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Construction Worker Rated the 8th Worst Job

The headline read “Construction Worker Rated the 8th Worst Job.”  Being a Builder who started out as construction worker, I just had to investigate further.  Here is what I found.

The headline referred to JobsRated.com’s 2010 Jobs Rated report which the website says “offers a comprehensive analysis of 200 different jobs giving each a unique ranking based on factual analysis and hard data, not guesswork.”

The report compares and contrasts careers across a multitude of industries, skill levels and salary ranges using five key measurement criteria – stress, working environment, physical demands, income and hiring outlook – and sorting them into a definitive list of jobs that can be called “worst” and “best.”  Jobs receive a score in each individual category, and when these are added together, the career with the best overall score is ranked 1st, while the one with the worst overall score is ranked 200th.  They noted that, in compiling the list of highly-ranked jobs for 2010,  researchers sought to find careers that are likely to provide a positive experience for a majority of employees, not just the uniquely talented. The top careers in the report “are the jobs that offer the greatest chance of enjoying a combination of good health, low stress, a pleasant workplace, solid income and strong growth potential.”

Of the 200 different jobs, 22 or 11% were construction related careers.  Here is how they ranked.

Rank Job
33 Civil Engineer
48 Architectural Drafter
71 Mechanical Engineer
86 Architect
110 Construction Foreman
119 HVAC Mechanic
120 Surveyor
141 Glazer
145 Realtor
150 Plumber
153 Electrician
159 Painter
164 Drywall Installer / Finisher
167 Construction Equipment Operator
169 Carpet/Tile Installer
170 Plasterer
171 Carpenter
173 Bricklayer
179 Roofer
187

Sheetmetal Worker

193 Construction Laborer
198 Ironworker

 For the Construction Laborer job which was the topic of the headline, the article listed both the Pros: Good income potential with overtime, opportunity to become an independent contractor and start your own business; and the Cons: Extreme, physically demanding labor in all weather conditions, risk of injury or death, poor hiring outlook in a struggling economy, seasonal layoffs.

In fact, it appeared that the poor hiring outlook was a big factor in most of the construction-related jobs.  Understandable considering that unemployment in the construction industry is currently 23.7%.  But regardless of the current outlook, I believe it is important to note that according to the U.S. Department of Labor, as the economy recovers and construction returns to normal levels, there will be a need for an additional 1.1 million construction trades people.  This figure does not include construction management positions.

What I found interesting were the rankings of some of the non-construction related careers.  Teacher ranked 116. Physician ranked 128.  Commercial Airline Pilot ranked 129.  Senior Corporate Executive ranked 133.  Surgeon ranked 136.

So what was the Top Rated Job? Actuary – someone who interprets statistics to determine probabilities of accidents, sickness, and death, and loss of property from theft and natural disasters.

I think I’ll stick with construction.

Chuck Miller GMB   CGP  CGB   MIRM   CMP   MCSP   CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

www.chuckmillerconstruction.com

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The Business of Building – Part 2

Welcome to the second in my series of blog posts on the Business of Building. We started Part 1 with a quiz. I asked what the average Net Profit for a Builder is in a normal market. The correct answer was C. 3.7% to 8.7%. That was based on the National Association of Home Builders 2004 Cost of Doing Business Study. Here is today’s quiz.

In 2008, what was the average Net Profit for a Builder? Was it

A. 11.0% to 20.0%
B. 14.4% to 15.1%
C. 0.0% to 4.4%
D. -3.7% to -1.4%

The correct answer is D. -3.7% to -1.4%. It should be no surprise that the results for 2008 vary considerably from the results for 2004 especially if you are a Builder. As with the 2004 Cost of Doing Business Study, the range reflects the differences between Builders who built on land they developed or purchased and Builders who built exclusively on their customer’s land. Builders who built exclusively on their customer’s land were the only Builders who made a profit.

As noted in Part 1, the difference between the Builder’s Gross Profit Margin and Net Profit is the Builder’s expenses which included his or her General and Administrative Expenses, Financing Expenses, and Sales and Marketing Expenses. General and Administrative Expenses ranged from 5.8% to 13.1% and include employee salaries; payroll taxes, insurance, and other benefits; office expenses; vehicle expenses; taxes; general liability insurance; accounting and legal service fees and expenses, and depreciation. Financing expenses ranged from 0.4% to 3.4% and include interest lines of credit and construction loans; and closing costs. Sales and Marketing expenses ranged from 0.5% to 8.1% and include commissions, website hosting and maintenance, and other advertising and promotion expenses.

