Austin Feels Stress of Construction Labor Woes

AUSTIN, TX—The local housing market is responding to an unusual labor dichotomy, what with unemployment levels expected to remain low but at the same time, tugging at construction labor demand. In this exclusive, Terry Shuffler, vice president and general manager with Trendmaker Homes, shares his insights into what is in store for this year, how interest rates and tariffs will impact the market, and the challenges that builders will face.

GlobeSt.com: What are your predictions for the Austin housing market in 2019/?

Shuffler: Austin is prepared for another successful year in the 2019 new home market, and although predictions are compared to 2018, you have to remember that 2018 had all-time-high prices and at or near an all-time-high number of homes built. Forecasts also call for continued job growth that will keep the unemployment rate at a level at or below 3%, which is considered full employment. The latest reports on the unemployment rate show it at 2.7%.

Because we are at or near an all-time high for homes being built in Austin, we are definitely feeling the stress of the construction labor force. We are working every day to deal successfully with the strained labor force while also dealing with what has been an unseasonably wet fall and winter.

GlobeSt.com: How much will interest rate hikes be a factor? What about tariffs?

Shuffler: Interest rates certainly affect buying power and many here in Austin have taken advantage of record lower rates to purchase homes. Homebuyers still continue to purchase homes due to low local interest rates as compared to historical averages. However, recent news suggests that interest rates may be entering a more stable environment, and this could help ease concerns for people looking to buy new homes.

Tariffs have had a direct impact on several components used in homebuilding including the availability and costs of lumber, steel and some internal finish items such as countertop material and flooring. Unfortunately, these impacts are somewhat compounded when combined with higher interest rates.

GlobeSt.com: What other challenges will Austin homebuilders face?

Shuffler: Affordability is a fundamental challenge for any homebuilder in the market and the ability to offer homes at prices that fit into a family’s budget in a desirable location has become a larger challenge. Trendmaker and other homebuilders have partnered with land owners and developers to deliver more efficient homes on slightly smaller homesites that are in still desirable locations. The challenge will be to continue to find those combinations.

GlobeSt.com: What is Trendmaker Homes working on in 2019?

Shuffler: We are excited to be opening our model homes in Palmera Ridge. Homes start from the $260,000s in a great neighborhood in the highly acclaimed Leander Independent School District. Palmera Ridge offers a charming Hill Country feel and appeal, great trails, a well-designed amenity center and pocket parks, as well as an in-community elementary school in the near future.

In early summer, we will be offering new homes in 6 Creeks, a master-planned community in Kyle, a south submarket area of Austin where Trendmaker has not previously built. We will offer a new plan lineup on 50- and 60-foot lots to deliver open floorplans in a variety of designs that start from the mid-$200,000s. The exteriors offer buyers both traditional and contemporary Texas Hill Country architecture.

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