Passive Impact: Real Estate Investing & Special Needs Housing
Welcome to "Passive Impact: Real Estate Investing & Special Needs Housing," where we explore how real estate investment can generate passive income while making a positive difference. Join host Robert Flowers as he shares strategies, success stories, and opportunities for investors looking to create financial stability and meaningful community impact.
Passive Impact: Real Estate Investing & Special Needs Housing
Tariffs and Timber: The Hidden Cost of Your Dream Home
Tariffs are significantly impacting the housing market by increasing construction costs and creating uncertainty for builders and buyers alike.
• Builder confidence at a seven-month low for new single-family homes
• Tariffs estimated to add $9,200 to the price of a new home
• 7% of products in new construction are imported and affected by tariffs
• Canadian lumber and Mexican gypsum specifically exempted from retaliatory tariffs
• First-time buyers concerned about the increased cost of appliances and fixtures
• Buyers being pushed further from city centers due to rising monthly costs
• Supply chain disruptions causing construction delays and additional expenses
• Significant tariffs remain in place despite some pauses, especially on Chinese goods
• Market uncertainty affects builder planning and potential housing supply
• Financial analysts recommend long-term investors stay the course despite market fluctuations
For expert consulting on starting your own special needs housing business, reach Flowers Associates at 901-445-8148 or visit flowersandassociatesbooking.com.
Welcome to the Deep Dive. Today we're going to tackle something that really affects a lot of us Tariffs, specifically how they're shaking up the housing market, and you know the cost of things we put in our homes.
Speaker 2:Right, it touches everything.
Speaker 1:Yeah. So, whether you own a home, maybe you're thinking about buying, or you're just curious about well, what makes the economy tick? We've dug into some recent reports to try and make sense of it all for you.
Speaker 2:Exactly. We've got info from ABC News and KPRC2 Click to Houston. Abc really zooms in on the home construction side of things and KPRC gives us that wider view, the bigger trade picture.
Speaker 1:So our mission here is basically to pull out the key stuff, clarify how these tariffs are actually hitting the housing market, affordability without getting bogged down in jargon or taking political sides on what the reports say.
Speaker 2:Just the facts laid out clearly.
Speaker 1:Before we jump in, though, a quick word about a great resource. Flowers Associates is helping bring you this deep dive.
Speaker 2:Ah, yes.
Speaker 1:If you've ever thought about starting your own special needs housing business for adults, which is incredibly rewarding work, flowers and Associates offers Expert consulting really guides you through it all.
Speaker 2:They really know their stuff in that area.
Speaker 1:Definitely. You can reach them at 901-445-8148 or just visit flowersandassociatesbookingcom. And you know, some listeners might remember Robert Flowers from our previous dives.
Speaker 2:Oh yeah, the author.
Speaker 1:Exactly Noted author. Titles like the Joy of Helping Others, Creating Passive Income Through Special Needs Housing. His insights have definitely come up before.
Speaker 2:A real expert in that field.
Speaker 1:OK, so let's get into it. Tariffs and home construction. What's the immediate vibe?
Speaker 2:Well, the ABC News report points to something pretty clear Builder confidence is down. Actually, it's at a seven-month low for new single-family homes.
Speaker 1:Seven months? Okay, that sounds significant. It's not just a feeling, then.
Speaker 2:No, no, it reflects real concerns. Costs are going up. There's this general uncertainty about what's next.
Speaker 1:Right, and we heard from that builder, alex Yost in North Carolina. Yeah, alex Yost in North Carolina.
Speaker 2:Yeah, in Raleigh.
Speaker 1:He's already having to rethink things right where he gets his materials from.
Speaker 2:Exactly he mentioned. Like even for light fixtures, you know before it might just be about the look, the quality. Now he's got to think.
Speaker 1:OK, where was this made? Are there tariffs? It actually narrows his choices. Wow, so global trade policy is literally affecting which light fixtures go into a house in Raleigh.
Speaker 2:Pretty much. And the report said what about 7% of products in new construction are imported.
Speaker 1:Yeah, 7%, which, okay, maybe doesn't sound like a huge number on its own.
Speaker 2:But wait till you hear the cost impact. They estimate these tariffs could add another $9,200 to the price of a new home $9,000.
Speaker 1:Ouch, For a lot of people that's a barrier. That could be the down payment difference.
Speaker 2:Almost it's a substantial chunk, absolutely, and it's hitting basic materials. We're talking steel, aluminum, copper, fundamentals, yeah, and appliances too, stuff you absolutely need.
Speaker 1:Now hang on. Didn't the report say some things were like exempted lumber and gypsum?
Speaker 2:Ah, good point. Yes, canadian lumber and Mexican gypsum were specifically exempted from retaliatory tariffs.
Speaker 1:Retaliatory, so like tariffs put in place because another country did something first.
Speaker 2:Exactly so. There was some strategic thinking there, it seems. And gypsum, just so folks know that's in drywall plaster cement, pretty key stuff.
Speaker 1:Okay, so that's some relief, but still lots of other materials. The prices are going up.
Speaker 2:Definitely, which brings us to the buyers. How are they feeling about this?
Speaker 1:Well, this was interesting in the ABC report. The first time buyers they talked to, they weren't initially super worried about tariffs stopping them from buying the house itself.
Speaker 2:Right, that surprised me a little too. The focus seems to be on that sticker price.
Speaker 1:But then they started thinking about. You know what makes a house a home.
Speaker 2:That's how they put it, the insides, the appliances.
