Tariffs and Residential Real Estate

By Bill Adams, President, MBA, CCIM, CRB, ALC

The Trump Administration’s tariffs on products from around the world are bound to have a negative effect on the housing market.  According to the College of Natural Resources at NC State University, the US imports up to 30% of softwood lumber used in construction from Canada.  In addition, the US imports about 25% of its cement from Canada and about 10% from Mexico.  Many appliances and other building materials are sourced from outside the US. If the tariffs on these items are passed on to the consumers, the cost of new construction of single-family homes and multi-family properties will increase.  Likewise, renovation projects will be negatively affected by tariffs. An already expensive housing market will be even more costly with the tariffs in place.  Many economists expect that tariffs will increase inflation.  The 10-year Treasury Bill, which is a benchmark for many mortgage loans, is likely to rise with inflation and thus, mortgage rates will also increase.  The combination of higher construction costs and higher interest rates will put the dream of homeownership out of reach for many Americans. Rental rates in new multifamily properties will also rise to reflect the increased cost of construction. A commentator appearing on Bloomberg radio stated that these tariffs are the biggest “self-inflicted” economic disaster in recent memory. I can’t agree more!

Our team is always standing by to answer any real estate questions you have and to support all of your real estate needs. We’d love for you to be in touch.