Trump’s Policies Could Raise US Home Prices

Tariffs and deportations threaten to make housing more expensive, pushing homeownership out of reach for millions.

Donald Trump campaigned on bringing down the cost of living, including house prices. But his administration is embracing policies that probably will make housing more expensive. Putting tariffs on Canadian lumber, drywall from Mexico, and imported appliances raise home prices. And deporting millions of undocumented workers will hamstring a construction industry where just under a quarter of workers are undocumented immigrants, said the left-leaning Center for American Progress.

“Anything that pushes the price of a home [or] build costs higher is going to be net detrimental for home buyers right now,” says Rick Palacios Jr. of real estate research firm John Burns Research and Consulting. “They are having a tough time as it is.” The new Trump policies come at a precarious time for the housing industry. Home prices hover at record levels, largely because construction has failed to keep up with demand.

The combination of high home prices and high mortgage rates has pushed homeownership out of reach for millions of Americans. There are few reasons to think the picture for buyers will dramatically improve this year. “The spring selling season will be very challenging if we don’t see some relief on rates,” says Ivy Zelman, executive vice president of housing research firm Zelman & Associates.

Mortgage rates have fallen to a recent 6.76%, but remain high. To be sure, Trump’s drive to cut regulations and lower interest rates could spur both home building and housing demand. The president directed agencies to lower the cost of housing and increase the supply of homes in an executive order decrying the burden that regulatory requirements add to the costs.

Treasury Secretary Scott Bessent’s focus on lowering long-term yields could also be a boon for buyers. The U.S. housing crisis is a supply and- demand problem. It would take three or more years of home building at current rates to meet the need for 3.7 million units, estimates Freddie Mac Deputy Chief Economist Len Kiefer.

The country has built an average of only one million single-family homes over the past five years, a trend that forecasters expect to continue in 2025. “The only way that we are going to solve [high home prices] is to put more supply on the market,” says Jim Tobin, CEO of the National Association of Home Builders, or NAHB, noting that both presidential candidates ran on improving housing affordability. “Some of the actions we’ve seen after that are maybe running counter to that.”

Inflation hit every part of the economy in the wake of the Covid-19 pandemic, and home materials were whacked particularly hard: The cost of construction materials is up more than 30%since the pandemic began, according to the NAHB. As lockdowns snarled supply chains, builders faced significant shortages of nearly everything, from windows and doors to home appliances, right when buyer demand was reaching its zenith.

It could get worse. New tariffs, including those on Canada and Mexico, complicate home building supply chains and ultimately drive up costs for buyers, the industry warns. “The cost of building is now just going to go up, and is ultimately going to be borne by the home buyer or renter,” says the NAHB’s Tobin. Tariffs on Canada and Mexico, which produce lumber and the gypsum used in drywall, are of concern—as are appliances from China.

The president announced the tariffs in early February before postponing enforcement of those on Canada and Mexico. An indication of future construction, the NAHB’s sentiment index, dropped in February by five points, its greatest decline since last May. “Uncertainty over the scale and scope of tariffs has builders further concerned about costs,” says Robert Dietz, the trade group’s chief economist.

“There is now more concern around deportation risk,” says Zelman, the housing researcher. A quarter of home builder respondents to the firm’s January survey said that the fear of immigration service raids resulted in higher levels of absenteeism among subcontractors, with the greatest impacts in Baton Rouge, La.; Chicago; Bakersfield, Calif.; San Antonio and Austin, Texas; Greensboro, N.C.; and Myrtle Beach, S.C. Risks exist outside of home supply.

Fannie Mae and Freddie Mac, the two mortgage market giants that buy, securitize, and guarantee loans from lenders, have been under government conservatorship since the 2008-09 financial crisis. The first Trump administration sought to remove the companies from conservatorship but stopped short. If the mortgage giants ultimately lose their implied government guarantees, mortgage rates would probably climb. “Our housing finance system, while it’s probably not how you would have drawn it up on a whiteboard from scratch, is the envy of the world,” says Bob Broeksmit, the CEO of the Mortgage Bankers Association.

“Any responsible exit would be accompanied by a legislated explicit guarantee on the mortgage-backed securities of Fannie and Freddie so as not to jeopardize that system.” How—and whether—the administration releases the companies from conservatorship has yet to be seen. Bill Pulte, Trump’s nominee to lead the Federal Housing Finance Agency— which regulates Fannie and Freddie— noted the risks at his confirmation hearing in February.

“While their conservatorship should not be indefinite, any exit from conservatorship must be carefully planned to ensure the safety and soundness of the housing market without upward pressure on mortgage rates,” said Pulte, whose grandfather started home builder PulteGroup, of which Bill Pulte is a former director.

Home purchases have already slowed because of high prices and a lack of resale inventory. Builders have been offering incentives to lure buyers, and investors are souring on the sector. The iShares U.S.Home Construction exchange-traded fund is down about 6.1%so far this year, compared with the S&P 500 index’s 1.9%loss. “The worry in the stocks is that margins are going to compress,” says BTIG analyst Carl Reichardt.

The headwinds could weigh on new-home construction for months or even years. That could push up prices further. “Anything that makes home prices increase more than they would otherwise is concerning,” says Broeksmit of the Mortgage Bankers Association. “We don’t want a generation that has given up on homeownership.” 

