Will tariffs raise house prices and mortgage rates even though we are in a buyer’s market? Most likely.

On April 2, President Donald Trump announced a broad set of tariffs, including a 10% baseline tariff on all imports and additional tariffs on specific countries. This move sent shockwaves through the housing market, raising questions about what comes next.

Key takeaways

• Tariffs are taxes on imported goods that make foreign products more expensive and encourage domestic purchases.

• A tariff is a tax that a government imposes on goods and services imported from another country. In this case, the U.S. would impose a tariff on imports from Canada, and Canada would, in return, impose its tariff on imports from the U.S.

• As construction costs rise due to tariffs, home prices may increase, and mortgage rates could follow suit.

With tariffs targeting imported materials such as steel and lumber, builders are facing rising costs, which are quickly passed on to buyers as higher home prices. At the same time, inflation resulting from these tariffs could drive mortgage rates higher, making homeownership even less affordable for many.

For homebuyers, investors, and real estate professionals, the stakes are high. As tariffs continue to shape the market, understanding the impact on mortgage rates and housing affordability is crucial, now more than ever. I

What are tariffs, and why do they matter?

Governments impose tariffs and taxes on imported goods to raise their prices and give local businesses a competitive advantage. The intention is to encourage consumers to buy domestic products instead of cheaper imported alternatives.

But here’s the catch: this price increase can have a ripple effect that reaches beyond the retailer and into your wallet, especially when it comes to homebuilding materials. For homebuyers and investors, this means paying higher prices for construction costs and essential materials, including steel, lumber, and appliances.

As these costs rise, so do new-home prices, making it harder for potential buyers to afford their dream home. Even investors can feel the pinch, as higher construction expenses can reduce potential profits on new developments.

How tariffs could affect mortgage rates

Tariffs can impact mortgage rates in various ways, presenting both opportunities and challenges for homebuyers and investors.

Implications of tariffs

The impact of the tariffs on the housing sector has been multifaceted. While some mortgage rates initially dipped following Trump’s announcement, overall uncertainty has made homebuyers and investors more cautious. This hesitation has slowed home sales and led to a more reserved market.

Key implications for homebuyers and investors

• Fewer affordable options for homebuyers: As construction costs rise, builders are raising home prices to offset higher costs. This could reduce options for buyers.

• Delayed purchases: As the cost of living increases, many homebuyers may delay purchasing, which can contribute to market stagnation and reduced inventory.

• Impact on new homes: For investors, the effects of tariffs extend beyond construction costs. While higher material costs strain new developments, there’s also a risk of project delays, as builders may struggle to secure affordable supplies.

• Global supply chain disruptions: If tariffs disrupt global supply chains, the cost of goods could rise, impacting everything from property maintenance to tenant amenities. This broader economic shift could make it more challenging for investors to maintain consistent cash flow and achieve long-term returns.

How homebuyers and investors can navigate the challenges of tariffs in the housing market

As tariffs continue to rise and potentially extend through 2026 and beyond, the housing market may face increased pressure, particularly with higher construction costs and mortgage rates. Here are some strategies to minimize the impact of tariffs on your homebuying and investing plans:

• Stay informed on policy changes: Monitor trade policies and tariffs to anticipate market shifts and adjust your strategies accordingly.

• Lock in mortgage rates early: With potential interest rate hikes due to inflation, securing a fixed-rate mortgage can save you money should inflation persist in the long term.

• Consider alternative construction materials: To keep construction costs down, utilize domestically sourced materials that are exempt from tariffs or import duties.

• Buy Canadian.

Note: I compiled the above information from writer Julia del Rosario and a comprehensive explanation from the Bank of Nova Scotia, titled “Understanding Tariffs.”

 There are income property seller mistakes that some owners may not even realize are occurring! Or, if so, they may stick their heads in the sand and plead, “There’s nothing I can do!”

I have been fortunate to help buyers who wanted to buy a condo or a 4-6 bedroom house near Western for investment, for their son or daughter, or for friends to move in. That way, it helps build equity or cover some of the expenses of getting an education.

Two wanted a medium—to high-end condo near Western for one of their children, and they could have a friend move in.

I have seen these mistakes before, but these buyers had not, and the most common comment I heard was :

“Do they want to sell this building (condo)?”

The most significant reasons we did not submit, or even consider submitting, an offer.

• The listing Realtor never called us back! Wow, as an owner, you and your Realtor have a $677,000 property, and they still don’t call you back after three attempts? (By the way, that building is still listed for sale!)

• My clients and I arrive, but can’t get into the rooms. The tenants say they were not notified or given enough notice. Whether the tenant is correct or not, it would behoove you, as a landlord or a Realtor, to ensure that ALL tenants are notified and reminded before a showing. Either by email, text, in person, smoke signals, notice on the door, telegram, fax, Morse code, or even Pokémon!

