Trump Tariffs Effect on Housing Market in the Traverse City Area

Could Trump's tariffs make Northern Michigan homes more expensive? Recent economic headlines have sparked concerns among homeowners and potential buyers across Northern Michigan, particularly regarding President Trump's tariffs and those tariffs' potential impact on our local real estate market. Tariffs on imported steel, aluminum, lumber, and all construction materials typically increase costs for builders, and that eventually affects home buyers of existing homes. Because as the price of new builds goes up, an obvious alternative to building a custom home in our area would be to buy an existing home. So existing home prices typically do go up as construction prices go up. So that's something to keep in mind as we watch for what effects Trump's tariffs, especially on Canadian lumber, but really the China market is also a factor, how that will impact home prices in our area. You see, in Traverse City, Leelanau, and Benzie counties, these are areas known for steady new construction and renovations, so this issue is particularly relevant. I recently spoke with two different sources to get some insight into this. The first was Aaron Saws, owner and operator of Northport Building Supply, right here where I live and grew up in Northport. It's a local hardware store and lumberyard. Aaron shared that while there have been slight price increases on smaller items such as fasteners, in other words, nails, deck screws, that kind of thing, those come from China. The big-ticket items like the commodities and lumber and OSB and those kinds of materials, they have not yet experienced any significant price increases. He noted modest price increases in metal roofing but emphasized the difficulty in predicting future lumber prices, especially with builds planned to start in July. So he, you know, he hasn't yet seen any increases in prices of lumber, but he's saying, you know, they could be coming. And so I'm cautioning both builders and customers at his lumberyard that he can't predict— he doesn't have a crystal ball, can't predict what will happen to the future. And so if you've got a build scheduled to start in July, you want to factor that into your pricing model. And that's just what the next source I interviewed for this piece is, Will Andre, an estimator at Scott Norris Construction. Scott Forest Construction is a highly regarded builder known for quality custom homes in the Traverse City area, and he provided me with further insight. He said, quote, initially we had concerns about potential price hikes on Canadian lumber. And he said that although we primarily source lumber from within the United States, any significant price in Canadian lumber would indirectly affect the domestic costs. Makes sense that if Canadian lumber goes up, the demand on US lumber— if the US producers don't produce more, then you'll have an increased demand, same supply. We know how economics works. The prices are going to go up. But he said, fortunately, not yet seen lumber prices rise significantly. He continued and said that, however, we anticipate price increases for items such as lighting fixtures, many of which are manufactured in China. So So it's not just Canadian lumber, it's all where we source all the different components that go into building a home that can play a factor in increasing construction costs. He continued, "Given this uncertainty, we've proactively increased contingency allowances within our fixed-price contracts to cushion us against possible cost escalations." You know, due to the uncertainty of what will happen with prices as a result of tariffs, they've built in more contingencies within their construction contracts to help absorb any kind of price increases that might happen as a result of Trump's tariffs. He said that his clients are navigating significant uncertainty right now because they're caught between what could happen with these tariff-driven price increases, but there, on the other hand, are some lingering fears about an economic recession. So you have these two forces that are kind of working against one another right now that have kept the prices really stable. You've got the pressure, the upward pressure of Trump tariffs. You also have the downward pressure of fears of a recession. So prices so far have remained relatively stable, but is only good until the next day or the next thing that might come around the corner, right? So these factors suggest that homeowners considering renovations or selling their home might face reduced returns on their investment due to potentially higher material costs. Buyers, particularly particularly first-time homebuyers or budget-conscious buyers could face even tighter affordability constraints. Despite these potential impacts, Northern Michigan's real estate market has historically demonstrated resilience, driven by a strong demand for vacation and, of course, waterfront properties. While modest price increases may occur, drastic shifts remain unlikely in our stable real estate market. What does this mean for local buyers and right now. Well, buyers, consider your timing carefully. Negotiating sooner might lock in current favorable pricing. If tariffs do go into effect and home building construction prices go up, you can bet it won't be long before existing homes go up. So plan your strategy accordingly. Now, sellers, sellers, you need to monitor market developments closely and weigh your personal circumstances and your reasons for selling against the potential impact of either tariffs or an impending recession. Every seller's situation is unique. For example, a seller who's really motivated to sell because they're moving out of state and they can't afford to hold two mortgages at once. That situation is different. That's more of a sense of urgency to sell, and you really need to sell. More dependent on that particular personal circumstance than what might be going on in the market. So that's a different circumstance totally from someone who just inherited a home from their parents. Nothing is owed on it. They can sell it now or they can wait a year. That's a totally different type of selling strategy. So that's where local real estate agents come in. So as your local real estate expert, I track national economic policies and what's going on in the national economy, what's going on in the local economy and local market. And I can help you on a case-by-case basis. It's very, very important because each buyer or seller circumstance is absolutely different. It's very important for you to get connected with a real estate agent that you know, like, and trust, and who can advise you through your personal circumstance and interview and talk you, learn all about your personal circumstance, juxtapose that with what's going on in the local and national real estate market and the current economic trends, and come up with a tailored plan to help you make the best decisions you need to make in the market. So I'm here to help you navigate these changes with personalized insights. So you want to stay informed, stay proactive, and let's tackle any market condition that might come our way together. Thanks a lot.