How Tariffs Could Shake Up the Real Estate Market (And What You Should Be Watching Closely)

What's a "Tariff"?

The word “tariff” gets thrown around a lot in the news, and most people tune it out like it’s just background noise. But if you're in real estate—whether as a buyer, seller, investor, or agent—those tariffs can ripple straight into your world in some pretty unexpected ways.

Let’s break it down. I’ll also share some personal predictions about what we’re likely to see in the coming months.

First off, what exactly are tariffs?

Tariffs are basically taxes on goods that are imported from other countries. Let’s say the U.S. puts a 25% tariff on Chinese steel. That means every time someone brings in steel from China, they have to pay that extra tax.

Now, that cost doesn’t just vanish—it usually gets passed down to the end consumer. And guess who one of those consumers often is? Yep—real estate developers and builders.

So… how do tariffs impact real estate?

Let’s talk about how these taxes could trickle down into our industry:

1. Construction Costs Will Likely Rise

If you’re building homes, commercial buildings, or even doing major renovations, your material costs are about to climb. Tariffs on goods like:

• Steel and aluminum (used in beams, roofing, appliances)
• Lumber (framing, flooring)
• Cabinets, countertops, and fixtures (a lot are imported from China or Mexico)

...all drive up the cost to build.

Prediction: Expect new home prices to increase in areas with a lot of new construction. Builders will pass those higher costs to buyers.

Confidence level: 90% – Historically, we’ve seen this play out every time construction materials go up. (Think back to the lumber tariffs and shortages during COVID—same song, new verse.)

2. Fewer New Homes Could Be Built

Higher material costs and economic uncertainty might cause builders to slow down. If the math doesn’t make sense for their profit margins, they’ll pause projects or scale them back.

Prediction: A slowdown in new builds will tighten housing inventory—especially in already tight markets like Houston, Austin, and parts of Florida.

Confidence level: 75% – Builders are sensitive to profit margins and rising costs. If interest rates are still high on top of tariffs, it’s a double-whammy.

3. Rent Prices May Go Up

If fewer homes are being built and people can’t afford to buy due to higher prices, they’ll stay in the rental market longer. More demand + not enough supply = rising rents.

Prediction: Expect upward pressure on rents in fast-growing cities with limited housing availability.

Confidence level: 85% – This domino effect has played out in markets like Seattle and San Francisco when supply shrinks.

4. Renovation and Fix-and-Flip Projects Get Pricier

Investors doing flips will have to deal with higher renovation costs. Cabinets, tile, windows, HVAC systems—all of it costs more if it’s imported and slapped with a tariff.

Prediction: Margins for flippers shrink, and we may see fewer quick-turn flips in the market. Some investors might pivot to buy-and-hold instead.

Confidence level: 80% – Investors watch their margins like hawks. If profits drop, they adjust strategy fast.

5. Luxury and Commercial Construction Could Slow Down

Tariffs also impact high-end construction. Think marble from Italy, smart appliances from Asia, or high-efficiency systems from Germany.

Prediction: Watch for delays or cutbacks in luxury home builds and commercial developments that rely on imported materials.

Confidence level: 70% – These sectors are more insulated, but not immune. Rising costs can delay projects or shrink scope.

How Should You Prepare?

Whether you’re a homebuyer, investor, or agent—don’t panic, just plan smart. Here’s what you can do:

• Buyers: If you’re on the fence about a new build, locking in sooner might save you from price hikes later.
• Investors: Factor in cost overruns and longer timelines if you're flipping or developing. Look into domestic suppliers.
• Agents: Be the expert for your clients. Help them understand how these macroeconomic shifts might affect local prices and timing.
• Sellers: You may see more demand if new homes become less affordable or scarce—especially if your home is move-in ready.

My Personal Take

I remember back in 2018 when steel and aluminum tariffs were first introduced under the Trump administration—builders were scrambling. One local builder here in Houston told me their steel framing costs jumped by 18% in just a few months. That affected everything from timelines to listing prices.

So yes, this isn’t just some international chess move between governments—it’s real, and it hits close to home. Literally.

Final Word: Real Estate Is a Lagging Indicator

Remember: the full impact of tariffs won’t show up overnight. It could take 6-12 months before we start seeing big shifts in housing starts, inventory, and pricing. But just like with interest rates, the market adjusts—and the savvy folks will position themselves ahead of the curve.

Stay sharp, stay informed, and stay ready.

If you want more updates on how macroeconomic trends are affecting the housing market—subscribe to my blog or let’s chat. I’m always watching the market, so you don’t have to.

Let’s build smart

Final Word: Real Estate Is a Lagging Indicator

Remember: the full impact of tariffs won’t show up overnight. It could take 6-12 months before we start seeing big shifts in housing starts, inventory, and pricing. But just like with interest rates, the market adjusts—and the savvy folks will position themselves ahead of the curve.

Stay sharp, stay informed, and stay ready.