How Tariffs Are Reshaping the Housing Market

As we move further into 2025, there’s a new layer of complexity shaping the housing market: tariffs. While interest rates and inventory levels continue to influence decisions, recent trade policy has introduced another variable that impacts everything from building costs to buyer confidence.

These "Liberation Day" tariffs introduced by the Trump administration are adding a baseline tax to most imported goods—including essential construction materials like lumber, steel, and aluminum. The implications may seem abstract at first glance, but their effects are rippling through our neighborhoods in very real ways.

This post breaks down how these national policy changes are influencing housing at a macro level across the U.S., a micro level in California, and at the hyper-local level in some of the state's most active markets. Whether you're a homeowner, an investor, or simply keeping an eye on your next move, this is for you.

A National Ripple Effect: What Tariffs Mean for Housing Across the U.S.

Industry analysts estimate these tariffs could raise the cost of building a new home by around $9,200. That increase alone can shape pricing strategy, project viability, and overall affordability across the country.

We’re also watching mortgage rates respond to this uncertainty. The 30-year fixed rate recently dipped to 6.55%, its lowest since October 2024. However, with inflationary pressure mounting, this relief may be temporary.

This chart illustrates the rate journey over the last year—highlighting dips that have provided opportunity, and spikes that have added hesitation to the buying timeline.

Tariffs and housing have crossed paths before. In 2018, a 20% tariff on Canadian lumber drove up material costs and pushed new home prices higher. Builders delayed or restructured projects. Buyers paid more.

The current tariffs are broader, impacting more than just wood. Their long-term influence could be deeper, too.

California’s Challenge: Higher Costs in a High-Stakes Market

California’s affordability crisis is nothing new, but the added weight of tariffs could slow the pace of development just when more housing is needed most. With fewer projects penciling out, supply gets even tighter. That means more competition, and in many cases, rising prices.

Buyers who were already contending with higher rates and fast-moving listings may now find themselves navigating a market where new inventory is delayed or repriced. Sellers, too, are rethinking timing based on shifting demand.

Still, there are pathways forward—and with the right insights, opportunities remain within reach.

A Closer Look at California's Local Markets

San Francisco Bay Area

In the SF-Oakland-Hayward region, home values are hovering around $1.13 million, with homes going pending in under a month. Demand remains, but stock market volatility is softening some buyer urgency, especially in the luxury sector.

• East Bay neighborhoods remain popular for families seeking more space.

• Silicon Valley sees selective, opportunity-driven investors.

• San Francisco sellers are leaning hard into staging and strategy.

Los Angeles County

The LA Metro's median price is $820,000. February saw a rise in monthly sales, though the year-over-year volume dipped slightly. Developers are adapting to rising costs, and that may impact how many new homes hit the market this year.

High-end areas remain competitive, but pricing and value perception are guiding buyer behavior.

Central Valley

Places like Sacramento and Stockton are magnets for Bay Area and LA transplants. But if tariffs make it harder to keep new builds affordable, this momentum could slow.

Orange County

Luxury developments in Irvine and Newport Beach are more sensitive to construction pricing. Builders here are already retooling plans and timelines in response to cost increases.

San Diego County

San Diego's reliance on cross-border labor and materials adds another layer. Buyers remain active, but developers are rethinking project scope in light of supply chain risks.

Migration Trends: Movement and Momentum

One of the clearest trends I’m seeing is intra-state migration. Californians aren’t always leaving the state—they’re relocating to regions where their dollars stretch further.

From Bay Area families heading to the Central Valley, to LA homeowners trading up in Orange County or San Diego, lifestyle alignment and affordability are shaping relocation patterns. These trends directly influence inventory, pricing, and opportunity across regions.

Recently, I met with a couple in Livermore contemplating a move to be closer to family in Orange County. Their focus wasn’t on timing the market, but rather, making a decision that aligned with their lifestyle and next chapter.

These are the conversations I have every day. The market matters, but so do you.

What’s Next? Aligning Timing with Opportunity

Markets shift. Rates fluctuate. Policies evolve. But real estate decisions are always personal.

The right time to make a move isn’t about chasing the market—it’s about clarity: knowing your goals and recognizing the right fit when it appears.

If you're exploring possibilities or just curious about what today’s conditions mean for your home or next chapter, I’m here.

Reach out to me at [email protected] or 510-692-2720.