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How New Tariffs Could Impact Home Prices and
Mortgage Rates
The housing market is facing new challenges as recently announced tariffs may increase construction costs and affect mortgage rates. President Donald Trump’s latest round of trade measures imposes a minimum 10% tax on most imports, with steeper levies on specific goods. Notably, imported vehicles now carry a 25% tax, while tariffs on Chinese goods have surged to 54%. Although Canada and Mexico were temporarily exempt from the new tariffs, they will soon face a baseline tariff as well.
Tariffs and Home Prices
For homebuyers and builders, the most immediate concern is the potential increase in construction costs. According to the National Association of Home Builders (NAHB), roughly 10% of residential construction materials are imported. Higher costs on key materials, such as lumber and gypsum, could raise home prices, further straining affordability.
The U.S. housing market is already grappling with a supply shortage of nearly 4 million homes. Some economists have pointed out that if building materials become more expensive, it could slow down the production of much-needed inventory.
Builders have already been navigating the 14.5% tariff on Canadian lumber that pre-dates Trump's second term, which has added close to $10,000 to the price of a new home. With 72% of imported lumber coming from Canada and 74% of gypsum coming from Mexico, additional tariffs could further escalate costs. While Canadian lumber remains exempt from Trump’s 25% national security tariff, it remains unclear whether the new 10% additional tariff will apply, potentially raising costs even further.
As of February, the median sales price for new homes in the U.S. stood at $414,500, compared to $398,400 for previously owned homes. With builders anticipating material cost increases of $7,500 to $10,000 per home, prospective buyers may find themselves priced out of the new-home market.
Tariffs and Mortgage Rates
The effects of tariffs extend beyond home prices. If these trade measures contribute to prolonged inflation, the Federal Reserve may hold off on interest rate cuts or even reconsider its current policy stance. Higher inflation would likely keep mortgage rates elevated for a longer period.
Since October, the average 30-year fixed mortgage rate has remained above 6.6%, partially due to persistent inflation concerns. While Trump has expressed a desire to bring rates down to 3% or lower, mortgage rates are largely dictated by economic conditions, inflation expectations, and Federal Reserve policy.
A 10% universal tariff is projected to generate $2 trillion in government revenue by 2034, according to the Tax Foundation. However, this may not be enough to offset the revenue losses from extending income tax cuts, which Republicans have pledged to do. If tariffs contribute to overall inflation, mortgage rates could remain high. Conversely, if the tariffs slow the economy significantly, rates may decline in response to weakened demand and potential recessionary pressures.
Looking Ahead
As these policies take effect, both homebuyers and sellers should stay informed about potential price fluctuations and mortgage rate trends. If you’re considering buying or selling a home, now may be the time to strategize with a real estate expert to navigate these shifting market conditions.
For more insights on the Southern California real estate market, stay tuned for next week’s update!
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1535 E Ocean Blvd #3
Long Beach, CA 90802
2 Bed | 1.5 Bath | 943 SF | $599,900
Top-Floor Corner Condo with Peek-a-Boo Ocean View! Enjoy beachside living in this beautiful 2-bedroom, 1.5-bath condo offering views of Ocean Blvd from its prime top-floor corner location. Just steps from the sand with easy beach access, this home features a spacious living room with gorgeous wood floors and recessed lighting, while the updated kitchen offers granite countertops, white cabinetry, and stainless steel appliances. Located right across the street from the beach with beach access. Rare private garage with remote. Conveniently located close to all of the great restaurants, cafes, and entertainment in downtown Long Beach and Belmont Shore. Don’t miss this chance to live just moments from the beach, bike paths, and ocean breezes!
Eligible for a $20,000 down payment grant from City National Bank!
OPEN HOUSES
Saturday (4/5) & Sunday (4/6)
12:00 - 3:00pm
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3603 E Hungerford St.
Long Beach, CA 90805
2 Bed + Bonus Room | 1 Bath | 1064 SF | $799,900
Charming 2-Bedroom + Bonus Room Home in a Quiet Long Beach Neighborhood. This beautifully updated home features fresh exterior paint, a new roof, and central AC. The light-filled living room boasts wood floors, recessed lighting, and an inviting atmosphere, while the updated kitchen includes granite counters, stainless steel appliances, and modern cabinetry. A spacious bonus room with a stone fireplace offers versatility as a family room or 3rd bedroom. The expansive backyard with a patio is perfect for entertaining or adding an ADU, and the long driveway with a finished 1-car garage provides plenty of parking. Located near Lakewood Mall and local amenities, this home is a must-see!
Eligible for a $50,000 down payment grant from City National Bank!
OPEN HOUSES
Saturday (4/5) & Sunday (4/6)
1:00 - 4:00pm
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1811 Tevis Ave.
