Five Observations on the Impact (and Potential Impact) of Tariffs on Multifamily and BTR

1. The impact on construction costs is smaller than you might expect.
Conversations with developers point to a modest 1–3% increase in costs for wood-frame builds, which make up the bulk of multifamily and BTR projects. That’s not nothing—but it’s also not the catastrophic cost spike some headlines imply.

Impacts could be higher for steel-frame high-rises, projects dependent on Canadian lumber, or those still sourcing heavily from China. But many builders began diversifying their supply chains away from China as far back as 2018, reducing exposure today.

2. Tariffs won’t drive rents up—at least not anytime soon.
While some headlines are quick to link tariffs with rising rents, the timing doesn’t line up. Construction starts dropped sharply in recent years, so supply was already set to decline in 2025–2027. Any short-term rent changes will be driven by that previous slowdown, not by tariffs.

New projects take years to plan, fund, and build—tariffs today could affect 2027 rents, but they won’t touch 2025.

3. The bigger threat? A potential recession.
Multifamily is more resilient than most sectors, but it’s not recession-proof. If the economy slows, household formation could shrink as people double up—putting downward pressure on rents.

A recession would delay the expected rent rebound tied to declining supply. It would also prolong the supply drought, potentially setting the stage for a sharper recovery once the market stabilizes.

4. Today’s operative word: Uncertainty.
"Uncertainty" was mentioned 10 times on Blackstone’s latest earnings call—and for good reason. Uncertainty paralyzes decision-making, both for renters and investors.

We’ve seen this before: capital markets froze in 2020, and renter demand stalled in late 2022 despite strong employment and wage growth. As consumer confidence dips, demand softens. Investors and lenders, meanwhile, often shift to “wait and see” mode—unless the deal is too good to pass up.

5. The best-case scenario? Quick clarity.
If the tariff situation resolves quickly, it could bring much-needed stability back to capital markets and confidence back to both investors and renters.