3 reasons California’s housing construction market is lacking
Look into four main reasons why the construction market in California is not keeping up with demand. Find out how it is leading to serious housing issues.
Working in the construction industry used to be quite lucrative, but there is a current environment in California that is holding this industry back. There is a lot of concern about the lack of growth and movement in the construction of new homes specifically, but there seems to be no forward movement. Anyone wanting to get to the heart of what is going on only needs to look at three factors holding this industry at bay.
1. Rezoning fights
It might seem like officials would want to bring in new residential housing to help combat homelessness and other issues associated with a lack of housing, but the Los Angeles Times explains that a big issue keeping residential construction from happening is officials fighting rezoning efforts. In order to allow for new construction of homes, many areas need zoning laws changed to create more residential areas. However, many officials fight against this and leave no option for new construction.
2. Lack of workers
With the recent immigration reform and movements to crack down on undocumented workers, the construction industry is scrambling to find workers. Not having enough workers means the inability to start new projects and even finish the current ones.
Beyond that, there is a general lull in workers in this industry everywhere. So, finding new employees is not an easy task regardless of immigration issues, wages, benefits or other factor that might make the job more enticing or draw in new workers.
3. Recession fears
Lenders and construction companies are in fear of a new recession. This holds everyone back from moving forward with new builds.
Construction companies worry that taking on the high debt of a project will put them into a precarious financial situation if a recession does hit. With prices of construction materials on the rise, this only heightens the tensions, explains the Los Angeles Times. Soaring prices leave companies with little working capital, which puts them in a precarious position.
Lenders worries lie in what could happen from loaning money to companies who may not be able to pay it back. This could lead to a horrible result in the financial sector.
These three factors play heavily into why California cannot seem to build the residential housing it so desperately needs. Until solutions manifest, it is likely to continue being an issue. If you want to build your construction company but fear the hurdles, it may help to speak with an attorney, such as those at Last & Faoro.