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.

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.

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.

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 been slowly trending downward, with the 30-year fixed currently around 6.65%, according to Freddie Mac. The Federal Reserve has already enacted three rate cuts since late 2024 and is expected to cut rates at least two more times this year, which could push borrowing costs even lower.

Lower rates make a big 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, which could re-open the door to homeownership for many buyers currently on the sidelines.
But here’s where tariffs come back into play: they could influence mortgage rates in different ways, depending on how the broader economy responds.

President Trump has indicated he’d like to bring down long-term bond yields (which influence mortgage rates).  This can be done in several ways: reducing the federal deficit, curbing inflation, slowing economic growth or some combination of these. However, tariffs themselves can be inflationary—by raising the cost of imported goods—which could put upward pressure on rates if the economy does not slow down.

If tariffs do slow down the economy, and tip us toward a recession, mortgage rates could fall more sharply as the Fed moves to stimulate growth, which would make housing more affordable.

Final Thoughts: Keep an Eye on Rates, Not Just Headlines
Tariffs may get the headlines, 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 showing signs of 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.