• In some 4-6-bedroom houses, we can only see one or two bedrooms because our keys don’t work!

• The stated rental income or the comment “If fully rented, the potential rent is” is unrealistic. In my experience, tell it like it is. Someone willing to buy your property is not dumb or lazy, and they want real numbers, no B.S.

• In one condo we saw, the fees were off by $113.00. There was one parking spot, not two, as indicated!

• Some will not cooperate with a Fire Marshal’s report or ESA Certificate. Some are not legal duplexes or triplexes. A Realtor or owner tries to tell me, “Don’t worry. It’s been like that for years; nobody will ever find out.” Yeah, right!

• Most Realtors had little experience with investment properties. Residential listings, investment listings, and even condo listings are pretty different. They can be more complex, and they require a different skill set to handle.

Diligence Should Not Be Difficult!

The above are just a few challenges. I haven’t even reached the offer stage yet!

Also, incorrect information was provided regarding property size, room sizes, taxes, outstanding work orders from the city, city violations of the building code, and three mortgages and liens on the building!

My clients and I cannot change the condition or situation we are dealing with, so it is unlikely any emotion will be helpful. I can’t change the obstacles; that part of the equation has already been set. However, how I approach them to find a solution is something that my clients and I can control!

So, ultimately, my clients found what they were looking for at a price point they were happy with.

If it sounds like I am ranting against the disorganized, lazy, and unwashed people who represent property sellers, I am. I also praise and thank the professional who is organized, diligent, has accurate information, and is willing to make the effort to ensure a transaction is completed. 

Preventing and fixing mistakes by income property sellers should not be a hassle!

More Income Property Tips & Prudent Things To Think About

Novice real estate investors make 12 common mistakes, and even experienced ones!

     Real estate investment has provided many investors with positive cash flow, tax benefits and the satisfaction of impacting others’ lives.  Like any investment, real estate has intricate nuances and risks!

Many wannabe investors are willing to part with their hard-earned cash without studying their investments. They rely on traditional trends and gut feelings. 

Take the time to learn all you can about your market. By aligning yourself with the right professional, you can avoid these 12 common mistakes and ensure an excellent return on your investment.

1.   Failure to determine the big picture – Why? Management, time, and energy are required.

2.   Not checking out the Seller or Seller’s Realtor’s  Numbers– Claims of extremely high rates of return run rampant in real estate investment.   Don’t get caught up in the excitement  – check everything: rents, payment history, taxes, expenses, deposits, & future modifications! Make sure you have the right Realtor.

3.   Forgetting You’re Buying a Business—Owning an investment property can create wealth, a loss and potentially problematic decisions. Evictions, reinvestment in the property, and time management need careful consideration. Remember, this is not a “hands-off” business.

4.   Avoid Negative Cash Flow—Property that consumes monthly cash can drain your working capital, creating stress and frustration and becoming quite painful.

5.   Failure to do a Thorough Inspection– Look under every rock! Ask the tenants about pest problems, structural damage or recurring problems. Don’t overlook anything! A value-driven real estate professional will help you find the right inspector and can help you avoid costly mistakes.

6.   Failing to Have Adequate Insurance—Investment property brings liability. This includes tenants, cars, parking lots, and property liability. Adequate insurance coverage is an absolute must!  

Six More To Go!

7.   Inspect, Approve, and  Confirm All Documents—The list of documents needing proof can overwhelm the first-time investor. Building permits, zoning laws, rental and lease applications, health licenses, laundry leases, underlying loan documents, by-laws, title policies, inspection reports, purchase contracts, and insurance—don’t attempt to do it alone. A professional can remove most of the stress and smoothly conclude the transaction.

8.   Get a Bill of Sale for All Property Involved—An investment sale can involve many types of personal property (appliances, furniture, fixtures, etc.). Be very detailed; know who owns what!

9.   Charge Fair  Rents–  Vacancies,  turnovers, and lease terminators are your most significant expenses. Charge fair rents, treat your tenants respectfully and respond quickly to their needs.  Vacant property is your Achilles’ heel.

10.   Select  Qualified, Good  Tenants From the  Start– Take the time to check references.    Previous landlords,  employers, financial references,  credit, and judgments are vitally important.  

11.   Make Sure  You get Tenancy  Letters– Get letters from tenants confirming the status of a tenancy. Ensure their rental or lease agreement version corresponds with the seller’s interpretation. (If you are adopting tenants from a purchase)

12.   Don’t Spend  Positive Cash  Flow– Successful investors have free and clear properties. Reinvest your cash flow into the property payment and speed up the amortization schedule.   This reduces your debt load and increases your equity, thereby boosting your net worth.

Investment property can be rewarding if your ducks are in a row!

Do your homework and, for goodness’ sake, work with a professional Realtor who knows income properties!   

Real Estate Investing The Right Way

Investing money is putting money into something to earn a financial return or future benefits. Do not lose money!

Read Why!