Speaker 1:Yeah, Washers, fridges, dishwashers. Suddenly the tariffs on those imported goods, that hit home because it bumps up the total cost of getting set up and messes with that monthly budget.
Speaker 2:Exactly, it's the total cost of ownership, not just the purchase price and that realtor, Leonard Windham. He mentioned seeing buyers pushed further out.
Speaker 1:Further from the city centers. Yeah, Because those monthly costs are just creeping up.
Speaker 2:Which changes, commutes, changes communities. It all connects.
Speaker 1:It really does. And beyond just the cost. Now there's this other layer of worry, right about the future.
Speaker 2:Yeah, the uncertainty. The ABC report brought up the speculation like what if buyers pull back, If they get nervous about the economy because of all this tariff talk?
Speaker 1:Demand drops. And if demand drops, maybe builders slow down construction, which makes the housing shortage even worse than it already is in many places.
Speaker 2:Exactly, it's like a potential double hit Higher costs and fewer houses being built.
Speaker 1:Man? And what about the builders themselves? Alex Yost mentioned supply chain worries too, didn't he?
Speaker 2:He did Really practical stuff, like if he can't get cabinets on time because they're held up Right and every month of delay means extra cost, often for the client who might be paying for temporary housing. It's not just numbers, it affects people's lives directly.
Speaker 1:Yeah, that's a really crucial point. Yeah, ok, so that's the construction side feeling the pinch Increased costs, supply chain jitters, uncertainty.
Speaker 2:Pretty much sums it up. Now let's maybe zoom out. The KPRC2 report gives us that wider economic context. Ok, shifting gears. Cprc2 report gives us that wider economic context.
Speaker 1:OK, shifting gears. So President Trump announced a pause on some tariffs, but this is important, not on China.
Speaker 2:Correct. That's a key distinction. The pause didn't cover China. In fact, the report said tariffs on some Chinese goods actually went up.
Speaker 1:Right Got it and they had that analyst, mark Hamrick from Bankrate.
Speaker 2:Yes, his insights were interesting. He suggested the reason for pulling back on some of the other planned tariffs might have been worries about a potential burgeoning financial crisis.
Speaker 1:A crisis, wow. What indicated that?
Speaker 2:He pointed to the bond market. You know, when certain bond yields spike, like the 10-year treasury, it can signal investors are getting nervous, maybe foresee economic trouble ahead. That likely got policymakers' attention.
Speaker 1:Okay. So even with that partial step back, the tariff situation isn't exactly resolved.
Speaker 2:Not at all. Kprc emphasized that significant tariffs are still very much in place those higher China tariffs, potential auto tariffs, auto parts tariffs, even maybe pharmaceuticals down the line.
Speaker 1:And they mentioned a number $300 billion worth of import taxes still potentially kicking in.
Speaker 2:Yeah, it gives you a sense of the scale. It's huge. We're still looking at baseline a 10% tax increase via tariffs on a lot of goods, plus that 25% on certain Chinese items.
Speaker 1:Which ultimately could mean higher prices for us, the consumers.
Speaker 2:That's the potential outcome. Yes, across a whole range of products.
Speaker 1:The report used Apple as an example, didn't it? Because they rely so much on China?
Speaker 2:They did, showed how their stock took a hit from the trade tensions. It illustrates how these big policies ripple through major companies, the stock market, investor confidence.
Speaker 1:So the main takeaway there is even pulling back slightly didn't erase the risks.
Speaker 2:Pretty much Risks to the financial outlook economic growth, inflation. They're still there, maybe just held off for a bit rather than solved.
Speaker 1:And politically. Kprc mentioned the uncertainty around the why right. Is it negotiation? Is it long-term policy?
Speaker 2:Hard to tell Exactly. That unpredictability itself is a challenge for businesses trying to plan, for investors trying to gauge risks.
Speaker 1:So the market did rally a bit on the news of the pause.
Speaker 2:It did, which probably had a lot of people checking their 401ks.
Speaker 1:Yeah, probably, and Hamrick gave some advice for investors in that situation.
Speaker 2:Pretty standard. Solid advice really For long-term investors don't panic, sell during dips. It's notoriously hard to time the market getting out and getting back in right, stay the course. Basically, if you're near retirement, maybe double check your asset mix. Make sure it fits your timeline and risk tolerance. Younger folks generally write it out. Time is on your side.
Speaker 1:Okay, so let's try and wrap this up. Key takeaways for listeners.
Speaker 2:Well, first tariffs are definitely adding costs and complexity to building a home. Well, first tariffs are definitely adding costs and complexity to building a home. That likely means higher prices for new houses and maybe more immediately felt for things like appliances.
Speaker 1:Right, Even if the initial house price doesn't seem directly hit, for some buyers the total cost of setting up and owning that home goes up.
Speaker 2:Exactly. And second, the bigger trade picture is still well, it's murky. Tensions, especially with China, persist. Significant tariffs remain. Potential for more exists.
Speaker 1:Which carries ongoing risks for the economy as a whole Consumer prices, growth, all that.
Speaker 2:Yeah, so this stuff matters. Whether you're buying a house tomorrow or just trying to understand why things cost what they do, it's all connected.
Speaker 1:OK, so here's something to maybe chew on after listening. With all this uncertainty in global trade and how it clearly hits home, what kind of strategies might people, or even businesses, need to think about to navigate future bumps related to tariffs and shaky supply chains?
Speaker 2:That's a really good question to ponder. What does resilience look like in this environment?
Speaker 1:Definitely food for thought. Thanks for joining us for this deep dive.
