New home building recovery’s labor shortage makes new home inspection mandatory

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You’ll be asking to suffer through building defects if you plan to buy a new home from the current supply on the assembly line and don’t also make a new home inspection mandatory.

Event then, it’s a real buyer beware time for buyers in the new home market.

Labor shortages are often precursors to increased building defects – in good times and bad – and with sales up and supplies down, labor shortages are afoot.

Sales of newly built, single-family homes rose 15.6 percent to a seasonally adjusted annual rate of 437,000 units in January, according the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau.

The fastest sales pace on record since July of 2008 pushed the supply of new homes for sale to its lowest level in nearly eight years.

Marv McDavis, president of Pulte Homes Minnesota Division said he can’t find skilled framers, masons and carpenters because many left during the industry bust to find greener pastures in the North Dakota oil fracking business.

• The shortgage of skilled workers to fill drywall, concrete and framing crews in causing delays of up to 25 percent in terms of how fast the company can build, according to Buddy Satterfield, division president for Shea Homes in Arizona.

• Robert Murrary vice president of economic affairs at McGraw-Hill Construction told Forbes, this could be just the tip of the iceberg.

“There is concern that labor shortages will emerge, given the fact that many construction related workers left the industry as the downturn intensified,” Murray told Forbes.

The Forbes article has the National Association of Home Builders playing down the labor shortage, but Builder Online reported the problem was already underway in the West back in November, 2012.

Decades ago, California’s SB 800 building defect law was a direct result of shoddy workmanship, due in part to the labor shortage that began back in the early 1990′s, during boom times the fueled growth in condo and townhome construction.

The legislation was designed to help ease the backlog of construction-defect lawsuits that followed the assembly-line building pace.

Building defect studies

But even since then, new home defects have not been uncommon.

• A Consumer Reports study back in 2004 found as many as 15 percent of all new homes sold have a serious defect.

• Later, in 2006 Quality Built, a risk management services firm from San Diego, CA used real home inspection data to find building envelope problems in 41 percent of new homes; framing and structural elements in 34 percent of homes and plumbing and electrical system problems in 8 percent of new homes.

“We do find serious problems in a new homes,” Terri Brown, chairman of the board at the California Real Estate Inspection Association told DeadlineNews.Com.

The best home inspections are phase inspections, conducted not when the home is completed — as is the case with most existing or resale home inspections — but during critical stages or phases during construction.

Stages include foundation, flooring, framing, wiring and plumbing, drywall, roofing and final coverings (stucco, siding, etc.).  A final home inspection is also necessary.

Haggle for inspections

The professional cost of $1,000 or more for at least several inspections is worth the price of admission, the studies reveal.

In the past, citing liability issues and phase inspections completed by municipal inspectors, builders typically haven’t allowed private stage inspections.

However, in today’s market there may be some wiggle room for aggressive buyers, armed with building defect history knowledge, to haggle, either for phase inspections or some concession in guarantees beyond the home warranty.

It can’t hurt to make the effort.

“Normally the builder won’t let a home inspector come in until the final walk through, but municipal inspection offices have had major cutbacks. They’ve had to downsize a lot of offices,” said Brown.

“At least hire someone to do a new home inspection on the final walk through,” he added.

Click the image below to walk along with a home inspector.

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About the author

DeadlineNews.Com's Publisher, Executive Editor and Founder, Broderick Perkins, was the first real estate journalist to manage a daily newspaper's online real estate section. He parlayed more than 30 years of old-school journalism into a digital real estate news service offering "News that really hits home!" -- the Silicon Valley bootstrap, DeadlineNews.Com. Network with Broderick Perkins on LinkedIn, FaceBook, Twitter, Google+ and the Bloomberg Business Exchange.

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