The $7,885 Home Tax: Tariffs Explode Housing Costs

Welcome to "the WiRE" Episode #34, dated August 4, 2025, where we provide an overview and analysis of last week’s top real estate news to inform and motivate top-performing, experienced agents and brokers.

This week, we confront the significant financial impact of recent tariffs imposed by President Trump’s (currently serving his second term as U.S. President) administration. UBS estimates that these tariffs could raise the average cost of a single-family home by $7,885, directly impacting affordability for potential buyers. These "home taxes" are not only exploding housing costs but are also upsetting financial markets more broadly.

The broader housing market is currently experiencing a period of significant stagnation. Experts predict that the market could remain "stuck until 2026," creating challenges for both sellers and buyers. CNBC reports that "U.S. homes are sitting and not selling," underscoring the difficulties in moving inventory. This is further supported by Compass CEO Robert Reffkin, who noted on July 31st that "there's more inventory than any time in the last six years," indicating a shift towards a buyer’s market in some segments. Despite a weak jobs report fueling speculation for further rate cuts, the Fed has continued to resist pressure to lower rates at its July meeting, opting to hold them steady. This stance, while aimed at combating inflation, has contributed to mortgage demand dropping to its lowest level since May, further slowing transactions.

In terms of real estate industry dynamics, the competitive landscape among brokerages is intense and evolving. eXp Realty (pronounced E. X. P. Realty) and LPT have recently celebrated notable recruiting wins. This comes after eXp Realty improved its agent count following a year marked by attrition. Meanwhile, RE/MAX, despite a continued slip in its revenue, managed to recruit a 170-agent firm. Anywhere's revenue also saw a slight increase despite what they describe as a "weird housing market". Compass reported its best-ever quarter and is strategically taking aim at real estate portals.

A major point of contention in the industry is "the industry leaders dogpiling on Zillow". This includes CoStar's (pronounced Koh-Star) lawsuit against Zillow, claiming "systematic infringement" over the use of photos. Additionally, Redfin is reportedly "funneling customers to Rocket," according to its CEO. These conflicts highlight a significant shift, suggesting that "the market is changing and the industry's old rules are outdated". NAR (pronounced N. A. R.) has continued its advocacy efforts, scoring another court victory over membership rules, and its advocacy in D.C. has shown some payoffs, even amidst the tariff discussions.

On the supply side, private residential construction spending saw a dip in June. There's a recognized need to increase housing supply to help bring interest rates down. In an effort to make housing more affordable and sustainable, a Senate bill is proposing six months of mortgage relief for natural disaster victims, and real estate developers are finding that affordable housing can indeed be profitable. Technologies like AI are also being explored to reduce construction errors and waste, while architecture firms have reported a decline in billings for commercial real estate.

Other notable market trends include small investors making up nearly a third of the market as of July 2025. A significant market flip has occurred where existing homes are now outpricing new homes. Furthermore, apartment rents dropped in July, with vacancies moving to multi-year highs.

For agents, understanding these market shifts is crucial. Advice for sellers includes how to keep jewelry safe while selling a home, six tips to make a home look more expensive, and preparing for a home appraisal. The importance of a pre-listing home inspection is also highlighted as a key driver for sellers. Buyers are advised on how much new home upgrades will cost and understanding the difference between an inspection versus an appraisal. For investors, there are tips on setting the right rent and understanding how landlord insurance differs from homeowners coverage.

Stay informed to empower your clients in this dynamic environment.