Why Tariffs Matter, What They’ll Do to Housing Costs, and How to Win Anyway

What’s Going On With Tariffs?

Trump’s back—and so are tariffs. But this time, they’re bigger than ever. Starting in February, the Trump Administration began rolling out global tariffs on imports from China, Europe, Canada, and Mexico. 

By April 2nd, China alone faced a 125% total tariff from the U.S., after multiple hikes. For the rest of the world, tariffs were reduced to 10% for the next 90 days.

So what are tariffs, and why should you care?

Tariffs Are Taxes on Imported Goods

Tariffs are basically taxes on imported goods. That means prices go up on everything brought in from other countries—things like washing machines, HVAC systems, phones, lumber, steel, and plumbing supplies. Basically, all the materials you need to build and renovate homes or apartments just got a lot more expensive. 

Let’s look at an example. If a washing machine costs $500 and is hit with a 25% tariff, the U.S. retailer owes $125 in tax. That cost usually gets passed on to you, the buyer. Now imagine that same cost increase across every piece of a house. That’s the situation we’re in now.

What This Means for Real Estate and Housing

Originally, taxes were levied on every imported good. This included things like lumber. Although those tariffs have been lifted on certain construction materials, we’re still feeling those price increases right now. 

At the time of writing this, lumber costs are up 63% for products like 2x10s. Steel is up 18%. HVAC and plumbing costs are up 12–15%. All of these increases hit one industry especially hard: real estate.

If you’re building homes or apartments, this is a big deal. The National Association of Homebuilders estimates that these tariffs add about $9,200 to the cost of building a typical single-family house. And multifamily buildings? They’re hit too.

But it’s not just about cost. It’s also about access. Just like during COVID, supply chain delays mean sometimes it doesn’t matter how much you’re willing to pay—you simply can’t get what you need.

All of this leads to one big problem: It’s getting harder and more expensive to build housing. That drives prices up for both buyers and renters. And since builders are avoiding affordable housing and focusing only on luxury (Class A) units, the gap between owning and renting is growing. It’s now the widest it’s been in 30 years—and it’s still getting wider.

That’s bad news for everyday Americans. But if you already own rental property—or plan to—it’s leading to an opportunity. Why? Because higher home prices mean more people will rent. And higher construction costs mean fewer new rentals are being built. That’s a perfect storm that drives up rental demand … and rental income.

How Smart Investors Should Respond

If you own real estate, especially rentals, the near future looks rough. Prices will increase, but so will demand. Supply is shrinking. And the cost of homeownership is getting out of reach for many people.

But if you’re doing construction or renovations—especially value-add projects—you need to plan for rising costs. Add at least 10% extra cushion to your construction budget to stay safe. And if you’re analyzing new deals, assume higher materials and labor costs. It’s better to be conservative now than to be surprised later.

Long-term, this trend isn’t going away. Permits to build new apartments are down over 50% in the last 18 months, and still falling. That means affordable housing will stay limited, and rental demand will stay high. If you're thinking about scaling your portfolio, now is the time to move.

If you’re owning or getting into the real estate business and you have rental properties – either single-family homes or multifamily – then you’re going to see the demand for that housing go up, because it’s so expensive to build something. 

If you're serious about scaling your real estate portfolio, now is the time to get into multifamily.

Want help making the leap?

Check out our free masterclass, Apartments 101, where we show you exactly how to go from single-family investing to owning apartment buildings—and how to use that to become financially free in just 1–2 years.

👉 Click here to join Apartments 101 and take your next step toward financial freedom.