Tariffs Are Raising the Cost of Finishing a Home. What New Fed Research Means for Buyers and Sellers in San Diego and Chicago

A home costs more than its price. New Federal Reserve research, reported by Inman, tracked tariffs through the housing economy. It found the biggest impact on appliances, furniture and construction materials, and it found no clear gain in jobs to make up for those higher costs.

That finding reaches well beyond builders' budgets. Buyers and sellers in San Diego and Chicago will feel tariffs in three places.

New construction and remodels. When lumber, fixtures and finishes cost more, builders either pass part of the cost along or cut back on what comes standard. In San Diego, where land is scarce and much of the new supply is infill or custom building, higher material costs tend to widen the price gap between new homes and resale homes. In Chicagoland, many buyers purchase an older home planning to renovate it, so the renovation budget is the number most exposed.

Move-in ready homes are worth more. An updated kitchen, newer appliances and recent work on major systems now save a buyer more than they did a few years ago, because replacing those items costs more. Sellers who have already done this work should document it and make sure the price reflects it. Buyers weighing a turnkey home against a project should get contractor bids before they write an offer, not after.

Furnishing the new home. The cost of furnishing a home is easy to overlook. Furniture is one of the categories the research flagged, so a buyer stretching into a larger home should put it in the moving budget.

What our team is telling clients. For sellers, a home's condition gives them leverage. Pre-listing repairs and cosmetic updates are worth doing now. The alternative is a buyer who asks for a discount on work they would have to pay for at today's higher material prices. For buyers, a fixer can still be the right move, but only with real numbers. We connect clients with local contractors early, so the price of the home and the cost of the renovation are known at the same time.

Tariff policy may change, and material prices will change with it. What stays the same is that the full cost of owning a home, not the list price alone, decides whether it is a good buy. Our team has that conversation with clients before any offer goes in.