Stressed About Tariffs? Time to Fix Your Focus
I cannot let this week go by without addressing what everybody is seeing in the news and that is tariffs. Although tariffs on Canadian lumber have not increased further at this time, the reality is that the impact of expansive, across-the-board tariffs is starting to be felt both in our economy and on the housing market.
Now tariffs aren't anything new, but the aggressive push for tariffs and the widespread application of them has greatly increased global awareness of them into overdrive and freaked-out some of our financial institutions like the stock market. That means you may have some clients that say, "I can't buy right now, I've lost a lot of money!" They should be very careful how they approach that and remember that stock markets go up-and-down; unless they turn their stocks into money, they haven't truly lost anything yet.
What is Next?
So, what's going to happen next? Some of these tariffs are so high that I think this is a negotiating tool to get us to an overall 10% tariff increase. Regardless, your clients may be worried about tariffs and buying (or building) a home. In response, I'm starting to see the renovation market go up.
This isn't just because of tariffs, it's also because a huge amount of housing product out there - about 40% - is of an age where they need to be renovated. Furthermore, we've created this perfect storm where people don't want to sell their older homes because they have great mortgage rates. Add to that today's tariff wars putting upward pressure on the price of goods and the Federal Reserve isn't going to be lowering rates any time soon. Borrowing costs will remain high and continue to make it harder for mortgage businesses to competitively reduce their own rates. The end result is homeowners sitting on property unless they have a reason they have to move.
The Language of Opportunity
The market is going to be a little interesting. You're going to have some of your clients asking you about whether they should be renovating instead of selling. Watch for that to come your way. Yet, this too will pass, so try to be the calm and reasonable voice in the room and focus on the moment of the market and the opportunities that are out there. Not a lot of sellers? The opportunity is less competition. Not a lot of buyers? That means the opportunity is we can prepare the home right for top dollar and we'll know those buyers are more serious buyers. Interest rates not down enough? Learn to compare the cost of staying against the cost of being somewhere the owner would rather be. Learn how to speak the language of opportunity.
People need to buy and sell real estate every day and you should be positioning yourself to help them solve the problems that are getting in their way.
One of the challenges that we have with housing, and why I'm so sure this tariff war will settle down soon, is that we don't have the ability to build manufacturing plants as quickly as some people think. It takes years. The other issue is, we already have a severe shortage of labor in new construction. We're not just going to be able to build manufacturing plants and bring our global product manufacturing to life here in the United States in the next year. That puts the pressure back on tariffs to come down again. Yes, we are in this tariff war, but I do think it is a negotiating tactic and that it will settle down.
Keep It Local
So, be aware that this is what some of your clients are seeing and thinking about – and they need you to keep it local. Stop thinking globally. Let the countries worry about the tariffs and focus on your local market and how you can help your clients. Real estate is local and you have clients that need to buy and sell. If all the talk about tariffs is stressing you out, maybe watch the news just a little bit less and focus on navigating your local market.
 By Denise Lones CSP, CMP, M.I.R.M. |
Comments(9)