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The U.S. real estate market isn’t just shaped by local trends or interest rates — global economic shifts, like tariffs, can have a big impact, too. Recently, tariffs proposed on goods from countries, including Canada and Mexico, have raised questions about inflation and how these changes might affect housing.
As a real estate professional, it’s vital to understand how these dynamics can impact your clients, whether they’re buying, selling or looking to invest. This article is meant to be a quick deep dive into the effects tariffs might have on mortgage rates, construction costs and housing demand, along with some strategies to keep your business and clients ahead of the game.
Tariffs, essentially taxes on imported goods, can cause ripples throughout the economy. While they’re often discussed in terms of international trade, they can have a significant effect on local markets — especially when it comes to real estate.
Here’s a breakdown of what to watch for:
Inflation and mortgage rates
Tariffs often result in higher prices for goods like appliances, steel and lumber. If this leads to inflation, the Federal Reserve might keep interest rates higher for longer to combat rising prices.
This means that mortgage rates could climb or hold steady, making it harder for buyers to afford homes. Understanding these shifts in the economy can help you guide your clients on when and how to lock in rates or time their home purchases.
Higher construction costs
If the cost of materials like wood, steel and concrete goes up because of tariffs, homebuilders will feel the pinch. That often translates into higher home prices for buyers.
Sellers may also feel the impact as home prices increase, reducing profit margins or making homes less appealing to buyers. As an agent, you’ll need to understand how these price changes could affect the construction of new homes and the potential for renovations.
Slower housing demand
With higher costs and economic uncertainty, buyers may hesitate to enter the market. If wages aren’t keeping up with inflation or mortgage rates rise too high, fewer people may be able to afford to buy homes.
When that happens, you may see sales slow down, or properties sit on the market for longer. This can be particularly challenging for sellers who might be waiting for a hot market to cash out on their investments.
How agents can adapt to tariff changes
While tariffs and economic uncertainty might feel like a threat, they also open up opportunities for agents to stand out as experts in a shifting market.
Here are some strategies to help you navigate these changes:
1. Educate your clients
Knowledge is power. Make sure your clients are aware of the economic landscape and how tariffs could affect their buying or selling decisions.
For example, if you’re working with a buyer, explain how rising mortgage rates or construction costs might change the affordability of homes. For sellers, help them understand how the price of new homes could affect their property’s market value. Offering these insights will help you build trust and show your clients that you’re on top of the game.
2. Work with lenders to find creative financing
With higher interest rates, some buyers might feel priced out of the market. Partner with lenders who can offer competitive rates or creative financing options to help clients afford their dream home despite higher mortgage costs. Explore programs like first-time homebuyer grants, adjustable-rate mortgages, or even seller-paid closing costs as ways to soften the blow.
3. Promote the long-term value of homeownership
During uncertain times, people often shy away from big financial commitments. It’s your job to remind clients that real estate is a long-term investment. Emphasize the benefits of owning a home, like building equity, tax advantages and potential appreciation. For clients worried about short-term fluctuations, focusing on these long-term benefits can help ease their concerns.
4. Leverage your negotiation skills
Tariff-related economic changes can lead to more sellers needing to offload properties quickly, especially if interest rates are higher or demand dips. Your negotiation skills will be essential in these times. Use your market knowledge to secure the best deals for your clients, whether they’re buying or selling. Understanding how to navigate these market shifts and secure favorable terms will set you apart from the competition.
5. Diversify your listings
If the market for high-end homes or new construction starts to slow, diversifying your listings can help ensure that you’re catering to a wide range of buyers. Offer properties at different price points, from starter homes to luxury estates, to tap into various segments of the market. Consider focusing on homes in up-and-coming areas, which might offer better value for buyers concerned about rising costs.
6. Stay ahead of the curve
Economic conditions and tariffs can change quickly, so staying informed is key. Keep a close eye on inflation data, interest rates and policy shifts that could affect the market. Subscribe to economic reports, follow news on international trade and maintain relationships with industry experts. By staying ahead of these shifts, you can offer timely advice and adapt your strategies to meet client needs.
Turning challenges into opportunities
While tariffs and their effects on the real estate market may seem like a tough hurdle, they don’t have to derail your business. In fact, understanding the broader economic picture gives you an edge over competitors who may not be as well-informed. By educating clients, offering creative financing and staying on top of market trends, you can continue to thrive even in the face of uncertainty.
In the end, real estate has always been about more than just transactions; it’s about guiding people through big decisions with knowledge and expertise. So, take these challenges head-on, and turn them into opportunities to prove your value as a trusted advisor in a constantly changing market.
The real estate market is shifting, and the agents who adapt will thrive. Stay ahead of the curve by sharpening your expertise, educating your clients and leveraging market insights to your advantage.
Want more strategies to navigate economic uncertainty and keep your business strong? Stay connected, stay informed, and stay proactive — because in real estate, knowledge isn’t just power — it’s profit.