Tariffs, Affordability, and the Charlottesville Real Estate Market

I’m no economist. But, I can read. And I can read people. Uncertainty is bad. Headwinds are bad.

Perception is often reality and when materials costs are higher, costs to build are more expensive, homebuyers’ prices will rise, and our community continues to want new homes “over there,”  the Charlottesville Albemarle community will continue to be an expensive, and more expensive, place to live.

Think about this uncertainty in the context of the residential construction ongoing in Charlottesville and Albemarle, the big buildings proposed in Downtown Charlottesville (West2nd, Charlottesville Technology Center, the Blue Moon Diner location, Quirk Hotel), and affordable housing.

The National Association of Homebuilders

Randy Noel, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from LaPlace, La., today issued the following statement regarding President Trump’s announcement to impose tariffs on steel and aluminum imports:

“It is unfortunate that President Trump has decided to impose tariffs of 25 percent on steel imports and 10 percent on aluminum imports. These tariffs will translate into higher costs for consumers and U.S. businesses that use these products, including home builders.

“Given that home builders are already grappling with 20 percent tariffs on Canadian softwood lumber and that the price of lumber and other key building materials are near record highs, this announcement by the president could not have come at a worse time.

“Tariffs hurt consumers and harm housing affordability. We hope the administration will work quickly to resolve these trade disputes regarding lumber and steel so that businesses and consumers have access to an adequate supply at a fair market price.”

 

From Inman News

Short on details and far from a done deal, the trade measure as outlined on Thursday would impose tariffs of 25 percent on steel and 10 percent on aluminum, raising the price of everything from canned beer and soda to automobiles and housing, not least of all skyscrapers and multifamily buildings deeply reliant on heavy metals, housing experts told Inman. “We’ve had a string of bad news for the housing market in just the past few months, and this is layering on top of that,” said Daren Blomquist, a senior vice president with the real estate data company Attom Data Solutions.

The WSJ

President Donald Trump burnished his tough-on-trade image last week by declaring he would impose tariffs on U.S. steel and aluminum imports. But the move could undermine another part of his “America First” economic agenda: Rebuilding U.S. infrastructure.

Realtor.com

Not knowing how much steel and lumber will cost makes it difficult for builders to price homes, or for buyers to know just how much they’ll be shelling out on their new abodes.

“It hurts home buyers,” says Rick Schumacher, editor and publisher of the LBM Journal, which covers the lumber and building materials industry. “It creates uncertainty … and any uncertainty is bad.”

National Review

The situation is worse for builders of large commercial projects such as office towers, which are much more steel-intensive than more residential developments. Reshuffling those bids causes chaos in the present, and it also adds to labor and administrative costs. One developer reports that his expenditures related to trying to outrace the tariffs already are running into six figures.

There are a handful of U.S.-based steel companies operating a relatively small number of facilities and employing about 142,000 people. That’s nothing to sneeze at, and we should wish them all well. But holding practically the entire U.S. manufacturing sector and construction sector hostage to the narrow corporate self interests of small but politically connected group of companies is deeply foolish. It’s also unjust.

But I suppose that’s only of interest to people who live in buildings or drive cars, or who consume products that are made and stored in buildings or transported via truck, train, ship, or airplane. And the shareholders and workers at Caterpillar, GM, Boeing, Ford, Toyota, United Technologies . . .

 

And this

Rick Schumacher, Editor and Publisher of the LBM Journal, which covers the lumber and building materials industry, told Realtor.com, “It hurts homebuyers. It creates uncertainty … and any uncertainty is bad.”

According to a survey of economists by the University of Chicago Booth School of Business, 93 percent of those surveyed either “Disagreed” or “Strongly Disagreed” with the statement, “Adding new or higher import duties on products such as air conditioners, cars, and cookies—to encourage producers to make them in the U.S.—would be a good idea.”

 

Some quick made-for-twitter data

In MLS, Charlottesville + Albemarle:

– 55 active listings
– Low of $288K
– High of $1.6M
– Low $/ft – $144
– High $/ft – $307
– Average $/ft – $207

$144/ft is for >$600K home.
$307/ft is for > $750K home

 

Also

Increasing gas prices
Increasing gas prices

 

 


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