about 75% of all cabinetry is taking 12 weeks or more plus and you go to on the list, you know, you think about all the different bits and pieces that goes into a house doors, windows, siding, flooring, fixtures, countertops, the list goes on and on. So, you know, supply chain issues are definitely an issue in, in the new construction, which is, which is definitely slowing it down,
Tracy:
Which some of the supply chain issues are related to labor also, right? Oh, you know, who’s making those appliances, where are they coming from? How are they getting here
Tego:
A hundred percent, a hundred percent. I, I did see some, some national stats on a number of single family permits. These are, you know, new construction permits Albuquerque, or excuse me, New Mexico is up 8% year over year from which is good, which is higher than a lot of other markets around the country. Arizona’s actually 13% or 8%. So they’re one, they’re one of the highest
Tracy:
Of new construction permits being pulled.
Tego:
Yeah. Montana saw a 61% increase in new permits. I thought that was interesting. But then there’s other markets like Colorado. They had a 17% decrease in, in new construction permits. So I’m not sure what’s going on there, but this is one that really jumped at me. We were talking about New Mexico. So single family homes, we saw 8% increase in building permits. That’s good. You know, probably could use not probably, we could definitely use more than that, but that’s good for multi-family proper look at this Tracy hundred 75% increase for New Mexico in multifamily permits.
Tracy:
So those are apartments. Yep. Condos, town homes. Yep. Whatever multifamily is. Yeah. But
Tego:
For the most part, it’s generally rental, you know, properties that are gonna become rentals of some sort. So that’s good because we have a, a as much as we have a housing crisis, we have a rental crisis in, in totally in New Mexico. So you know, there there’s good news there’s stuff in the pipeline. Problem is new homes are taking, you know, 3, 4, 5 months longer than they were, you know, new construction used to be, you know, you could get a new home in five months now at 7, 8, 9 months, 10 months a year. Problem with multifamily is we could use more rentals today. Most multifamilies, you’re looking at a two year lead time, right before you they’re actually available. So you know, there, there’s definitely some challenges there. I know, I wish there was some good news and it’s, you know, it, it, it just is where we’re at and, and the shortage of homes doesn’t seem to be going, going away anytime soon.
Tracy:
Good news in interest rates is yes, they’ve gone up, but they’re still a historic yeah. Lower levels. And we expect them to stay that way. Yeah.