As conversations around new U.S. tariff policies continue, it's important for both homebuyers and sellers in California to understand how these economic shifts could impact the real estate market. While tariffs may seem far removed from home transactions, the ripple effects especially in a state like California with a strong global trade presence can be surprisingly close to home.
California's Role in Trade: Why It Matters
California is one of the most trade-reliant states in the country. Our economy thrives on both imports and exports everything from tech and agricultural goods to manufacturing and logistics flow through our ports and highways. With major trade hubs like the Port of Los Angeles and Port of Long Beach, tariff changes can have a direct impact on the cost of building materials, availability of consumer goods, and the health of the job market.
Tariff increases on key goods like steel, copper, appliances, and drywall materials are already pushing up the cost of new construction. According to the National Association of Home Builders, new homes could cost an average of $9,200 more because of recent tariff hikes. That cost is likely to be passed down to buyers. In high-demand markets like Los Angeles, where affordability is already a concern, this could price out more first-time buyers or slow new development projects.
What This Means for California Buyers
If you're in the market to buy a home in California:
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Expect slower inventory growth: Rising construction costs could delay or limit new builds, tightening inventory even further.
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Watch for higher prices on new homes: New construction may carry an even higher premium as builders adjust for imported materials.
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Keep an eye on mortgage rates and inflation: Tariff changes can influence national inflation trends, which in turn affect interest rates. Budget accordingly.
Advice for Buyers:
Act sooner if you can. With material costs rising, waiting could mean paying more for the same home later. Explore existing homes or off-market deals to find value outside of new builds.
What This Means for California Sellers
If you’re thinking of selling:
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You may benefit from reduced competition: If new construction slows down, resale homes will become more attractive to buyers.
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Job market shifts could affect demand: California’s trade and tech sectors are tied closely to global supply chains. If tariffs disrupt these industries, some regions could see job loss or slowed migration—two factors that influence housing demand.
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Migration trends matter: Buyers from less trade-sensitive states may continue moving into California for knowledge economy roles, retirement, or lifestyle shifts. Highlight these benefits in your marketing.
Advice for Sellers:
Position your home as a strong value alternative to new builds. Focus on updated features and cost-savings compared to rising new construction prices. If your area has strong job growth or lifestyle appeal, highlight that in your listing.
Final Thoughts
At the end of the day, real estate is about people not just policy. As economist Nadia Evangelou of the National Association of REALTORS® put it, “The housing market thrives where people want to live and work, not merely where goods are produced or shipped.”
California, with its blend of innovation, climate, and cultural pull, will remain in demand but staying informed on how trade policies affect construction costs, job markets, and migration patterns will help you make smarter buying or selling decisions in 2025 and beyond.
