Housing costs may grow in Las Vegas due to Trump’s tariffs

President Donald Trump made his fortune in real estate, but by slapping tariffs on imports from close allies, developers in Las Vegas and other cities could get hit hard.

The result could include higher prices for homebuyers and apartment renters at a time when affordability is already getting stretched.

Citing “national security” concerns, the White House implemented a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from Canada, Mexico and the European Union on June 1. The move followed the Trump administration’s tariffs on imported Canadian lumber in November.

“Pretty much 100 percent” of future projects in Southern Nevada could be affected, but “the question is the degree of impact,” said John Restrepo, founder of Las Vegas-based RCG Economics.

The price hikes come as the valley’s once-battered construction industry grows at a fast clip, with developers putting up housing tracts, apartments, warehouses and other projects.

There are concerns the tariffs will push up construction costs and spark a slowdown in development. But analysts said it’s too early to gauge the tariffs’ impact on projects locally and nationally, in part because builders might have locked in future prices or acquired materials.

There’s no reason to think Las Vegas will be more insulated from the tariffs than other cities, Restrepo said, and higher land, labor or material costs can lead to higher prices.

“We won’t know the effects (of the tariffs) until they’re in place for a while,” he said.

On June 12, less than two weeks after Trump implemented the tariffs, the Las Vegas Convention and Visitors Authority’s board of directors approved spending up to $40 million for the first purchase of structural steel for the Las Vegas Convention Center’s expansion.

Amid rising demand for building materials, project officials figure steel prices would climb 10 to 15 percent in the next 12 months even without the tariffs, owners’ representative Terry Miller said.

‘Tremendous amount of anxiety’

Las Vegas apartment developers have ramped up construction in recent years, and rents are climbing faster than the national average. Higher costs from tariffs might push rental rates even higher.

“It’s going to be hard to escape a cost impact from a tariff if you’re a multifamily developer, when you’re facing it both from the wood side and the steel side,” said Paula Cino, vice president of construction, development and land use policy at the National Multifamily Housing Council, an apartment industry group.

The higher costs also could kill developments before they’re built, further crimping the housing supply, she said.

“There’s a tremendous amount of anxiety over what the potential impact is going to be,” Cino said.

Ken Simonson, chief economist at the Associated General Contractors of America, said foreign steel prices climbed after the Obama administration implemented tariffs following U.S. steelmakers’ complaints of unfair trade practices.

Now, because of Trump’s tariffs, he expects another double-digit increase in steel prices within a few months and a slowdown in the growth of development activity.

“I’m not sure this is enough to completely knock the wind out of the sails of construction, (but) it’s going to be damaging,” Simonson said.

‘A striking impact’

Compared with commercial developers, U.S. homebuilders appear unlikely to get hurt as much by rising steel and aluminum prices.

Those materials make up less than 5 percent of what goes into a house, Wedbush Securities analyst Jay McCanless said.

But lumber is different. Builders frame houses with wood, and the tariffs on Canadian imports “had a striking impact” on builders and buyers alike, said David Logan, director of tax and trade policy analysis for the National Association of Home Builders.

About two-thirds of the lumber used in the United States come from domestic producers, but 95 percent of imports come from Canada, he said. According to Logan, rising lumber costs have pushed up the average price of a house by about $9,000 since the start of 2017.

The lumber tariff’s price impact might not be as severe in Las Vegas as in other cities because the valley’s home construction market is dominated by big, national builders.

They buy more lumber than a typical private builder and might be able to negotiate a smaller price increase, McCanless said.

Las Vegas builder Wayne Laska, owner of StoryBook Homes, said rising lumber prices affect small builders like him and his much-larger rivals.

They aren’t hit equally, he said, but “neither of us like it.”

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.

