How Tariffs and Economic Trends Are Impacting the Real Estate Market in 2025

As we head into summer 2025, I’m getting the same question from almost everyone: “Carly, what’s happening with the market?”

It’s a fair question. Between new tariffs, stubborn inflation, and interest rates that won’t quite come down, there’s a lot of uncertainty out there. And uncertainty makes people nervous — whether they’re buying, selling, or just watching from the sidelines.

After 17+ years in this market, here’s my honest take on what’s happening and what it means for you.

The Big Picture: Tariffs and Construction Costs

Earlier this year, the federal government implemented new tariffs on imported steel, aluminum, and certain manufactured goods — a lot of which are essential to the construction industry.

What does this mean practically?

• Building materials are more expensive. Lumber, steel, appliances — costs are up.
• New construction homes are seeing price increases. Builders aren’t eating these costs; they’re passing them on.
• Production is slowing. Some builders are pulling back rather than taking risks on tight margins.

Inflation & Mortgage Rates in 2025

Inflation is lower than it was in 2022–2023 (remember those days?), but it’s still above the Fed’s target. Which means interest rates are still elevated.

Here’s where we’re at as of June 2025:

• 30-year mortgage rates are hovering around 6.8%–7.2%
• Buyer purchasing power is somewhat reduced compared to a few years ago
• Some buyers are choosing to wait, or adjusting their expectations

Why Magic Valley Is Holding Steady

Here’s the thing about our local market: despite all the national uncertainty, we’re doing okay.

Why?

• High demand from out-of-state buyers keeps competition strong. People are still discovering us.
• Idaho’s lifestyle appeal continues to attract remote workers, retirees, and families looking for a change.
• Inventory remains limited, especially in desirable neighborhoods like Kimberly, Filer, and northeast Twin Falls.

Prices aren’t skyrocketing like 2021–2022, but they’re holding steady. Well-maintained, move-in ready homes are still appreciating.

What This Means for Buyers

If you’re looking to buy:

• Consider buying now to lock in a home before prices rise further. Yes, rates are higher than we’d like — but home prices keep climbing too.
• You may have more room to negotiate than you did a couple years ago, especially on homes that have been sitting.
• Look into rate buydown programs or adjustable-rate mortgages if you need to improve affordability. Your lender can walk you through options.

The “marry the house, date the rate” advice still applies. If you find the right home, you can always refinance later.

What This Means for Sellers

If you’re thinking about selling:

• Well-priced homes are still moving. The key words there are “well-priced.” Overpricing will cost you.
• Be prepared for more questions about home efficiency, maintenance, and construction materials. Buyers are doing their homework.
• Work with an experienced REALTOR® who knows how to price strategically and negotiate effectively in this market.

The Bottom Line

The economic landscape in 2025 is dynamic. Tariffs and inflation are driving up costs in some areas. But real estate in the Magic Valley remains resilient thanks to continued demand and limited supply.

Smart buyers and sellers are still finding opportunities. The key is understanding the market, being realistic about pricing, and working with someone who knows this area inside and out.

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Thinking about buying, selling, or investing this year? I’d love to help you navigate this market. After 17+ years in Twin Falls real estate, I’ve seen different cycles — and I can help you make confident decisions no matter what the economy is doing.

Let’s connect.