Houses currently appear to be in short supply, driving higher rent growth. This condition seems likely to endure due to changes in resident lifestyles, longer construction times, and the substantial disincentive presented in the form of rapidly rising construction prices.
High material costs and labor shortages affected construction activity in the past 12 months. As a result, current multifamily units under construction are considerably lower than pre-pandemic in the vast majority of US metros. There are about 3,000 units under construction in Jacksonville, with the metro growing by more than 20,000 residents yearly.
Rising Costs
The global supply chain gridlock may not be cleared until well into 2022. Shipping rates continue to soar, delivery delays are up significantly, and inventories are in steady decline. Container freight rates, for example, have increased more than 400% over pre-pandemic levels.
Delivery delays According to the Institute for Supply Management’s latest data, delivery times have also slowed, with manufacturing supplier delivery times roughly 30% slower than they were a year ago.
Hiring Logistical Difficulties
Federal Reserve Chairman Jerome Powell blamed additional factors for the shortages, including skills mismatches and geographic differences.
Hiring new employees is a time-consuming process. There are limits on how fast employers can hire, and these are aggravated by the high level of people quitting their jobs for other opportunities lately.
Skills mismatches are another solid contributor to rising costs and slower economic recovery, particularly within the real estate industry. Kevin Liang, vice president at Argo Construction, commented that builders have not been able to keep up with demand due to skilled labor shortfalls. “That raises concerns about the quality of work being done on construction sites,” Liang said. “And the current supply chain issues, everything from material shortages to scarce shipping containers, to a shortage of truckers, everything in that supply chain has a significant effect on construction.”
Unskilled workers are being mentioned as the number one cause for subcontractor default insurance claims. Gary Kaplan, president of construction for AXA XL, noted that the sector’s labor shortage concerns are not new, but the shortfall effects are beginning to be reflected in insurance claims.
Florida’s economy is performing robustly. Job demand is high, leading companies & Americans are moving to Florida daily. With all the uncertainty in the global market, now is a great time to invest in Florida real estate.