It’s nearly impossible to ignore news about tariffs and burgeoning trade wars these days. Discussion of these import taxes is suddenly everywhere, causing a frenzy of speculation about their effects on everything from the price of avocados to the future of manufacturing in the United States.
As a real estate agent, it’s critical that you stay informed and up to date. Here are five reasons why real estate agents need to keep up-to-date on tariff news.
Tariffs are a type of tax that is directly levied on imported goods. A company that wants to sell goods manufactured in other countries must pay a tax to the US on those goods when they enter the country. As of mid-April, a 10% across-the-board tariff on all imported goods has been levied, with country-specific tariffs either in effect or temporarily paused.
Consider, hypothetically, a pair of imported jeans. The retailer buys the jeans for $50. When they reach the US, the retailer has to pay a tariff of $5 to the US government, bringing their cost to $55. The retailer can either eat the cost of the tariff or, more likely, pass that 10% increase on to the consumer.
One of the stated goals of the Trump administration’s tariffs is to bring manufacturing back to the United States. In January of 2025, the United States imported $317 billion worth of goods and exported $164 billion. Proponents of higher tariffs argue that tariffs address this trade deficit.
However, economists warn that the pace of tariffs in 2025 is dangerous. Without the manufacturing infrastructure in place, there is no way for US companies to create the goods the country imports. And tariffs tend to affect domestic consumers more than trading partners or the companies that import goods.
Although Congress is the body primarily responsible for levying taxes (specifically in the House Ways and Means Committee), the executive branch of the government has more power when it comes to tariffs. The Smoot-Hawley Act of 1930 triggered a global trade war that exacerbated the worldwide effects of the Great Depression. After this, Congress backed off tariffs and largely delegated that authority to the executive branch, allowing presidents to unilaterally increase tariffs in the event of a national security threat.
If tariffs are levied on imported goods, why should real estate agents care about them? After all, housing is domestic, doesn’t cross any borders, and isn’t under the purview of the executive branch.
But tariffs are poised to have a dramatic impact on housing. Millennials, the largest home-buying demographic and canary in the coal mine of housing changes, are indicating their displeasure, specifically about the Trump administration’s role. Roughly 61% of millennials blame the Trump administration for the affordable housing crisis, 11 points more than boomers (50%), who are likely already in homes that are nearly paid off.
Tariffs can’t help but increase pressure on the housing market; here are five reasons why real estate agents need to pay attention.
Home-building season starts in spring, and housing starts are already down by double-digit percentages. This slump may be partly due to concerns and expectations regarding tariffs on imported construction materials, such as steel, aluminum, or lumber. More expensive materials directly impact the cost of building new homes and may stall the progress of new development.
The delay in new housing availability reduces housing stock, which can, in turn, reduce a real estate agent’s potential commissions, even if prices rise.
For home sellers looking to spruce up their homes before putting them on the market and investors wanting to buy and flip properties, renovation expenses, including imported fixtures, materials, and appliances, are increasing.
Buyers may be reluctant to purchase homes without upgrades, which can cause properties to remain on the market for an extended period.
Pandemic-era mortgage rates are a thing of the past; the days of rates in the 2-3% range are now a distant memory. Early 2025 has seen rates hovering in the high 6% range, lower than some points in 2024 but still high enough to keep homeownership out of reach for many buyers.
The uncertainty about whether the Federal Reserve will cut this rate in the coming months means some buyers might hold off in anticipation of saving some money. Additionally, homeowners looking to sell and upgrade cannot afford to let go of their low pandemic interest rates, as even similarly priced homes will cost hundreds more per month in financing costs.
As prices creep up, consumer confidence often falls. Tariff uncertainty is unsettling for consumers, which means they are less likely to make big purchases and more likely to hunker down. This means a shrinking pool of potential clients and more competition among real estate agents for them.
More price-conscious consumers may notice price fluctuations and uncertainty and tighten up their budgets. Price-consciousness means more negotiations around prices, fewer bidding wars, longer sale times, and pressure to reduce listing prices. All of this affects commissions and the number of sales real estate agents can expect to see in 2025
During the pandemic, global shutdowns disrupted the supply chain, leading to slowdowns in new construction and renovations. This, in turn, resulted in a smaller housing stock and fewer home sales. Although this can drive up the price of available homes, the cost of those homes may be daunting to potential buyers. Delays in receiving critical supplies, such as windows and HVAC system components, can also delay closings that require repairs before settlement.
The best way to approach client fears amid economic uncertainty is to stay calm and do your research. It can be challenging to keep up with daily changes, but real estate agents who stay informed about broader economic trends and how they affect housing already have a leg up. If you can translate the challenges of this economic uncertainty for your clients, you’ll better position yourself as a savvy market expert. This builds trust and adds value to your services, which translates to more sales and repeat clients who refer you to their friends.
Luke Babich is CEO of Clever Real Estate.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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