Housing safety net
Following the recent announcement of tariffs by the Trump administration, global stocks took a hit and uncertainty looms over the economy’s direction.
“The stock market has experienced significant losses, with businesses expected to hold back on hiring and consumers on spending due to the administration’s tariffs and economic uncertainty,” said Lisa Sturtevant, the chief economist at Bright MLS.
For Stella, this could mean more canceled deals like Friday’s as potential homebuyers weigh economic risks against their desire to purchase property. Despite this, he believes it’s still a good time to invest in real estate.
“Real estate is a safe investment, especially during uncertain times,” Stella said. “In the Greater Boston area, we anticipate normal price appreciation of 2% to 5% this year.”
While some may share Stella’s view, there are conflicting factors influencing consumers’ decisions to buy a home. Economic conditions have cooled due to the tariffs, leading to job security and inflation concerns among home shoppers.
Although mortgage rates have decreased, some prospective buyers remain cautious about making a purchase.
Conflicting opinions
In different markets, the impact of the tariffs varies. Brian Huskey in Billings, Montana, notes that lower mortgage rates are encouraging buyers despite economic uncertainty.
However, Michael Nourmand in Southern California is skeptical that lower rates will drive a surge in home purchases, particularly for move-up buyers with existing low interest rates.
In Dallas-Fort Worth, Mandy Nichols hopes for increased buyer activity, while Mike Pappas is confident that sales transactions will continue despite market fluctuations.
Hobbled construction market
The tariffs are also expected to impact the new construction market, particularly in areas like Southern California that are rebuilding after wildfires.
Rising commodity prices due to the tariffs may lead to increased costs for builders and consumers, affecting the demand for new homes.
Stella predicts that some homeowners may opt to sell rather than renovate or add on due to rising construction costs, potentially adding inventory to the market.
While the full impact of the tariffs is still uncertain, builders are already quoting high prices for additions, prompting some homeowners to consider buying new homes instead.