Panelists James Tobin, Keta Kosman, and Ed Brady shared the short-term outlook for legislation surrounding housing issues, lumber, and the labor market during the education session “The Outlook: A Complete Guide to Housing Trends, Forecasts, & Insights for 2023” at the 2023 International Builders' Show in Las Vegas. During the session, moderated by NAHB senior vice president of communications and public affairs Paul Lopez, each panelist shared areas for concern in 2023 given the uncertain year ahead for housing and the overall economy.
Legislation and Government
Tobin, the executive vice president and chief lobbyist for government affairs for the NAHB, forecast that a politically divided government in Washington, D.C.—a Republican House and a Democratic Senate—will slow down the White House’s agenda for the next two years.
“There is going to be very little on the White House’s agenda, but there is going to be some partisanship needed to do the business of the country,” Tobin said. “By and large, we’re going to see a ‘small ball’ bipartisan agenda with no more big ticket items.”
Tobin said policymakers should focus on fiscal policy in order to lower the impact of higher interest rates on renters and homeowners. Additionally, Tobin said lowering regulations and creating solutions to help promote more housing supply are top legislative issues related to the housing industry. However, Tobin said his biggest concern for 2023 is the government’s ability to work together to reduce barriers to supply.
Lumber
Kosman, the owner and publisher of Madison’s Lumber Reporter, says the volatility related to lumber prices seen throughout 2020 and 2021 are not likely to persist. Kosman says lumber prices will not likely return to levels seen between 2006 and 2017 and instead settle at a ‘new normal’ in 2023.
“The industry has adjusted and society has moderated the impact on the housing starts and we are into a new era,” Kosman said. “The way that the industry operates has changed. The most recent two years where all these changes impacted [the industry], it will also not be like that moving forward. The industry has matured to address both the period where housing was underbuilt and lumber demand was very low and all of that extreme volatility [over the past two years].”
Looking ahead to 2023, Kosman said the biggest concern for lumber is the changes that cannot be planned for. While the pace of production can be changed to meet current demand conditions, unforeseen events such as storms, fires, and other weather situations present a major risk for lumber supply.
Labor
Brady, the president and CEO of the Home Builders Institute (HBI), stated the construction industry has a crisis in the labor market. November 2022 data indicated there were 380,000 open positions in the industry. Brady said even with the expected slowdown in the industry, projections for October 2023 data suggest the construction industry will still have 190,000 to 200,000 open positions.
“Now is the time to train and to invest in your workforce,” Brady said. “At the end of 2023 and going into 2024, the housing demand is still there and interest rates will stabilize. We have to build 1 million or 1.5 million units a year and we don’t have the labor force to do it. This crisis, unlike lumber, land, and financing, has a long runway. It’s generational and [the crisis] will not come and go.”
In order to combat the labor shortage, Brady said it is imperative to bring programs such as shop classes back to the education system to introduce younger individuals to potential careers in the skilled trades at an early age. Brady said the industry needs to “repopulate interest” in the construction industry, beginning with individuals as young as elementary school and middle school.
“By the time [students] get to high school in 9th grade, they’ve already decided or have some impression of what they want to do,” Brady said. “We’re promoting the perception [of the skilled trades]. This is a good career path; it’s not an alternative career path or a second choice. It’s a first choice for those who don’t want to go into a four-year education program and work in an office.”
While Brady said he is skeptical about the possibility of the industry losing part of its labor force during the slowdown, he is optimistic that attitudes are shifting related to higher education and positions not requiring college degrees. With college tuition rising substantially, many are beginning to consider other alternative options, Brady said.