Long Beach 90815
5 Bed | 2 Bath | 2018 SF | $1,395,000
Stunning Remodeled 5-Bedroom Home in Highly Desirable Los Altos! This beautifully remodeled home is nestled on a picturesque tree-lined street in one of Los Altos’ most sought-after neighborhoods. Designed for modern living and entertaining, the open floor plan features hardwood floors, beamed ceilings, and custom paint throughout. The gourmet kitchen boasts sleek white cabinetry, black quartz countertops, a spacious island, and high-end GE Profile stainless steel appliances. Enjoy seamless indoor-outdoor living with a stunning wall of glass-pane doors that open to an entertainer’s patio and a beautifully landscaped backyard. Recent upgrades include a new roof and driveway in 2024, solar system with dual batteries in 2024, and new windows in 2023. Conveniently located near shopping, parks, Trader Joe’s, Cal State Long Beach, and award-winning Minnie Gant Elementary School—this home truly has it all!
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225 W 6th St #515
Long Beach 90802
1 Bed | 1 Bath | 547 SF | $299,900
Top-floor end unit condo in the heart of Long Beach, offering privacy and city views! This nicely updated home features an open living area with a private balcony, a stylish kitchen with butcher block countertops, and a bright bedroom with two mirrored closets. Located near top attractions like the Long Beach Convention Center and Shoreline Village, with easy access to dining, shopping, and transportation.
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223 Elm Ave.
Long Beach 90802
2 Bed | 3 Bath | 1570 SF | $799,900
Enjoy modern luxury living in this stunning 2019-built townhome at The Huxton in the East Village Arts District. This inviting home features an open-concept layout perfect for entertaining, with high ceilings, large windows, recessed lighting, and beautiful flooring throughout. The gourmet kitchen boasts quartz countertops, soft close cabinets, and upscale appliances by Bertazzoni and Bosch. Upstairs, two primary suites offer walk-in closets and luxurious bathrooms. Enjoy city views from the spacious rooftop deck – ideal for relaxing or BBQs. Eco-friendly features include owner-owned solar panels and a garage pre-planned for EV charging. Located in a secure, gated complex, you’ll be steps from the waterfront, dining, cafes, and nightlife. VA Approved.
Eligible for a $50,000 down payment grant from City National Bank!
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3817 W Compton Ave.
Orange, CA 92868
4 Bed | 2 Bath | 1316 SF | $985,000
Beautiful Single-Story Pool Home with Modern Upgrades in Orange, CA! Discover this stunning 4-bedroom, 2-bathroom home situated on a spacious 7,598 sq. ft. lot in a fantastic Orange neighborhood. This thoughtfully updated home offers everything you need for comfortable living and entertaining. Located in a friendly neighborhood, this home offers unbeatable access to major freeways (I-5 and 22), top destinations like UCI Medical Center, Angels Stadium, Disneyland, Old Towne Orange, The Outlets at Orange, Chapman University, Honda Center, and GardenWalk. This is the perfect opportunity to live in a vibrant area while enjoying a tranquil and well-appointed home.
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488 E. Ocean Blvd #1102
Long Beach, CA 90802
1 Bed | 1 Bath | 600 SF | $545,000
Stunning 11th-Floor Ocean View Condo in the Iconic Aqua Towers! Enjoy breathtaking ocean, marina, and city views in this stunning corner-unit high-rise. Featuring floor-to-ceiling windows, high ceilings, slate flooring, granite countertops, and a wrap-around balcony, this condo offers the ultimate in coastal living. A rare private enclosed garage near the elevator adds extra convenience. Resort-style amenities include 24-hour security, pool, spa, sauna, fitness center, and clubhouse. Just steps from the beach, shopping, dining, and entertainment—don’t miss this incredible opportunity!
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3824 Pacific Ave.
Long Beach 90807
4 Bed | 3.5 Bath | 2646 SF | $1,710,000
This stunning, custom-built single story Mediterranean style pool home was completely rebuilt in 2007 and features 4 bedrooms and 3 1/2 baths. Set amidst towering palms on one of the city's most prestigious avenues. A Saltillo-tiled walk leads to custom-made iron doors entering into the grand reception foyer beneath soaring cathedral ceilings. Exquisite 3/4 solid oak hardwood flooring flows throughout. The awe-inspiring great room boasts a 12' high cathedral ceiling, crown moldings and a gas fireplace. Custom designed gourmet kitchen features classic cherry wood cabinetry, granite counters, walk-in pantry, 5 burner gas cooktop, Stainless dual ovens, Built-in ref/freezer, dishwasher, a large island with seating for 4 and a separate dining area. Outside the kitchen is a fabulous raised lighted deck leading to the newly built pool area. A unique roofed but open-air lounge perfect for indoor/outdoor living and entertaining. There is also a full pool bath located next to the open family room and pool.
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700 E Ocean Blvd #1706
Long Beach 90802
2 Bed | 2 Bath | 1080 SF | $840,000
Experience luxury coastal living with breathtaking ocean views from every room in this beautifully remodeled high-rise condo at the iconic International Tower. This light-filled unit features an open floor plan, updated kitchen with sleek cabinets, marble countertops, and stainless steel appliances, and a spacious primary suite with a luxurious soaking tub. Enjoy panoramic vistas from the large wrap-around balcony, plus access to top-notch amenities, including a pool, fitness center, and 24-hour security, all just steps from the beach and vibrant local dining.
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