Developers and housing experts in Chicago are bracing for the ripple effects of a U.S. tariffs, with concerns mounting over rising construction costs, consumer jitters and broader market instability.
President Dondald Trump’s global tariff rollout has injected volatility into an already strained housing market.
Chicago developer Zev Salomon of ZSD said he’s relieved his 149-unit River North project is geared toward rentals rather than condos, Crain’s reported. Rent prices can adjust to market conditions in real time, while condo prices are often locked in years before delivery.
The tariffs are expected to increase construction costs, though estimates vary.
The average price of a new home may rise by $10,000, the National Association of Home Builders predicted, while Bank of America suggested material costs will increase by 1.5 percent on average, with some spikes as high as 6 percent.
For buyers, that could mean an extra $65 per month on mortgage payments, which some experts say is still manageable in the current interest rate environment.
Chicago-area buyers may be less rattled by the added costs, having already absorbed steep price hikes in recent years, said Jeff Benach of Lexington Homes. At Metro on Main in Morton Grove, rising labor and material costs have already pushed prices up nearly 12 percent year-over-year, with entry-level units jumping from around $444,000 to $495,000, Benach said.
But other market players warn the real risk lies in consumer confidence.
Uncertainty about interest rates, recession fears and volatile material costs could push would-be buyers and sellers to the sidelines, said Erik Doersching of Tracy Cross & Associates. With inventory already tight and sales sluggish, any additional drag could prolong the slowdown.
The tariffs are already straining material suppliers. Sandya Dandamudi, who runs West Loop-based GI Stone, said her firm got hit with $40,000 in surprise tariffs on Canadian stone bound for the Obama Presidential Center on March 4, the day before Trump extended the tariff deadline by another month.
“But do I get my money back? No, of course I don’t,” she told the outlet. “There’s so much chaos.”
She estimates costs for imported stone could rise by 40 percent.
— Judah Duke
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