SourceL: Barrons

Parking for the upwardly mobile

Inside Bentley tower’s $6m apartments with high-rise parking in Miami

These $6m apartments could help, writes  It is one of life’s great first world problems. You buy a luxury apartment in a high-rise building but then have to lug your Whole Foods shopping from the communal car park to your door.

It was a conundrum bosses at Bentley, the carmaker, were keen to solve in its first branded residential tower, which opens in 2028 in Miami. The Dezervator lift — named after Bentley’s partner, Dezer Development — is designed to be the “ultimate in seamless privacy” allowing residents to travel directly up to their apartments inside their cars.

Each apartment will have its own huge garage next to it. Residences on the east side of the building have an 144 square metre area that can hold up to four vehicles, while those on the west side have 106 square metres, where they can park three cars.

The 216 residences will be spread over the 62 floors, while each balcony will have its own private heated swimming pool and summer kitchen — with sweeping views of the ocean.

Prices for the apartments start at $5.8 million. The building will also have a private residents’ only restaurant led by Todd English, a four times winner of the James Beard culinary awards, who will curate the dining experiences.

There will also be a cinema, a whisky bar and a beauty salon complete with hair styling, manicure, pedicure, and make-up facilities. Four-legged residents will be able to indulge at the pet spa that is “designed in partnership with Bentley Motors” and features washing and drying services.

Ben Saltmer, the product and lifestyle design manager for Bentley, said: “We have applied the same attention to detail that goes into our cars into this very building. “Each space is different, but with distinctive Bentley design cues styled harmoniously throughout — right down to a functional area like Bentley pet spa concept.

“Despite practicality being paramount, the area should have an elevated experience. We achieve this through exquisite materiality and subtle Bentley design signatures, an ethos we’ve followed throughout the design of the building.

“For instance, in the pet spa we’ve used the Bentley diamond motif when giving the surfaces a non-slip quality. This diamond signature extends graphically to the shelving above the main bath area that houses towels, shampoos, and pet-friendly fragrances.”

Saltmer said that pets visiting the spa will be “guided up the steps, washed in the bath, guided up to the grey marble surface for drying, then guided down the steps once dry”, adding: “This is a practical space but also a luxurious sanctuary for pet and owner.”

The building’s cinema has been designed to mimic the concept of a Bentley car interior. Saltmer said: “A cosseting sofa wraps around the back of the rear three walls, embracing residents in the space.”

There is also a “state of the art” games room equipped with VR headsets and golf simulators.

“The whisky bar design is inspired by the iconic matrix grille of Bentley’s cars,” Saltmer added. As it will be suspended from the ceiling, the bar will appear to be floating.

Car manufacturers moving into bricks and mortar has become a trend recently. Porsche has already opened a property in Miami while Aston Martin is preparing to do the same. Mercedes-Benz and JDS Development Group are celebrating the sales launch of the second tower at Mercedes-Benz Places in Miami.

It is the brand’s first real estate project in the US and one of the largest under construction in Florida. It launched Tower 1 last year and sold all 100 apartments in just four days.  

Source: The Times

Trump's tariffs will raise the roof on US home prices

Homes – the most expensive item most Americans ever buy – are about to get even pricier if the Trump administration’s proposed tariffs take effect.

An analysis from John Burns Research and Consulting, which focuses on the housing industry, estimates the cost of a newly constructed home will increase by nearly 5% if the White House’s proposed tariffs are implemented. That’s about $21,000 on the median-priced new home.

While the Trump administration paused proposed 25% levies on Canada and Mexico for at least a month, a 10% tariff on goods imported from China took effect Monday.

Tariffs "are going to be an affordability shock if they come through,” said Matthew Saunders, senior vice president of building products research at the company.

Residential construction requires many ingredients. In most categories, the vast majority of the import supplies come from the trading partners targeted this month.

Roughly 60% of all hardware imports come from China, Canada and Mexico, according to Saunders’ analysis. Nearly three-quarters of imported sawmill wood products come from Canada. And perhaps surprisingly, the U.S. imports more major household appliances from Mexico, by dollar amount, than from China.

Though 5% may not sound like a lot, some context is crucial. The median price of a new home in December 2024 was $427,000, according to the Census Bureau. That’s up 30% in five years – and mortgage rates now are roughly double what they were just before the COVID-19 pandemic.

And tariffs may also have some knock-on effects, Saunders noted. For example, domestic suppliers of materials are likely to raise their prices in line with those from tariff-affected countries simply because they can.

The simmering trade war with Canada is also likely to affect the supply of lumber in the longer run, said Stinson Dean, an investor who runs Deacon Lumber.

“The bigger problem is the long-term effect of making sawmill operations in Canada unviable because of their increased cost to do business in the U.S.,” Dean said. “We don't need that much lumber right now because of the state of the housing market, but eventually that'll change, and we'll need all the lumber we can get.”

When consumer demand for new homes perks up – likely when mortgage rates fall significantly – the production capacity won’t be there, he said.  

“You don't even have to implement the tariff. The threat of the tariff has already done the damage to potential increases in supply.”

Higher costs for building materials also exacerbate severe labor shortages in the construction industry, Saunders said. Many homebuilders won’t be able to swallow all of the additional costs, and at some point consumers won’t be able to afford to buy.

“In terms of immigration, potential deportations, tariffs, these are all adding to what's already an unsupportable environment.”

Source: USA Today