Does College Increase Home Prices?

According to a recent article, the writer was standing on the soccer sidelines talking to a friend. The friend, who owned a small, successful construction company, complained that his son was starting at a nearby university that fall. The cost? Nearly $200,000 over four years. The friend stated, “I could take the same money and set him up in a contracting business. It would be a much better investment.”

I could have been that friend. I’ve always advised people to get into the trades.

According to the Associated General Contractors of America, 92% of firms have had a hard time filling positions, and 45% delayed at least one project due to labor shortages. Nearly half a million workers are needed to meet 2026 demand. The National Association of Home Builders estimates the annual number to be over 700,000. Lack of workers is a major reason homes and rents are priced exorbitantly high. Construction can’t keep up with demand.

Why the shortage? Let me be brutal. The butt-sitting, raised-on-game-console generations have sat endlessly on their butts instead of going outside to play from sunup to sundown like in the old days. They have gravitated away from physical activity in favor of butt-sitting office jobs. At the same time, the National Center for Construction Education and Research is watching the current construction workforce retiring as they quickly age out. Forty-one percent (41%) could be gone by 2031.

To make matters worse, the rampant building of AI data centers, with their high profitability for contractors, has stolen workers from the home building sector. That should be reason enough for future home buyers to oppose their local town councils granting permits for such centers, regardless of one’s opinion on personal data collection. Trump’s improperly executed crackdown on immigration isn’t helping, either. It takes away workers just as we need them.

While home prices seem to be flattening, can we be sure it will last? The Fed has incorrectly cut interest rates, which in turn, will likely create more demand from home buyers who were sitting on the fence waiting for a financial sign.

Strangely, thanks to the aforementioned AI building, an obliteration of entry-level, and other white-collar jobs, may occur. Where will those workers go? While AI takes some jobs away, it also creates new jobs. Will the butt-sitters keep looking for butt-sitting jobs, or will they actually consider physical trade work?

Trade school enrollment is up significantly since the pandemic and growth is expected to continue. According to one report, students studying construction trades rose 23% over the past year. Young people are not stupid. They’re following the money. However, I remain cynical. Nature dictates no more caloric expenditure than necessary to survive. Some studies also show younger generations aren’t as materialistic as their parents.

As for the kid in the opening paragraph? He graduated from college in 2014, with a degree in history. However, he is now working in the construction business. So much for that $200k history degree.

Source used: The Guardian