Trump to Blame for California Housing Crisis?

Timothy L. Coyle
Consultant specializing in housing issues

It was a headline sure to be a winner in California:  “Trump’s Tariffs Make California Housing Crisis Worse.”  Partisans – quick to agree – cheered another bomb thrown the President’s way.  Hell, he’s has been blamed for everything else. Why not the state’s housing supply and affordability debacle?

The underlying story asserted that Trump’s get-tough trade initiative with China was making appliances being bought for installation in new California homes more expensive.  The article, appearing in a trade periodical, reported that home prices in the Central Valley have increased by as much as 10% thanks to tariff-driven rising costs of appliances and other new-home features.  And, rightly observed by Dan Dunmoyer, CEO of the California Building Industry Association (CBIA), even a small price hike affects thousands of would-be homebuyers. 

It’s true that the President’s imposition of new tariffs on Chinese exports to America have driven up prices on, among other products, durable goods.  The cost to U.S. consumers of new stoves, refrigerators, washers and dryers spiked last year after the first round of trade excises against China – in some cases as much as 15%.  The National Association of Home Builders (NAHB) estimates the China trade skirmish will eventually cost homebuyers $2.5 billion this year.

So, is Trump’s current posture with China bad policy for America?  Surely, it was clear that pressing China’s buttons would produce a response from the emerging economic powerhouse.  Except, hadn’t that nation been pressing ours for years? 

First, didn’t China’s decades-long currency manipulation artificially lower the prices for products it was selling to us?  Such currency moves made Chinese products cheaper and eventually help shutter U.S. manufacturers. Should this activity be allowed to continue?

Secondly, doesn’t China’s current proclivity to accomplish technology transfers – where third parties gain access to and obtain business methodologies – represent theft?  Should America tolerate theft? By a market competitor?

Lastly, speaking of theft, why should we stand by and do nothing as China systematically steals our nation’s intellectual property – an individual’s latest creation or a company’s new way of doing this and that?  What’s the worth of a patent, copyright or trademark if they can’t protect the value of an individual’s creativity or a company’s market advancement?  

Such has been China’s behavior toward the U.S. for decades.  It wasn’t until Trump came along that anyone from our side did anything to respond.  Some say it’s the wrong approach. They argue that tariffs are a tax on both consumers (of imports) and producers (due in large measure to retaliatory action by China).  Still, most saw the conflict coming and agree something had to be done. They just don’t like the (hopefully short-term) pain, and they’re right not to.

But, let’s examine the bigger picture.  First, the U.S. economy is humming along nicely – with steady gains in wages and retreating unemployment.  That means greater purchasing power for consumers – a healthy economic climate, now and in the near future.  And, demand for California housing remains strong. 

Second, there has been and continues to be improvement on the regulatory front.  According to the New York Times, there have been at least 53 federal regulations eliminated under the Trump administration – including 14 dealing with water and animal species, with another dozen involving land-use and infrastructure – and more underway.  NAHB recently hailed the President for delivering long-needed relief from insidious federal regulations.  

Finally, you really can’t blame Trump for the state’s housing woes.  To do so is plain silly. Just the inflated development-impact fees, charged by local governments, keep tens of thousands of Californians from buying new homes.  Add in a few dozen CEQA lawsuits and you have the housing mess the state has been experiencing – beginning well before Trump was elected.  

Referring to the tariff influence on housing costs Dunmoyer said, “So many other things have pushed (prices and rents) up” to the tipping point of unaffordability.  Fees, for one, said Dunmoyer. Meanwhile, the state Legislature is passing rent control legislation, which will only discourage housing construction even further.

To blame President Trump for even a scintilla of California’s misery is foolhardy and smacks of clueless whistling past the graveyard.

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