Housing Safety Net
This week, global stocks plummeted shortly after the Trump administration’s tariff announcement, and uncertainty rose as to where the economy was heading.
“The stock market has had its biggest losses since 2020. The expected impact of the administration’s tariffs, along with general economic uncertainty, means that businesses can reduce employment and individuals and families can reduce spending.” Bright MLS, He said in a statement.
For Stella, this means that Friday’s cancelled deal might be just the tip of the iceberg as more future home buyers begin weighing economic risks in their desire to buy the property. But with that being said, he believes this is a good time to buy real estate for someone who still can.
“I don’t know much about the global market, but I know that real estate is a safe port investment. So if the times are uncertain, buy the property,” he said.
In the Boston region, Stella expects home values to increase by 2% to 5% this year.
“It’s a safe place to spend money,” Stella said. “I think real estate will be a more valuable investment for your dollar compared to customs.”
While some consumers may agree with Stella, there are many contradictory factors that contribute to whether or not they ultimately rush to buy a home.
On the one hand, the cooling economic situation caused by this week’s tariff announcement will lead to an increase in uncertainty surrounding job safety and inflation. This makes home shoppers like Stella’s clients think a lot before buying a home. However, these same slow economic situations have led to mortgage rates reaching some of the lowest levels of this year.
With many buyers sitting on the sidelines, they are waiting for a lower fee, so it remains to be seen whether the latest decline will cause transaction levels to jump.
“While the announcement of tariffs has lowered mortgage fees, those lower fees may be cold comforts for prospects who are increasingly worried about employment security and inflation,” Sturtevant said.
Conflict opinions
Broker Owner Brian Husky American real estate of the era,Buyers in some markets recognize that they may be heavily affected by the stock market. But in his Billings market, Montana, he said consumers are happy to welcome a decline in mortgage rates despite macroeconomic uncertainty.
“I’ve been getting calls from three or four buyers today and I’m really excited about the interest rates being lowered,” Huskey says. “The market here has been frozen throughout the winter, and I think these charges are helping us to reach the point where it can really be opened again.”
Huskey added that his market has many small business owners who feel optimistic about the lower interest rate outlook. This should make them more affordable for them to borrow money and grow their business.
In Southern California, Michael Noormand, president Nourmand & Associatesview things a little differently. Unlike Huskey, he is not sure that a wave of consumers will be enough incentive to buy a home.
“Buyers have become used to assess hovering in the 6% range. Whether they’re in motion or not, I haven’t changed much unless they’re down much,” Nourmand said. “It’s still very difficult for move-up buyers who may be in their current home at a 3% interest rate.
“In addition to the higher rates, they also have transactions and travel costs to consider. The insurance costs for new insurance are more expensive than renewing your current insurance.”
In Dallas and Fort Worth, Texas, the home plunged out of the market with multiple offers during the pandemic. That’s not like that anymore, and Brixstone Real Estate Agent Mandy Nichols is pleased to welcome the influx of buyers.
“I remember when I couldn’t find a home in Coryville, but now I’m over 80 in the market and I’ve had nearly two months in the market,” Nichols said. “I hope the market picks up this spring. The market is odd now.”
Nichols wants to see more buyers, but she is not sure how the latest wave of economic uncertainty will affect consumers in her area.
“I don’t know if people are just waiting to see what happens or if they’re waiting for school to leave, but it’s late now and I don’t know if that will improve,” Nichols said. “I’m just confused by the whole thing.”
Nichols said activity increased in mid-March during spring break, but activity has recently declined again, even if mortgage rates fell.
Mike Papas, CEO of Keyes CompanyWe are also unsure about how things will unfold in the housing market, but we are sure sales transactions will continue to occur, whether they are not at the level agents or brokers want to see them.
“We see changes in our lives being carried over and people who are hesitant to sell can no longer wait,” Pappas said. “We see inventory rise and more individuals on the market for death, divorce, babies, marriage. Everything that happens in life is a real reason why people buy and sell.”
The construction market that has been stepped into
The Trump administration’s tariff announcement is expected to have a direct impact on the new construction market, in addition to indirectly affecting the current level of economic uncertainty experienced by home buyers.
In Southern California, which is heavily affected by the Los Angeles wildfires, Nourmand expects a rise in product prices for builders to hit consumers even more difficult than in other parts of the country.
“You have tariffs, one way to make things more expensive, but then you have an entire town (probably hundreds of thousands of homes) that you need to rebuild at the same time.
If residents try to rebuild their homes and their lives in places like Pacific Palisades, Nourmand believes these rising costs will affect the number of people who decide to build a new home.
“Demand for the land will fall,” he said. “Construction costs rise and once a timeline of 18-24 months is built, there is a huge amount of uncertainty about how much it will cost to complete the project.”
Stella also sees the world where existing homeowners who have made their homes bigger and bigger choose to sell, a reversal of what many did when interest rates first began to rise in 2022 and 2023.
“The cost of wood, steel is all expected to rise, and that cost will be handed over to consumers. So, if you have a younger family and need more space, instead of adding it, you might actually go buy another home,” he said.
It’s still a little early to grasp the full impact of the tariffs, but Stella said she heard that most builders in his area are citing homeowners between $700 and $1,000 per square foot for additional.
“It’s too expensive, but it may help add stock to the market, so it may not all be bad news,” he said.
