Are Tariffs and Layoffs Behind Rising Housing Costs?

How tariffs and layoffs are driving up inventory, increasing costs, and creating other challenges.

Are layoffs and tariffs about to shake up the real estate market? It’s a fair question, especially with all the changes happening right now. Interest rates have been high, layoffs are making headlines, and trade policies are shifting. But what does all of this mean for home prices, inventory, and the overall market? In this update, I’ll break them down for you. Here’s what you need to know:

Why are interest rates finally dropping? For the past year, we've been dealing with some seriously high interest rates. They hovered around the mid to low 7% range for a standard three-year mortgage. The Federal Reserve has been pretty clear: for rates to come down, inflation needs to drop. Unfortunately, that often means job losses will be on the rise, and we're already seeing this happen. As more companies lay off workers, mortgage rates have started to dip slightly. Right now, they’re around 6.85%. It’s not a huge drop, but it shows that the market is starting to change.

Do job losses mean more homes for sale? One of the biggest ways layoffs affect real estate is through housing inventory. When people lose their jobs, they start looking at their financial situation, and for many, that means reassessing their homes. Do they need to sell? Are they in the right place? Can they tap into their home equity to stay afloat?

Right now, the good news is that homeowners have built up a lot of equity, which gives them options. But if more layoffs continue, we could see more homes hitting the market as people look for ways to adjust financially.

“More homes may hit the market due to job losses, but prices likely won’t drop sharply.”

What do tariffs have to do with real estate? Tariffs might not seem connected to housing, but they impact the economy in a big way. When a country adds tariffs, it can push trade partners to negotiate. However, this often leads to higher costs, slower trade, and economic slowdowns.

If trade slows down and the economy takes a hit, we could see more uncertainty in the housing market. A weaker economy can mean job cuts and lower consumer spending. As a result, more people will need to sell their homes.

Will home prices drop? While the market is changing, most economists still expect home prices to continue rising. The difference is that it will be at a slower pace than in previous years. This means that more homes may hit the market due to job losses, but prices likely won’t drop sharply.

The hidden impact of tariffs on new homes. If tariffs make construction materials more expensive, builders may slow down new home projects. That could balance out any increase in inventory caused by layoffs and keep supply relatively tight. Fewer new homes being built means buyers still face limited choices. It could help keep home prices stable despite economic uncertainty.

Basically, the real estate market is in an interesting spot; interest rates are shifting, layoffs are adding some uncertainty, and tariffs could have ripple effects. With that said, if you want to stay updated or have questions about these changes, don’t hesitate to reach out! You can call me at (949) 835-4713. I’m more than happy to keep you informed.