Trump announced earlier this year that he would be placing a tariff on certain imports. Imported steel and lumber were some of those items and these two items play a major role in housing construction. What does this mean for future homeowners?
What is a Tariff?
First off, a tariff is a tax on foreign goods. When there is a tariff on an item, it costs more to bring it into the country that placed the tariff. If items become more expensive, prices will have to go up or it will eat into the company’s profits.
How Does This Affect The Housing Market?
Trump’s Tariffs can affect the future of housing. This is because he placed a tariff on imported steel and lumber, among other items. When the cost of materials to build something increases, the prices have to adjust. The imported steel tariff did not drive up the prices of homes too much. The tariff placed on Canadian lumber did most of the damage. This is because most US homes are primarily built from wood, which has suddenly become more expensive.
What Does This Mean For Us?
For homeowners, this means that your home’s value just went up. Home values are determined by the selling price of similar homes in your immediate area. If selling prices are going to increase, then your equity will, too. Similarly, if housing prices are going to increase, there’s a good chance the cost of rent will also go up.
What Should We Do?
If home ownership is something that you want in the near future, I would say the time to act is now. While these tariffs are promoting American products, it is increasing the cost of homes. It might be a permanent change, but it could also be temporary. Knowing President Trump and his views on outsourcing jobs, this seems like something he is passionate about and he probably won’t back down easily. While it does make buying a home a little more difficult, we’re hoping that it works out in the end and creates more jobs in America, since the demand is there. If you’re interested in purchasing a home before prices go up even further, check out Quicken Loans. They’ve made the process easy, simple, and fast for people who want to buy their home while it’s still affordable.
If you already own a home, your equity will most likely increase. If you want to take advantage of your equity, you could either sell your home or get a cash out refinance loan. You can read more about that here.