The real estate industry has weathered recessions, financial crises, pandemic shutdowns and soaring interest rates, writes Darryl Davis. Our commitment to being truly useful to the people we serve, regardless of market trends, is why.
On Friday morning, the U.S. Supreme Court issued a 6-3 decision striking down most of President Trump’s sweeping tariffs and declaring them an illegal overreach of executive power.
At the same time, the U.S. Bureau of Economic Analysis released GDP statistics for the fourth quarter of 2025, showing that while the PCE index, the Federal Reserve’s recommended inflation measure, rose to 3%, economic growth languished at an annualized rate of 1.4%, a dramatic collapse from the 4.4% pace in the third quarter.
Three earthquakes occurred. One morning. And real estate professionals who aren’t paying attention are about to be hit hard.
Think about it. When a major earthquake occurs, it is not just the initial shaking that causes damage. Aftershocks, sometimes lasting for months, can crack the foundations of what people thought was stable. That is where we are today.
Tariff determination – and why it may not mean what you think
The Supreme Court’s decision invalidates tariffs imposed under the International Emergency Economic Powers Act (IEEPA), which covers reciprocal tariffs on dozens of countries and surcharges related to trade relationships with Canada, China, and Mexico. The government has already collected more than $130 billion under these illegal authorities, and businesses are already demanding refunds.
As an analyst, I’d like to put the brakes on and issue a warning: don’t think this ruling will change everything overnight. The Trump administration has a well-documented pattern of resisting, delaying, and circumventing court rulings with which it disagrees. Officials have already indicated they intend to use other statutory trade authorities to reimpose many of the same tariffs through different legal means, including executive orders.
There are also real questions about whether refunds will be processed efficiently, or even at all, given the administration’s track record of treating adverse court results as obstacles to be addressed rather than orders to be followed.
As I always say, plan for the worst and hope for the best. It is too early to know the full impact of this ruling on real estate. The legal implications alone could create years of litigation and continued uncertainty as countries, industries, and individual companies rally together to demand refunds.
That uncertainty could ultimately have a more negative impact on constructor confidence and consumer sentiment than the tariffs themselves.
If trade relations stabilize and material costs eventually normalize, new construction prices may ease to some extent. Wood from Canada, steel and aluminum from multiple trading partners, and appliances with parts made in China all drove up construction costs for more than a year. But don’t wait with bated breath to see that relief in price per square foot anytime soon.
GDP: What 1.4% Really Tells Us
The 1.4% GDP figure for the fourth quarter of 2025 was not just an outlier, it was a surprise. Economists had expected growth of about 3%. Much of the blame lies with the 43-day government shutdown late last year that disrupted federal spending and furloughed thousands of employees. Consumer spending, which accounts for about two-thirds of the U.S. economy, has slowed to its slowest pace in more than a year.
Consumer trust is everything when it comes to real estate. When people feel financially insecure, they refrain from making important financial decisions. They don’t buy houses. they don’t relocate. I will not increase the size. They’re sitting back and waiting for the wind to blow, as you can see in January’s decline in home sales on both a monthly and annual basis.
Sellers who were expecting eager buyers in spring 2026 will need to readjust their expectations. Buyers who were “almost ready” six months ago may have simply been set back another six months.
Inflation: a never-ending problem
Core PCE inflation was 3%, above the Federal Reserve’s 2% target and above expectations. The Fed has been reluctant to aggressively lower interest rates in this environment, meaning mortgage rates remain high. Rates on 30-year fixed mortgages have hovered well above 6% in recent months, making it even less likely that the Fed will act quickly after today’s data.
Here’s a painful reality that agents need to clearly communicate to their clients: The combination of rising inflation, slowing GDP growth, and rising mortgage rates is the most damaging economic scenario for real estate transaction volumes. Suppress supply and demand at the same time.
Sellers won’t list because they can’t afford to trade their fixed low interest rate for a new rate. The buyer can’t afford the purchase because the monthly payment calculator doesn’t work at all. The market doesn’t freeze because people don’t want homes anymore, it freezes because conditions make deals nearly impossible.
What real estate professionals must do now
First, be the most financially savvy person your customers know. In times of uncertainty, people gravitate toward trusted advisors who cut through the noise and provide clear information. If you aren’t reading the headlines, understanding what it means for your local market, and actively communicating that insight into your area, someone else will fill the void.
Second, don’t wait for the market to save you. Agents who succeed in turbulent markets are those who build systems, not those who rely on favorable conditions. Now is the time to hone your property presentation, enhance your buyer consultation process, and deepen your relationships with mortgage professionals who can help your customers find creative financing solutions.
Third, we help our clients find opportunities amid uncertainty. Yes, the situation is tough. But tough conditions also mean there’s less competition for buyers who are ready to move in and sellers who are priced right. Buyers in today’s market are serious. The deals available to motivated sellers are real.
The real estate industry has weathered recessions, financial crises, pandemic shutdowns, and soaring interest rates. What separates the experts who survive from those who disappear is always the same. It’s a commitment to truly serving the people they serve, regardless of market trends.
Today’s economic earthquake will pass. The legal, political, and financial aftershocks will continue for some time, but no one knows exactly how long. Your job is to be the steady hand your client needs when the ground is still shaking.