One thing that didn’t vary considerably between the 2004 study and the 2008 study was the Cost of Sales, which includes the land cost, the direct costs (the sticks and bricks and labor), and the indirect costs (permit fees, temporary utilities, etc.) In 2004, the Cost of Sales ranged between 79.1% and 83.2%.
In 2008, the Cost of Sales ranged between 80.1% and 90.6%.

As I cautioned in my last post, if you are waiting for the price of that new home you’d like to build to drop further? I wouldn’t.

Chuck Miller GMB CGP CGB MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553
www.chuckmillerconstruction.com

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Are You Waiting to Buy or Build? Don’t Wait Too Long.

For the 80 percent of home buyers who need a mortgage to buy a home, the two major factors that determine affordability are mortgage interest rates and house prices.  It appears that many buyers have been waiting for home prices to fall further while hoping that mortgage interest rates will remain at their current lows hovering around 5%. 

The key catalyst for interest rates in 2010 will be the end of a Federal Reserve program that buys a sizable chunk of mortgage-backed securities issued by firms such as Fannie Mae and Freddie Mac. That program succeeded in immediately pushing mortgage rates well below the 6 percent mark when it was announced in 2008.

But the Fed has committed to winding down the program by March. The deputy chief economist at Freddie Mac said interest rates are bound to rise to 6 percent by the end of 2010 because private buyers will demand a higher rate of return on the securities than the Fed did. Lenders will have to raise the rates they charge to home buyers in order to make that happen.

According to the Federal Housing Finance Agency, the average purchase price of homes in November 2009 was $247,300.  The average loan amount was $182,000 or 73.6% of the purchase price and the average interest rate was 5.09%.  As you can see from the table below, a one-quarter percentage point change in mortgage interest rates has about the same impact on affordability for the average priced  home as a 2% change in the purchase price or a 2.7% change in the loan amount.

 As interest rates rise, home buyers who wait thinking that house prices will fall further will need to see up to another 7 percent decline in prices to maintain the same level of affordability. 

And if you follow the Recent News posting on my website www.chuckmillerconstruction.com , you know that the cost to build a new home is not declining.

Chuck Miller GMB   CGB  CGP   MIRM   CMP   MCSP   CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

chuck@chuckmillerconstruction.com

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The End of the McMansion? An Economist’s Perspective.

I have read several articles regarding this topic in the past several weeks. Trey Langford provided his Top Ten Reasons to buy the right size home (as opposed to a McMansion) in his BuildIdaho.com blog on October 10th. It was also the subject of NAHB’s Chief Economist David Crowe’s article in the October edition of Builder magazine and it was the cover article in the November edition. Will the trend to smaller-sized homes persist?

Although he didn’t proclaim the end of the McMansion, Dr. Crowe, NAHB’s Chief Economist, believes that the trend to smaller homes may last longer than in past recoveries. He cites the fact that none of the previous recessions were preceded by the significant rise and subsequent fall of home values that we experienced from 2004 through 2009. As a result, it will take existing homeowners who want to purchase new homes longer to build up the equity needed to roll over into a new home. While these existing homeowners are waiting to regain equity, first-time home buyers who typically buy smaller homes
will continue to account for a larger than normal percentage of home buyers.

Although house prices will eventually recover and housing equity will grow, many potential home buyers will remember the declines in house prices over the last two years and will be more motivated to purchase because of actual need and less motivated to purchase because of expected appreciation. Also, due to the severity and length of this recession, home buyers are likely to be more cost conscious which should drive them to purchase smaller, more affordable homes.

Finally, home buyers are growing more concerned about energy cost which could drive them to smaller homes to as a way to reduce energy use.

Obviously, Dr. Crowe’s opinion on economic factors. But what about other factors, like changing demographics? I’ll discuss those next.

Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553
chuck@chuckmillerconstruction.com

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Builders, Realtors, lost your income? Worried about feeding yourself and your family? Read This.

Since the beginning of time, man has sought fruitlessly for the Fountain of Youth. An array of studies done on various mammals have shown that it is possible to promote longevity. Far and away the most effective method is restricting caloric intake by as much as 30 percent. In every case, as long as optimum nutritional requirements are met, average and maximum life expectancies are increased by an equal amount.

According to a paper just published in the prestigious journal Science, restricting food intake dramatically prolongs life in a close relative of man: the monkey. Conducted over 20 years, the study has found that only 20 percent of the calorically restricted animals have died, compared with 50 percent of those allowed to eat anything they want. Not only that, the restricted animals look much younger, have fewer physical disabilities and have a much lower prevalence of diabetes, heart disease and cancer. Their immune function is much better, and every marker that measures biologic age is improved. And interestingly, caloric restriction does not lead to significant differences in weight, as these animals handle calories much more efficiently.

The fact that restricting calories prolongs life expectancy in monkeys makes it highly likely that a similar effect occurs in humans.

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