Uncertainty over new tariffs is creating challenges for home builders and real estate developers in Southern California, especially in areas recovering from the January wildfires. Many builders are struggling to plan their budgets because they don’t know how much construction materials and appliances will cost in the coming months.
The situation is particularly tense for contractors dealing with imports from China, where products like windows, doors, plumbing, and lighting fixtures are facing tariffs as high as 145%. This has already led to increased prices, frustrating builders and homeowners alike. Cory Singer, a general contractor overseeing multiple rebuilding projects in Pacific Palisades, expressed his concerns, noting that suppliers are raising prices daily. He is advising clients to prepare for higher costs and is even recommending they buy materials now and store them for later use to avoid future price hikes.
The wildfires have devastated an estimated 16,000 homes and businesses, leading to a significant construction boom in the Los Angeles area. However, builders are also worried about material shortages and rising costs for essential items like lumber and bathtubs. Many are adding a contingency of 5% to 10% to their budgets to account for what they call “market volatility.”
The confusion surrounding tariffs is making it difficult for builders to make long-term plans. Bryan Wong, CEO of San Gabriel Valley Habitat for Humanity, shared his anxiety about the unpredictability of the situation, which complicates efforts to assist low-income homeowners looking to rebuild. Frequent changes in policy from the Trump administration contribute to this uncertainty, making it hard to predict how tariffs will affect the construction landscape.
Anirban Basu, chief economist for Associated Builders and Contractors, pointed out that the construction outlook had been promising at the start of the year, but the current tariff situation is dampening that optimism. He noted that while some prices have fallen, the overall economic picture is not as bright as it was just a few weeks ago.
The construction labor force is also feeling the strain, with many workers hesitant due to fears surrounding immigration policies. Basu emphasized that the industry relies heavily on foreign-born workers, and the current climate is creating additional barriers to finding labor.
Despite these challenges, some builders remain hopeful. Andrew Slocum, who is managing several rebuilds in the fire-affected areas, noted that while they are not experiencing immediate pain from the tariffs, they are concerned about future developments. He emphasized the need for clarity to make informed decisions going forward.
As the situation unfolds, the real estate industry is bracing for potential impacts on housing affordability and construction costs. Builders and developers are calling for a clearer understanding of tariffs to help them plan effectively and support the rebuilding efforts in Southern California.