Build your next home out of galvanized pipe
So what will be the impact on domestic housing of those tariffs the White House is so keen to impose on our biggest trading partners (and everybody else)? Prices of materials rise and fall all the time, due to availability, shipping costs, demand spikes or drops, and other reasons. So uncertainty is the name of the game. Nonetheless, back in February, estimates were that home construction costs could be boosted by 4–6 percent over the following 12 months as a result of the tariffs, according to a recent report from Cotality. In April, the National Association of Home Builders/Wells Fargo Housing Index reported that builders estimate “an average cost increase of $10,900 per home due to recent tariff actions.”
“Already, the average cost of new construction in the U.S. is $422,000,” said Cotality. “Adding in potential material cost increases from the tariffs would add between $17,000 and $22,000 to that price tag.”
Multiply that by some number to account for a typical San Francisco home price, and it starts to look like real money. Out of your pocket.
Cotality reports that for the year ending in January 2025, prices had already increased for many basic building materials: rebar (up 5.7 percent), concrete block (7.2 percent), steel studs (6.6 percent), and aluminum conduit (12.5 percent). You might be able to substitute those with items that dropped in cost, such as galvanized pipe (down 8.6 percent), but you probably don’t want your whole home built out of galvanized pipe, not even just your steel deck (up 11.2 percent).
Which brings to mind the Germans in World War I and II, when the country got quite creative using “ersatz” materials to replace things that were in short supply due to the war. So, acorns instead of coffee beans; paper fiber for canvas, potato meal and even sawdust for bread. The Germans might have lost the wars just so they could get back to peacetime real products.
Anyway, the price increases noted from January were before Trump’s tariff announcements. Cotality says, “New tariffs on Chinese steel could alter project budgets by double-digit percentages,” particularly hitting commercial construction. Meanwhile, about 25 percent of cement is imported, so maybe use some of that galvanized pipe for the driveway.
Anything that retards new housing growth just adds to the pressures boosting the cost of existing housing purchases or rentals.
Sotheby’s Arielle Dixon wrote in early April that the cost of 1,000 board feet of lumber, which was $430 in 2018, is estimated to be $580 with the tariffs. Says Dixon, “California’s affordability crisis is nothing new, but the added weight of tariffs could slow the pace of development just when more housing is needed most. With fewer projects penciling out, supply gets even tighter. That means more competition, and in many cases, rising prices.”
Of course, anything that retards new housing growth just adds to the pressures boosting the cost of existing housing purchases or rentals.
Headline of the week
“The Bay Area’s real estate market is flashing a key warning signal” (San Francisco Chronicle)
Go figure
$19,500: increase in median cost for a U.S. home in 2024 (Cotality) . . . 17 days: length of time it takes for a San Francisco home to sell (Redfin) . . . 768,000: San Francisco’s estimated population in 2025, down 102,000 since 2020 (World Population Review) . . . $204,625: San Francisco’s average household income (World Population Review) . . . $8,020: monthly mortgage payment for San Francisco homes in the fourth quarter of 2024 (National Association of Realtors) . . . almost two-thirds: number of U.S. renters who live with negative cash flow (USA Today) . . . $1 million: cost of a two-bedroom condo at the new 80-story Trump Hotel & Residences Dubai, which includes a free 10-year “golden visa,” though it’s not specified which country it’s for (Independent) . . . $3 million: amount of investor deposits for properties taken in by a real estate broker in Chicago. He described himself as having an “innate sense of what people want in a home, keen eye for the potential of space and acute market savvy combine[d] to bring about exceptional results for buyers and sellers alike. . . . He is a dedicated, motivated, efficient professional who wastes no time in showing buyers great properties and helping sellers attain the highest price for their homes.” Earlier this year he was sentenced to 50 months in prison, because the properties in question were not actually for sale (Crain’s Chicago Business).
Say what?
“Do we want to live in a museum or do we want to live in a city?”
— Jane Natoli, organization director of YIMBY Action, on a proposed San Francisco rezoning plan