Is a Trade War Good or Bad for Multifamily Real Estate?

• Tariffs and Housing: Trump’s tariff threat, paused for 30 days, fueled market sell-offs and real estate uncertainty.

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Is a Trade War Good or Bad for Multifamily Real Estate?

When President Trump announced that he would follow through on his promise to enact tariffs on China, Mexico, and Canada, stock market futures immediately sank. When the markets reopened, the anticipated sell-off had already begun. Investors seemed to be offloading stocks across nearly every sector, from tech to commodities to REITs. While some believed the tariffs and the potential trade war could have broad negative impacts, others speculated that multifamily real estate might serve as a safe haven.

Analysts suggested that residential real estate owners could benefit from the trade war, as higher construction costs would limit new supply, making existing multifamily properties more valuable. Slowing the construction of new homes—already in short supply across the country—could, in theory, drive up the value of multifamily buildings. But, other economic effects might counteract this decrease in supply, introducing uncertainty into the market.

Tariffs raise prices, and higher prices lead to higher inflation. If inflation rises, the likelihood of the Federal Reserve lowering interest rates decreases significantly. President Trump has stated his intention to lower interest rates, but he has limited ability to do so until a new Fed chairman is appointed next May. In the meantime, multifamily loans will continue to mature, and building owners will face much higher costs to refinance. In 2025, approximately $150 billion in multifamily loans will come due—more than double the $61 billion that matured in 2024. As more multifamily owners are forced to sell properties at a loss due to limited financing options, investor interest in the asset class could decline.

If new construction becomes more expensive due to tariffs, it would worsen an already severe housing affordability crisis in many cities. President Trump has stated that he intends to lower housing costs, but tariffs could have the opposite effect. The National Association of Home Builders has urged the administration to exempt critical construction materials, warning that tariffs could further strain affordability for Americans.

If construction slows and rents spike, cities and states may respond with rent control or stronger tenant protections, potentially reducing the value of multifamily properties. Tariffs might also cool the broader economy, as higher prices for everyday goods like produce and electronics could make it more difficult for landlords to raise rents. While tariffs may seem beneficial to multifamily owners at first glance, the broader economic consequences suggest the industry may prefer business as usual over this new protectionist approach.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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