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Category Archives: Finance & Economics

Finance & Economics

Benchmark softwood lumber price loses ground, specialty item prices tank

By Madison’s Lumber Reporter
Lesprom Network
October 15, 2019
Category: Finance & Economics
Region: Canada, United States

The price of benchmark construction framing dimension softwood lumber commodity Western Spruce-Pine-Fir KD 2×4 #2&Btr dropped another -$8 last week as customer reluctance to buy won over supplier stubbornness to keep prices higher. …Last week’s price is also -$8 less than it was one month ago. For their part, many specialty items like Douglas fir green, studs in Eastern Canada, and plywood dropped significantly

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Pace of housing starts slowed in September, CMHC reports

By CMHC
The Canadian Press in CBC News
October 8, 2019
Category: Finance & Economics
Region: Canada

Canada Mortgage and Housing Corp. says the pace of housing starts in September slowed compared with August.The agency says the seasonally adjusted annual rate fell 2.5 per cent to 221,202 units in September compared with 226,871 in August. …The decrease came as the pace of urban starts fell 2.4 per cent to 208,503 units. Multiple-unit urban starts dipped 0.2 per cent to 159,742, while starts of single-detached urban homes fell 9.2 per cent to 48,761 units.

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Painful sawmill closures keep lumber supply-demand balance healthy

By Madison’s Lumber Reporter
Wood Business – Canadian Forest Industries
October 8, 2019
Category: Finance & Economics
Region: Canada, United States

The stringent and painful sawmill closures and curtailments during this year have done well to keep a healthy supply-demand balance. While customers are somewhat reluctant, ongoing weekly purchases are allowing Canadian and US sawmills to prop up prices. As U.S. Thanksgiving approaches demand will lessen into year-end. …Compared to historical trend, last week’s WSPF 2×4 #2&Btr price is up +$14, or +3.4%, relative to the one-year rolling average price of U.S. $362 mfbm, and is down -$70, or -16%, relative to the two-year rolling average price of U.S. $446 mfbm.

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Canada: Housing Starts remain strong

By Sandeep Kanihama
RBC Capital Markets
October 8, 2019
Category: Finance & Economics
Region: Canada

Canadian housing starts were above consensus at 221,000 annualized units in September with six-month trend remaining close to a cycle high. …The latest permit data (247,000 in August) points to further strength ahead. After slowing throughout 2018 and early this year, the six-month trend in housing starts has reversed course, picking up to a near-cycle-high 223,500 annualized units.

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Interest Rates And The Lumber Market – An Opportunity Over The Coming Weeks

By Andrew Hecht
Seeking Alpha
October 4, 2019
Category: Finance & Economics
Region: Canada, United States

We are heading into the offseason for construction and lumber is just below the midpoint in 2019. The winter is a time of the year when construction projects slow down and demand building raw materials decline. …The Fed has acted twice, and the market thinks a third move is coming before the end of this year. Lumber is highly sensitive to interest rates in the US for new home building. …A dovish Fed going into 2020 could ignite the lumber market once again as mortgage rates decline.

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Softwood lumber prices moderate nicely

By Madison’s Lumber Reporter
Wood Business – Canadian Forest Industries
October 1, 2019
Category: Finance & Economics
Region: Canada, United States

Lumber prices moderated down slightly on some construction framing items, but stayed flat on most solid wood commodities. …After increasing by six dollars the previous week, this week’s benchmark lumber commodity Western Spruce-Pine-Fir KD 2×4 #2&Btr price was U.S. $376 mfbm, down -$6, or -1.5%. …This price is up six dollars from one month ago, when it was U.S. $382 mfbm. Further narrowing the gap from 2018, compared to one year ago this price is down -$20, or -5%.

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North American Wood Fiber Review

By Hakan Ekstrom
Wood Resources International LLC
October 1, 2019
Category: Finance & Economics
Region: Canada, United States

Many pellet manufacturers in North America have had to increase the usage of logs for their feedstock in 2019 because of reduced availability of lower-cost sawmill residues. This has resulted in higher total wood fiber costs and increases in the pellet feedstock price indices for both Canada and the US in the 1H/19, according to North American Wood Fiber Review.

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Canadian pellet prices unchanged from summer low-season

By Madison’s Lumber Reporter
Canadian Biomass Magazine
October 1, 2019
Category: Finance & Economics
Region: Canada

For September 2019, Madison’s has determined that Canadian wholesale and retail wood pellet prices are as-yet unchanged from the summer low-season. However, producers in the U.S. northeast have already posted price increases this month. …While cutting significant amounts of lumber production will do well to keep commodity prices up, the reduced manufacturing volumes will result in less availability of the sawmill residuals important for pellet mills.

