ATL Fed reports affordable homes hard to find as employers offer modest pay hikesRising construction costs, 'make it difficult for homebuilders to deliver reasonably priced products,' according to Wednesday's Beige Book report from the Atlanta Fed. These structures are underway in Chamblee. Credit:David Pendered
By David Pendered
Demand for affordable housing comprises a fair amount of the housing sales in Georgia and the Southeast, even as employers offer incentives other than money to attract and retain labor in what remains a tight labor market, according to Wednesday’s edition of the Atlanta Federal Reserve’s Beige Book.
The Beige Book makes no direct connection between affordable housing and wages. The report’s purpose is to present a snapshot of the nation’s regional economies through anecdotes presented by the Fed’s business contacts.
However, the Wednesday edition of the Beige Book does highlight the ongoing shortage of workers and employers’ reticence to raise wages, and a shortage of affordable housing – however each market defines affordable housing.
Tight conditions around wages have existed for some time. Past editions of the national Beige Book have shown that employers are actively pursuing alternatives to higher wages to fill jobs at lower costs – including training unskilled workers who, presumably, will work for lower wages than a previously trained person; paying one-time bonuses rather than raising wages; providing benefits that are easier than wages to curtail; and offering incentives such as flex-time in lieu of higher wages.
The wrinkle that appears to have emerged in Wednesday’s report is that workers are responding to employers’ wage strategy by seeking compensation other than money.
The Atlanta Fed observed:
- “Contacts continued to report hiring challenges. … While many contacts pointed out that employee bargaining power increased, non-financial benefits focused on work-life balance often dominated demands, rather than higher wages.”
The Atlanta report comports with the national theme. The Federal Reserve observed of the national picture:
- “Compensation grew at a modest-to-moderate pace…. Most District reports also noted that employers expanded benefit packages in response to the tight labor market conditions.”
Another section of the Beige Book addresses the housing and real estate sectors of the economy.
Of housing, the report notes a shortage of affordably priced homes across the South:
- “Demand was strongest in the more affordable price segments, where inventory remained limited. … [A]ffordability remained a concern as higher construction costs continued to make it difficult for homebuilders to deliver reasonably priced products.”
And the issue of affordable housing transcends the South. Here are some snapshots of other regions where housing affordability was cited as a concern:
- “Home sales were flat overall, with increased sales of lower-end homes offset by decreased sales of higher-end homes.”
- “Residential real estate contacts noted that sales of low- and medium-priced homes continued to outpace sales of higher-priced homes.”
- “In Oregon, the completion of several apartment complexes and single-family developments resulted in brisk selling activity, especially for more affordable units.”
Boston is an outlier.
Contacts in about half the companies consulted reported stronger than expected revenue growth in the software and information technology sections. Though tariffs were cited for some layoffs, the overall outlook for the region’s employment was viewed as, “positive with some downward revision.”
This optimistic employment outlook may have fueled a housing sector that indicated the opposite of a lack of affordability, at least as defined in regions including metro Atlanta:
- “Residential real estate markets in the First District continued to show strong momentum in May. Single family homes market saw robust sales activities, with closed sales and pending sales increased in all reporting areas. Inventory decreased moderately in Rhode Island, Boston and Maine, while Massachusetts and New Hampshire experienced a larger drop.
- “House prices continued to rise in the region. Prices reached milestones in several places. The median sales price of a house surpassed $300,000 in Rhode Island and $400,000 in Massachusetts both for the first time.”