Tariffs Driving Up Costs For New Homes

Dated: 09/12/2019

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The California Building Industry Association is claiming that tariffs have driven up the cost of an average-size new home by $20,000 to $30,000.


That comes from tariffs on appliances, certain counter tops and other miscellaneous items that “at the end of the day, really add up,” according toDennis Fitzpatrick, owner of Fitzpatrick Homes in Modesto.


The industry is already struggling in California, because of increased costs rising fees from local government, a shortage of space & labor to build.


The added cost and uncertainty of tariffs have pushed it much further, builders say.


 “This created the perfect storm of the wrong kind,” said David Logan, director of Tax and Trade Policy at the National Association of Home Builders. “All the stars aligned for the worst outcome.”


The tariffs against China increased from 10% to 25% in May, on 500 items involved in housing, i.e. appliances, nails, lighting, laminate, tile, cabinets, other common finishes in housing made from aluminum, steel & lumber.


The home builders association estimates the tariffs will ultimately cost home buyers $2.5 billion per year nationwide.


Facing those costs, builders such as Fitzpatrick have to find other materials to use in homes or pass the charges directly on to their customers — those looking to build OR renovate their current homes.


While the tariffs are not the most cost-prohibitive part of building a home, particularly in California, they can price some families out of the market.


Dan Dunmoyer, president of the California Building Industry Association, said increasing the cost of $500,000 home in the state by even $10,000 would price out thousands of families.


The median price of a single-family home in California in June was $611,000 according to state data.


New tariffs are coming - soon. They don’t target housing products, but the builders worry the costs to consumers will make it more difficult for people to save up money for a down payment.


Logan says the long-term effects of these tariffs could choke off new construction, and they’re leading builders to focus on catering to people with higher incomes or encouraging those with moderate incomes to build with less space.


Fitzpatrick said his company has stopped offering some products, such as quartz, because of the tariffs.


If customers ask for it, Fitzpatrick said the company warns them it will cost them a lot more.


Already, the inflationary tendencies of tariffs have meant many distributors will increase costs before a tariff has gone into effect, Fitzpatrick said.


If a project will take a year or more, distributors anticipate a tariff might happen and therefore increase costs to cover that possibility.

*Information Source:  Dan Dobbs and the OC Register

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Kelly Bojarski

My Story: WHY DID YOU BECOME A REALTOR KELLY? "Real Estate has been in my family for over 30 years. I married a Broker/REALTOR and really learned about the practices of Real Estate during that time....

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