In early 2025, new tariffs introduced the current administration have begun reshaping the economic landscape across the U.S., including Orange County's real estate market. These tariffs impose higher taxes on imported construction materials such as lumber, steel, and aluminum—key components for residential development—and are already influencing housing costs and market behavior.

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Rising Construction Costs
The tariffs have significantly increased the cost of building materials, with lumber alone facing a 14.5% tariff. For developers in Orange County, this translates into higher expenses that are often passed on to homebuyers through elevated prices for new builds. According to the National Association of Home Builders, these tariffs add an average of $9,200 to the cost of a new home. In Costa Mesa, where affordability is already a concern, these additional costs could further strain buyers.

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Impact on Housing Supply
Higher construction costs may lead developers to delay or scale back projects to mitigate financial risks. This reduction in new housing supply exacerbates an already tight inventory situation in Orange County. With fewer homes being built, competition among buyers intensifies, driving up prices for existing properties—a trend particularly noticeable in desirable neighborhoods like Mesa Verde.

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What We’re Seeing Locally
Here in Costa Mesa and Orange County, we’re observing steady interest in our listings, but buyers seem more hesitant to write offers due to affordability concerns and elevated mortgage rates. This has created a bit of a standoff between buyers and sellers—both waiting for the other to make the first move. While inventory levels have risen significantly this year, they remain constrained compared to historical norms over the past four years. Many buyers are still waiting on the sidelines, and if interest rates were to drop even slightly, it could spark a surge of demand as these sidelined buyers race to secure the limited homes available.

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Seller Opportunities Amid Uncertainty
While buyers face challenges, sellers can find opportunities in this environment. Limited inventory continues to benefit sellers by increasing demand for existing homes. Well-priced homes in sought-after areas like Mesa Verde are still attracting attention, especially with strategic marketing and staging efforts. Sellers who act now may be able to capitalize on these conditions before any significant shifts in inventory or buyer sentiment occur.

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Why Now Is a Great Time to Act
Despite challenges posed by tariffs and fluctuating mortgage rates, now is still an excellent time to make a move—whether you’re buying or selling. Buyers can take advantage of less competition while positioning themselves for potential rate decreases in the future. Sellers can leverage limited inventory and high demand to secure competitive offers.

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At Torelli Realty, we understand how these market dynamics impact your real estate goals. Whether you’re looking to buy your dream home or sell your house at the right time, our team is here to guide you every step of the way. Contact us today to learn how we can help you navigate Costa Mesa’s unique real estate market with confidence! – Info@torellirealty.com

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