President Donald Trump’s tariffs on imported lumber and steel may make Bay Area’s already skyrocketing housing costs rise even more.
The Bay Area’s housing market is booming, but now builders are faced with escalating construction costs thanks to the Trump Administration’s tariffs, averaging 20 percent, on imported lumber from Canada.
"Ever since tariffs on lumber from Canada were put in place, we have seen the cost of lumber go up dramatically in the U.S.," said Sean Randolph, senior director of the Bay Area economic institute.
When apartments are finished, rents are likely to be higher than initially expected to pay for the additional construction costs of lumber. Even the cost of a new garage door could go up.
"In the past year we've seen lumber go up 40 to 50 percent, rippling to builders who are seeing a decreased margin," said David Logan from the National Association of Homebuilders.
Construction industry analysts said that decreased margin will likely translate into increased home costs. At Global Wood Source in Campbell, the cost of certain types of lumber is already going up.
"There’s a lot of demand for two by fours to build houses so prices are going up," said store owner Russ Jacobson.
Tariffs are not only impacting lumber, they are also hitting imported steel and aluminum. Developers are expected to pass those costs on the homebuyers, combined with other factors such as the cost of land, labor and regulatory fees.
Some housing industry analysts predict many in the Bay Area clinging to dreams of buying a home may now be completely shut out of the market.
There are also issues with fires burning trees used for lumber in the U.S., beetles and disease killing trees and a shortage of truckers. All things that can drive up the cost of lumber even more and add to the costs of housing.