The Trump administration announced a proposal for tariffs on imported steel and aluminum, sending shockwaves through the housing market. With tariffs on Canadian lumber already driving up the cost of some types of housing, new tariffs on aluminum and steel could increase the overall cost for a new home even more. How will that affect homebuyers? Find out right now with the Mortgage Report by our most-trusted home loan expert, Bob Johnson (AKA BobMortgage), the senior mortgage adviser with the nation’s oldest private lender Wallick & Volk.

With more than 20 years of experience helping buyers find the right loan solutions for their home, BobMortgage can help you make sense of the complicated mortgage market. Should you lock or float? Find out in this week’s Mortgage Report presented by Wallick & Volk.

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New House under Construction

By Phil Crone
Executive Officer
Dallas Builders Association

Labor, Land, and Local regulation add up to the three “L’s” of Dallas’s affordability crisis. On April 25, the Trump administration added a fourth “L” — Lumber — to that equation when they announced plans to impose duties of up to 24 percent on most Canadian lumber. The most recent agreement between the two nations expired on Oct. 12, 2015, and was followed by a one-year cooling off period before a new agreement could be negotiated.

Before the tariff, the other three “L’s” accounted for much of the $100,000 premium on new home prices when compared to the existing market. Now, the escalation of a decades-long trade dispute between the United States and Canada is making matters worse. The industry knew that striking a new agreement would have its challenges when the cooling off period ended in October, but few predicted those challenges would include Donald Trump and his protectionist stance on trade finding their way into the White House the following month.

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Canadian_Lumber

Last week, the Trump Administration announced a new tariff of up to 24 percent on Canadian lumber. According to a report by CNN Money, Canadian lumber accounts for nearly a third of all lumber used in the United States, and the new duty could raise the price of homebuilding by six percent, on average.

“For builders, it’ll increase the cost of construction by about $3,000 on the average home, which unfortunately will be passed on to consumers,” said Jerry Howard, CEO of [the National Association of Home Builders].

Builders argue that higher prices will translate into a slowdown of construction activity that could cost 8,000 U.S. jobs and $500 million in lost wages.

How could a lumber tariff affect homebuilding in Dallas-Fort Worth? We reached out to John Scott of Scott Homebuilders for a clearer picture of how local trades and buyers could be impacted.

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From Staff Reports

With lumber tariffs already adding more than $6,000 to the price of every new home in Dallas, President Trump’s decision this month to escalate the trade conflict with China has builders bracing for more challenges to housing affordability. This decision could wind up imposing a $2.5 billion tax increase on residential construction, according to the National Association of Home Builders.

Trump announced he is moving immediately to impose 10 percent tariffs on an additional $200 billion worth of Chinese imports, including $10 billion of goods used by the home building industry. This 10 percent levy represents a $1 billion tax increase on residential construction. Making matters even worse, the tax hike will rise to $2.5 billion on Jan. 1 when the president said the tariff rate will jump to 25 percent if the two nations have not resolved their differences by year end. If China retaliates, Trump has vowed to place tariffs on an additional $267 billion worth of imports. The NAHB has strongly opposed this move.

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