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Freddie Mac September Forecast: Housing to Remain Strong Heading into the Fall

Global Newswire
September 30, 2019
Category: Finance & Economics
Region: Canada, United States

Freddie Mac’s September Forecast mortgage originations will reach $2.1 trillion in 2019 driven by a surge of homeowners refinancing into a lower mortgage rate along with strong homebuyer demand. …While mortgage rates have ticked up in recent weeks, they remain lower than they were a year ago which will help boost sales headed into the fall.” …For full year 2019, expect GDP growth of 2.2%… expect the 30-year fixed-rate mortgage to remain below 4.0%… the single-family housing starts forecast remains unchanged at 870,000… home sales to be slightly higher at 5.98 million.

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U.S. Lumber Sourcing Spikes After Canadian Logistical Delays, Mill Closures

By Robert Dalheim
ThomasNet News
September 30, 2019
Category: Finance & Economics
Region: Canada, United States

In today’s Report, we’re looking at sourcing activity for Lumber by users of the Thomasnet.com platform. Our data shows that over the past twelve weeks, sourcing activity for Lumber is up 69% over its historical average. It’s also up 70% year over year. …When we looked at Lumber in a Thomas Index Report last summer, prices were skyrocketing to record levels. But when bad weather in Canada caused substantial logistical delays, lumber shipments were pushed back into the second half of the year. This excessive supply caused an almost 50% price drop for lumber products.

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US housing data mixed, softwood lumber prices strengthen further

By Madison’s Lumber Reporter
Wood Business – Canadian Forest Industries
September 24, 2019
Category: Finance & Economics
Region: Canada, United States

Last week was another of rising lumber prices, even as a glowing U.S. housing starts report came out and more Canadian sawmills announced closures and curtailments. This week’s benchmark lumber commodity Western Spruce-Pine-Fir KD 2×4 #2&Btr price was U.S. $382, up another +$6, or +2%, from one month ago when it was U.S. $346 mfbm. Narrowing the gap from the highs of summer 2018, compared to one year ago this price is down -$44, or -10%.

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More Fed cuts expected to push Canadian interest rates lower

By Don Pittis
CBC News
September 18, 2019
Category: Finance & Economics
Region: Canada

A weakening global economy and continued trade fears — and emphatically, he said, not angry words from U.S. President Donald Trump — convinced U.S. Federal Reserve chair Jerome Powell to cut interest rates on Wednesday for the second time this summer. And for Canadians waiting for lower rates, those same global forces are on their way, and will likely force Bank of Canada Governor Stephen Poloz to follow suit. Despite the fact that the quarter point cut was widely expected, the move had an immediate effect on the Canadian dollar which fell promptly after Powell’s announcement. 

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Sharp Uptick in Canada’s New Housing Starts

By CMHC
Point 2 Homes
September 18, 2019
Category: Finance & Economics
Region: Canada

New data from Canada Mortgage and Housing Corporation (CMHC) suggests an upward trend in housing starts. The seasonally adjusted, annualized rate of housing starts (SAAR) for all areas in Canada was 226,639 in August. This is up 1.9% from 222,467 units in July and exceeded experts’ prediction of 212,500. Compared to August 2018, new housing starts rose 12% as construction started on 17,611 new homes last month.

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U.S. housing starts race to 12-year high in August

Reuters in The Financial Post
September 18, 2019
Category: Finance & Economics
Region: Canada, United States

WASHINGTON — U.S. homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction increased, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market. Housing starts jumped 12.3% to a seasonally adjusted annual rate of 1.364 million units last month, the highest level since June 2007, the Commerce Department said on Wednesday. …The housing market, the most sensitive sector to interest rates, had until now shown few signs of benefiting from the Federal Reserve’s monetary policy easing, which has pushed down mortgage rates from last year’s multi-year highs.

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Mortgage demand from buyers jumps, just as interest rates spike

By Diana Olick
CNBC Markets
September 18, 2019
Category: Finance & Economics
Region: Canada, United States

Mortgage application volume was flat last, down a slight 0.1%, according to the Mortgage Bankers Association. Volume was still 67% higher than a year ago, when rates were much higher. Mortgage applications to purchase a home increased 6% for the week and were a strong 15% higher annually.

