Rebuilding Paradise: Demand For Skilled Laborers May Affect Housing Market

FOLSOM (CBS13) — Northern California's destructive wildfires are raising new concerns for anyone looking to get into a new home anytime soon.

The construction industry is worried the devastation from the fires could burn into California's already tight housing market. This year alone, California wildfires destroyed tens of thousands of homes.

"Specifically in Paradise, there are not very many trades in that market and that's going to impact us here, absolutely," said builder Michael Paris of BlackPine Communities.

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And it comes just as Sacramento's construction season heats up. With housing projects such as Folsom's Farmhouse at Willow Creek, builders say projects could take a lot longer, as the need for labor grows in communities ravaged by wildfire.

"Many of the trades vacated the industry in general when the recession came," said Paris.

Paris says the industry never recovered from the labor shortage that hit during the great recession of 2007. He says it takes about seven months to build a home, three times longer than it did before the recession.

Now, it's not the economy — but Mother Nature that may disturb the local housing boom. Companies are already recruiting for skilled workers, with the purpose of rebuilding disaster zones, including Paradise.

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"It certainly is going to take away from those trades that are heavily reliant on labor like drywall and some of the stucco and plaster trades," said Paris.

And with such a high demand for skilled labor, Paris expects wages to go up and that cost will eventually be passed down to the consumer.

"It could drive prices up on housing…a little. [It] will depend on the current inventory and the availability," he said.

Real estate data shows there are more new homes this year, compared to last year; most of them were sold before they're even finished.

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"I've sold more new homes this year than I ever have in the past," said Elizabeth Axelgard of Keller Williams.

Axelgard thinks anyone in the market for a new home, should do something now.

"Absolutely the prices of these homes are going to continue to rise but supply and demand is an important thing to keep in the back of your mind, which gives the buyer more negotiating power," Axlegard said.

"It does keep us managing our inventory," said Paris.

Paris isn't expecting relief anytime soon.