Mortgage Research Network Podcast

Welcome to the Mortgage Research Network Podcast. This podcast brings you the latest in mortgage and real estate news 3 times a week. The audio is AI generated, but content is fact-checked by me, Tim Lucas, editor of MortgageResearch.com and a former mortgage professional. And with me is Craig Berry, a mortgage originator with 25 years experience. Craig, here's a surprising number: $30 billion. That's how much extra Americans are about to pay for housing thanks to some new tariffs that almost nobody is talking about.

Hold on, that's an enormous number. What exactly is driving those costs?

Well, the Brookings Institution just released this fascinating report showing how these new tariffs on everything from lumber to kitchen cabinets are going to hit the housing market hard. We're talking about a 10% tariff on imported softwood timber and 25% on things like kitchen cabinets and vanities. And get this, that 25% is scheduled to jump to 50% by January 2026.

So how does that translate for the average homebuyer?

According to the National Association of Home Builders, we're looking at about $10,900 extra per home. And that's probably a conservative estimate since it doesn't include the newest tariffs. And that's kind of adding insult to injury. Building materials are already up 34% since December 2020.

That's going to put a serious dent in people's renovation plans too, isn't it?

Oh absolutely. And here's where it gets really interesting. The Canadian lumber situation is particularly concerning. They supply about 85% of our imported lumber, and their tariff is about to more than double, going from 14% to 34% by year's end.

You know what's strange though? I haven't noticed prices jumping up dramatically yet at hardware stores.

That's actually one of the most fascinating parts of this story. The Yale Budget Lab has identified several reasons for this delay. Companies are stockpiling materials before the tariffs kick in. The Wall Street Journal just reported on these massive inventory buildups. Plus, there's this whole thing with delayed payments because tariffs don't apply to goods already in transit.

So we're basically in the calm before the storm?

Exactly right. And there's another layer to this. Some American businesses are currently absorbing these costs themselves. But as Eugenio Aleman from Raymond James points out, businesses price their goods at replacement cost. So when they need to restock at higher prices, those increases are definitely getting passed on to consumers.

That sounds like it could create some serious problems for affordable housing initiatives.

That's precisely the irony here. While the government is trying to make housing more affordable through various programs, these tariffs could potentially undermine those efforts. The Brookings Institution specifically warned about this contradiction.

So what should people do if they're planning to build or renovate?

Well, the experts are pretty clear on this. If you're planning any kind of home project, sooner is probably better than later. And here's something interesting that's not getting much attention. About 10% of tariffed imports might involve some form of avoidance or evasion, something the Yale Budget Lab proposed. Importers may be misdescribing some imports from Canada on their customs declarations to minimize their tariff liabilities.

That's quite a predicament for people who might need time to save up for their projects.

And that's really the heart of this issue. These aren't just abstract economic policies. They're decisions that directly impact people's ability to afford homes and maintain them. The next few months are going to be crucial as we start to see these policies play out in real time.

Looking ahead, what should people be watching for?

Keep an eye on those Canadian lumber prices - that's going to be our first real indicator of how this plays out. Also watch for any shifts in construction starts and renovation permits. Those numbers will tell us if these tariffs are actually achieving their intended goal of protecting American industries, or if they're just making housing less affordable for everyone.

Sounds like we're in for some interesting times in the housing market.

You know what's really going to be telling? How small and medium-sized construction companies handle this. They're the ones who typically can't afford to stockpile materials or absorb these kinds of cost increases. Their response could reshape the entire housing market landscape in ways we haven't even considered yet. That's about all the time we have for this topic, but we go into even more detail on the site. To learn more, type tariffs into the search bar at Mortgage research.com. We'll see you next time on the Mortgage Research Network Podcast.