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Lumber prices recover slightly as autumn arrives

By Madison’s Lumber Reporter
Wood Business – Canadian Forest Industries
September 17, 2019
Category: Finance & Economics
Region: Canada, United States

After terrifying drops this summer, lumber prices are slightly up from last week. This week’s benchmark lumber commodity Western Spruce-Pine-Fir KD 2×4 #2&Btr price was U.S. $376. After a big jump over one-month-ago last week, this week’s price is up another +$6, or +2%, from one month ago. Compared to one year ago, this price is down -$100, or -21%.

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It’s “time to buy the trees again; Raymond James

By David Leeder
The Globe and Mail
September 17, 2019
Category: Finance & Economics
Region: Canada

Raymond James analyst Daryl Swetlishoff feels below-cost commodity pricing in the building materials sector is “unsustainable,” pointing to “encouraging” US homebuilding data and commentary as well as “material” curtailment-related shipment declines. Accordingly, Mr. Swetlishoff said it’s “time to buy the trees again.” …That led Mr. Swetlishoff to raise his ratings for a trio of stocks. [Interfor, West Fraser and Western Forest Products].

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Softwood lumber trade was up 5% in first half of 2019, with China reaching record-high imports in 2Q

By Wood Resources International
Lesprom Network
September 16, 2019
Category: Finance & Economics
Region: Canada, International

Softwood lumber trade was up 5% in the first half of 2019 on a worldwide basis, with China reaching record-high imports in the 2Q. …China imported almost eight million m3 of softwood lumber in the 2Q 2019, a new quarterly high. …The Nordic countries have steadily expanded their shipments to China over the past year and were the third largest suppliers behind Russia and Canada in the 2Q 2019. Import prices have trended downward for the past 18 months and in June hit their lowest levels since early 2016.

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Lumber Sits And Waits – WOOD Follows The Price Of The Futures

By Andrew Hecht
Seeking Alpha
September 12, 2019
Category: Finance & Economics
Region: Canada, United States

So far in 2019, the price of nearby lumber futures has traded in a range from $286.10 to $453.90 per 1,000 board feet. At $374.50 on September 12 on the nearby November contract, the price of the wood futures was a bit above the midpoint for this year which stands at $370. …On the longer-term chart, lumber looks like it could work its way higher. 

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Why Home Depot’s Second Quarter Was Better Than It Looked

By Matthew Cochrane
The Motley Fool
September 11, 2019
Category: Finance & Economics
Region: Canada, United States

Despite a rough second-quarter earnings report last month, Home Depot’s stock price has risen about 7.5% since Aug. 21. …In the company’s quarterly conference call, Home Depot’s management credited two factors for the tepid growth: wet weather and lumber prices. What went right? Home Depot continues to invest heavily in removing friction from its omnichannel shopping experience, where the lines between online and in-store shopping are increasingly blurred.

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CMHC reports annual pace of housing starts climbed 1.9% in August

Canadian Housing and Mortgage Corp
CBC News
September 10, 2019
Category: Finance & Economics
Region: Canada

Canada Mortgage and Housing Corp. says the pace of new housing starts in August climbed 1.9 per cent compared with July. …The increase in the result for August came as the pace of urban starts increased two per cent in August to 213,663 units. Multiple-unit urban starts fell 1.4 per cent to 160,388 units in August while single-detached urban starts increased by 13.6 per cent to 53,275.

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Softwood lumber price movements remain cryptic: 3Q 2019

By Madison’s Lumber Reporter
Wood Business – Canadian Forest Industries
September 10, 2019
Category: Finance & Economics
Region: Canada, United States

This week benchmark lumber commodity Western Spruce-Pine-Fir KD 2×4 #2&Btr price remained unchanged from the previous week, to close again at U.S. $370 mfbm. One month ago this price was falling, hard. That may have stopped as, by comparison, this week’s price is up +$30, or +9%, from one month ago. Compared to one year ago, this price is down -$112, or -23%.

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It May Take Years for Home Building to Get Back to Historic Levels

By Zillow Research
Yahoo Finance
September 9, 2019
Category: Finance & Economics
Region: Canada, United States

Today’s slow pace of single-family home building isn’t expected to get back to historic norms until 2022 or later, and expectations for home value growth over the next few years continue to weaken, according to a Zillow survey of 100 economists and real estate experts. …On average, they expect annual home value growth – currently growing at a 5.2% pace – to slow to 3.6% by the end of this year.

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Global forest industry hit hard in Q2, pulp demand down

By Wood Resources International LLC
Pulp & Paper Canada
September 9, 2019
Category: Finance & Economics
Region: Canada, United States

The global forest industry has had a difficult second quarter with softening prices and excess supply, according to Wood Resource Quarterly’s 2Q/2019 report highlights.

