Are we in line for another bubble burst? Real Estate prices have increased substantially the last two years and many experts predict we might be due for a regression. Mortgage Rates have increased and probably will continue to rise. The average 30 year mortgage is now about 4.25% and likely to rise.
The US housing industry is in the crosshairs of President Donald Trump’s planned tariffs steel and aluminum.
The National Association of Homebuilders was among several trade organizations that spoke out against the tariffs, or import taxes. That’s because higher steel costs would raise construction costs for its members, which could eventuallycould be passed on to homebuyers.
The construction industry is no stranger to tariffs. In April 2017, Trump slapped the first tariffs of his presidency on five Canadian lumber companies, ranging from between 3% to 24%. The tariffs were in response to Canada’s restrictions on the import of US dairy products.
Lumber prices have gained 31% since then, according to Bloomberg data. And now, homebuilders may have to add higher steel costs to the mix.
As things stand, they’re unable to meet demand for housing, and this imbalance has driven a shortage of affordable housing in many major cities.
Of course, by driving construction pricing higher this could increase the shortage of new housing developments which in turn would mean that Real Estate prices are not going to burst but instead rise higher. Lack of inventory could push values higher.
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