Construction - Tariff's Driving Up Costs

President Trump has been pushing to level the tariff playing field. If a country charges us a 10% tariff for our goods, then we charge them 10%. So far things change on an almost daily basis. They’re on, then they’re off, then there is a pause but nothing is settled, and on it goes.

Here’s what we all know. Tariffs drive up the cost of goods. Robert Gordon, a senior vice president for the American Property Casualty Insurance Association (APCIA) says that’s why many in the insurance industry are speaking out against the president’s agenda. It’s putting a lot of pressure on the industry.

“The growing demographic shifts and property values to high-climate-risk areas, inflation in the cost to repair and replace property, climate change, legal system abuse, delayed regulatory approval of rate filings, and mandated coverages have collectively resulted in escalating insurance losses, poor profitability, and limited capital compared to the growth in the U.S. economy and related insurance demand,” Gordon told the Senate Committee on Banking, Housing, and Urban Affairs.

The property management company, Evernest looked at tariffs and their impact on the construction costs of new homes. They’ve added about $100,000 the cost of a new home with an estimated square footage of 2,200 feet.

And Steve Koller, a postdoctoral fellow with the Joint Center for House Studies at Harvard University said the higher the cost of a home, the more it costs to get it insured.

“As home prices remain elevated at historically high levels, rising insurance premiums are also contributing to the growing costs of homeownership and property management,” Koller said. “From the Great Recession to the present, homeowners’ insurance prices have increased 74 percent while home prices have increased more than 40 percent, even after adjusting for inflation.”

Here are the states most impacted by the Trump tariffs. Three states in the top 10 are PIA Western Alliance states:

1. Hawaii

Average construction cost per square foot: $450

Estimated construction increase per square foot: $339

Estimated building cost increase per new home: $102,400

2. California

Average construction cost per square foot: $300

Estimated construction increase per square foot: $226

Estimated building cost increase per new home: $68,200

3. Massachusetts
4. New York
5. New Jersey

6. Alaska

Average construction cost per square foot: $225

Estimated construction increase per square foot: $170

Estimated building cost increase per new home: $51.200

7. Connecticut
8. Rhode Island
9. Colorado
10. Maine

Source link: PropertyCasualty360.com — https://bit.ly/43tqssO