Comment by newtonsmethod
2 days ago
I agree with the first half of what you posted, but immediately jumping to blaming tariffs in your last paragraph seems weak (and a slight attempt at a gotcha).
Concrete, gypsum and steel are primarily domestically produced. Similar goes for wood (although a substantial amount is imported, e.g. from Canada - the tariffs range from 25% to 50%). Labour & Materials may make up say 60% of the cost of a house, but only 50% of this is likely materials, with likely a minority of the materials tariffed.
What is likely to actually reduce rent and house prices is making development permission and laws more lax, as well as preventing rent control.
Tariffs on products like lumber and cabinetry were introduced or raise on January 1st of this year. It's an additional factor that will make a bad situation worse.
You can't tell me that increasing the pricing of construction materials won't have negative pressure on home construction.
> Materials may make up say 60% of the cost of a house, but only 50% of this is likely materials, with likely a minority of the materials tariffed.
And where does the construction equipment come from? The parts to repair that construction equipment? The parts that go into the trucks that the workers drive to the job site?
Focusing on a single input is myopic when the tariffs are so widespread that they touch everything.
I have agreed tariffs will have an effect, but I'm not being myopic.
Lot costs, builder profits, indirect labour (commissioning, financial and legal affairs, advertising) all are far less affected by tariffs. Machine costs could make up 15% of your "labour and material" cost but depreciation and repair purchases are still only 30% of this, with of course not all of this affected by tariffs.
It seems wholly reasonable to believe that the long term effects of a tariff policy like these on housing costs could indeed be in the ballpark of 5%, as I claim, because in fact housing development is less affected by this.
I'm not sure if you trust this for consensus, but you could try asking an AI to give an estimate of the long-term impact for you. Here's what Gemini 3 Pro said to "Estimate the increase Trump's current tariffs, if long term, would have on price of new housing developments."
> Total Home Price Impact: This translates to a roughly 3% to 4% increase in the final purchase price for the consumer.