ad-high_impact_4
Business
Caesars Forum Meeting Center
Caesars broke ground Monday on its $375 million Caesars Forum Meeting Center (convention center) just east of the High Roller observation wheel. (Caesars Entertainment)
Technology reshapes the pawn shop industry
Devin Battersby attaches a black-colored device to the back of her iPhone and snaps several of the inside and outside of a Louis Vuitton wallet. The device, installed with artificial intelligence capabilities, analyzes the images using a patented microscopic technology. Within a few minutes, Battersby receives an answer on her app. The designer item is authentic.
Recreational marijuana has been legal in Nevada for one year
Exhale Nevada CEO Pete Findley talks about the one year anniversary of the legalization of recreational marijuana in Nevada. (K.M. Cannon/Las Vegas Review-Journal)
Young adults aren't saving for retirement
Financial advisors talk about saving trends among young adults. (Bailey Schulz/Las Vegas Review-Journal)
President Trump’s tariffs could raise costs for real estate developers, analysts say
President Donald Trump made his fortune in real estate, but by slapping tariffs on imports from close allies, developers in Las Vegas and other cities could get hit hard.
Las Vegas business and tariffs
Barry Yost, co-owner of Precision Tube Laser, LLC, places a metal pipe into the TruLaser Tube 5000 laser cutting machine on Wednesday, June 20, 2018, in Las Vegas. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Nevada Film Office Connects Businesses To Producers
The director of the Nevada Film Office discusses its revamped locations database and how it will affect local businesses. (Bailey Schulz/Las Vegas Review-Journal)
Opendoor isn't the typical house flipping company
Unlike most house flippers, the company aims to make money from transaction costs rather than from selling homes for more than their purchase price.
The Venetian gondoliers sing Italian songs
Gondolier Marciano sings a the classic Italian song "Volare" as he leads guests through the canals of The Venetian in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal)
Building In Logandale
Texas homebuilder D.R. Horton bought 43 lots in rural Logandale. (Eli Segall/Las Vegas Review-Journal)
Indoor farming in Southern Nevada
Experts discuss Nevada's indoor farming industry. (Bailey Schulz/Las Vegas Review-Journal)
Former Fontainebleau could have become a Waldorf Astoria
Months after developer Steve Witkoff bought the Fontainebleau last summer, he unveiled plans to turn the mothballed hotel into a Marriott-managed resort called The Drew. But if Richard “Boz” Bosworth’s plans didn’t fall through, the north Las Vegas Strip tower could have become a Waldorf Astoria with several floors of timeshare units. (Eli Segall/Las Vegas Review-Journal)
LVCVA CEO Rossi Ralenkotter announces plans to retire
Rossi Ralenkotter, CEO of the LVCVA, on Tuesday confirmed a Las Vegas Review-Journal report that he is preparing to retire. Richard N. Velotta/ Las Vegas Review-Journal
Cousins Maine Lobster to open inside 2 Las Vegas Smith’s stores
Cousins Maine Lobster food truck company will open inside Las Vegas’ two newest Smith’s at Skye Canyon Park Drive and U.S. Highway 95, and at Warm Springs Road and Durango Drive. Cousins currently sells outside some Las Vegas Smith’s stores and at Fremont Street and Las Vegas Boulevard. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas home prices to continue to rise, expert says
Lawrence Yun, chief economist at the National Association of Realtors, gives homebuyers a pulse on the Las Vegas housing market. (Eli Segall/Las Vegas Review-Journal)
NV Energy announces clean energy investment
The company is planning to add six solar projects in Nevada, along with the state's first major battery energy storage capacity. Bailey Schulz/Las Vegas Review-Journal
3 Mario Batali restaurants on Las Vegas Strip to close
Days after new sexual misconduct allegations were made against celebrity chef Mario Batali, his company announced Friday that it will close its three Las Vegas restaurants July 27. Employees of Carnevino Italian Steakhouse, B&B Ristorante and Otto Enoteca e Pizzeria, all located in The Venetian and Palazzo resorts, were informed of the decision Friday morning. Bastianich is scheduled to visit the restaurants Friday to speak to employees about the next two months of operation as well as how the company plans to help them transition to new positions.
Nevada has its first cybersecurity apprenticeship program
The Learning Center education company in Las Vegas has launched the first apprenticeship program for cybersecurity in Nevada. It was approved by the State Apprenticeship Council on May 15. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas union members voting to authorize the right to strike
Thousands of Las Vegas union members voting Tuesday morning to authorize the right to strike. A “yes” vote would give the union negotiating committee the power to call a strike anytime after June 1 at the resorts that fail to reach an agreement. (Todd Prince/Las Vegas Review-Journal)
Small businesses struggle to find qualified candidates
A 2018 survey found that over two-thirds of small businesses in Nevada find it somewhat to very difficult to recruit qualified candidates. Bailey Schulz/Las Vegas Review-Journal
Nevada secretary of state website offers little protection against fraudulent business filings
Property developer Andy Pham tells how control of his business was easily seized by another person using the secretary of state website.
Caesars may be going solo in its marijuana policy
Several Southern Nevada casino companies aren’t following Caesars Entertainment’s lead on marijuana testing.
How much is the Lucky Dragon worth?
Less than a year-and-a-half after it opened, the Lucky Dragon was in bankruptcy.
Gyms and discount stores take over empty retail spaces
Grocery stores used to draw people to shopping centers. But many large retail spaces have been vacant since 2008. Discount stores like goodwill and gyms like EOS Fitness are filling those empty spaces, and helping to draw shoppers back in. K.M. Cannon/Las Vegas Review-Journal
Funding source of Las Vegas stadium for the Raiders is sound, expert says
The stadium is funded in part by $750 million of room taxes, the biggest such tax subsidy ever for a professional sports stadium. Robert Lang, executive director of Brookings Mountain West and The Lincy Institute at UNLV, says that is a good use of public funds. (Richard Velotta/Las Vegas Review-Journal)
Las Vegas needs light rail, expert says
Robert Lang, executive director of Brookings Mountain West and the Lincy Institute said he is afraid of a "congestion mobility crisis." Las Vegas needs a light rail system, he said, to accommodate the city's growing number of attractions. (Richard Velotta/Las Vegas Review-Journal)
Three takeaways from Wynn Resorts' Earnings Call
Matt Maddox came out swinging in his first earnings conference call as Wynn Resorts chief executive officer, boasting of record Las Vegas quarterly revenues and applicants lining up for work.
Star Wars VR Comes to Las Vegas
Sneak peak at the new "Star Wars: Secrets of the Empire" VR experience at the Grand Canal Shoppes.
Elaine Wynn continues her fight to change Wynn Resorts board
Elaine Wynn, the largest shareholder of Wynn Resorts Ltd., is seeking to kick a friend of her ex-husband Steve Wynn off the company’s board of directors. (Todd Prince/Las Vegas Review-Journal)
Zillow is getting into house flipping in Las Vegas
Las Vegas Review-Journal real estate reporter Eli Segall says flipping houses has waned in popularity after the housing bubble burst.
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like