What Do Tariffs Have to Do with Orange County Real Estate?
A reality check with HC
Go deeper than clickbait and get informed, right here.
Why Global Tariffs Still Matter—Even in Orange County Real Estate
When you think of tariffs, your mind probably goes to global trade wars and headlines—not home buying in Orange County. But believe it or not, international tariff policies can have a ripple effect on real estate. The good news? For our market, the impact may be less dramatic than you think—and there could even be some positive movement ahead.
With the (newly extended) August 1 deadline looming for key U.S. trade negotiations, and the Trump administration threatening to raise tariffs to as much as 50% on countries that haven’t reached a deal, it’s worth understanding how this could indirectly affect our housing market.
Let’s dig into how it all connects—and what it means for you.
How Tariffs Affect Construction Costs
At first glance, tariffs on imported materials—like lumber, steel, or appliances—might sound like a red flag for homebuyers. After all, if builders pay more for materials, wouldn’t that push home prices even higher?
Yes… but only slightly.
According to the National Association of Home Builders (NAHB), imported goods make up just about 10% of the materials used in residential construction. And in a high-cost area like Orange County, the bulk of a home’s price comes from land, labor, and permitting—not drywall or timber.
So while tariffs can nudge construction costs up, their effect here is relatively modest. What really moves the needle in our market are factors like mortgage rates, inventory, and buyer demand.
That said, if no trade deal is reached by August 1, we could see another round of cost increases down the line—especially for goods sourced from the EU or countries that remain outside U.S. agreements (currently, only the U.K. has signed a deal).
What About Mortgage Rates?
This is where things could get brighter for buyers—but also a bit more complicated.
After peaking at 7.04% in January 2025, mortgage rates have adjusted slightly downward, with the 30-year fixed currently around 6.8%, according to Freddie Mac. The Federal Reserve has enacted three rate cuts since late 2024 but with new higher inflation levels, the outlook for another rate cut in 2025 does not look promising.
Mortgage rates are what make the biggest difference. For example:
A $1.3M home at a 7% interest rate = ~$8,650/month (P&I)
That same home at 6% = ~$7,790/month
That’s $800+ in monthly savings! An eventual rate cut is what would loosen up affordability for many buyers currently on the sidelines.
But here’s where tariffs come back into play: they can influence mortgage rates in both directions, depending on how the broader economy reacts.
The Trump administration has suggested that higher tariffs are a tool to force better trade terms—but they also come with potential side effects. If tariffs raise the cost of imported goods, that can fuel inflation as we may be starting to see now, which may push interest rates up. On the other hand, if the tariffs slow the economy too much, the Fed could step in with more cuts to stimulate growth—which could bring rates down further.
Either way, the outcome of trade negotiations in the coming weeks could shape the trajectory of rates heading into the second half of 2025.
Final Thoughts: Keep an Eye on Rates, Not Just Headlines
Tariffs may be making the headlines again, but in Orange County, mortgage rates and local supply-demand dynamics will always have a bigger influence on affordability and pricing.
If you're thinking about buying, selling, or just staying informed, now is a great time to tune in. Rates are softening, buyers are watching closely, and sellers may soon be seeing more action at open houses.
Stay optimistic—but stay strategic. And as always, we’re here to help you navigate the shifts with clarity and confidence.