  • The Softwood Fiber Price Index (SFPI) fell by 1.5 per cent .
  • The Hardwood Fiber Price Index (HFPI) was down 0.5 pr cent
  • The prices for NBSK and BHKP market pulp in July were down as much as 26 per cent and 18 per cent respectively.

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B.C. housing starts drop after four-month run

By Bryan You
Business in Vancouver
September 23, 2019
Category: Finance & Economics
Region: Canada, Canada West

Annualized urban-area starts fell to 36,900 units during the month, from 50,800 units in July, following strong results since April. This was the lowest monthly reading since March. …Our expectation is for a significant decline over the next year given the weak resale market. …Multi-family unit construction was the main driver of August’s pullback. Starts fell from 43,400 units to 29,112 units (down 33%). Detached starts rose 4% to 7,750 units annualized.

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US manufacturing sinks to decade-low, stoking economic fear

By Bani Sapra
The Associated Press in CBS News
October 1, 2019
Category: Finance & Economics
Region: United States

US factory activity hit a decade low last month in the face of President Donald Trump’s trade conflicts, adding to a weakening picture of the global economy. The Institute for Supply Management… said its manufacturing index shrank for a second straight month to 47.8% in September, down from 49.1% in August. Any reading below 50 signals that the sector is contracting. …Manufacturing makes up only about a tenth of the U.S. economy, but analysts see the survey as a warning sign about the trade conflict.

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Fed’s Charles Evans Says U.S. Still on Path for ‘Solid’ 2.25% GDP This Year

By Michael Derby
The Wall Street Journal
September 30, 2019
Category: Finance & Economics
Region: United States

Federal Reserve Bank of Chicago President Charles Evans said… The U.S. economy should grow by around 2.25% this year, which is “a solid number, as it exceeds my view of the economy’s long-run potential growth rate.” …Mr. Evans expects the jobless rate to stay at a level just under 4% and he sees inflation slowly moving up to the central bank’s 2% target over the next several years. …Mr. Evans noted that the stability in his outlook owes to the fact that the economic fundamentals remain “solid.” [WSJ subscription required to access full story]

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Second-quarter U.S. GDP left at 2%, slower economic growth seen persisting

By Jeff Bartash
MarketWatch
September 26, 2019
Category: Finance & Economics
Region: United States

The U.S. economy grew more slowly in the second quarter, updated figures confirm, and this slow growth is expected to persist through the end of the year largely because of the festering trade fight with China. GDP, the official score card for the economy, grew at a 2% annual pace from April to June, the government said Thursday. That was unchanged from the previous estimate.

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No Housing Market Bubble

By Calafia Beach Pundit
Seeking Alpha
September 26, 2019
Category: Finance & Economics
Region: United States

Home prices appear to be consolidating after almost four years of gains. There are few, if any, signs of a housing bubble waiting to pop, or a mismatch between housing supply and demand. Housing construction is proceeding at a fairly modest pace, from an historical perspective, and new home sales are increasing.

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Higher interest rates send weekly mortgage applications tanking 10%

By Diana Olick
CNBC Real Estate
September 25, 2019
Category: Finance & Economics
Region: United States

Higher in rates over the last two weeks send mortgage applications into a slide, according to the Mortgage Bankers Association. Applications to refinance a home loan, which are highly rate-sensitive, fell 15% for the week. Mortgage applications to purchase a home fell 3% for the week but were a solid 9% higher than a year ago.

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What Makes Trex a Better Wood Stock Than Universal Forest?

By Zacks Equity Research
Yahoo Finance
September 23, 2019
Category: Finance & Economics
Region: United States

The Zacks Building Products – has witnessed signs of recovery as the U.S. housing market rebounded this year, thanks to lower mortgage rates and a solid labor market. …Universal Forest and Trex are the most recognized among the industry bellwethers. …In the past three-month period, Trex and Universal Forest have gained 29.4% and 10.3%, respectively, compared with the industry’s 8% growth. 

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US Housing Data Roars Back To Life, Finally

Seeking Alpha
September 22, 2019
Category: Finance & Economics
Region: United States

Home construction in the US surged to the strongest levels in more than a decade in August. Housing Starts and Building Permits jumped to the highest monthly rates since 2007. Patience is a virtue. …At long last, the stubbornly slow-to-react single-family housing data has benefited from the tailwinds of significantly lower mortgage rates. Strong performance from the REIT and Homebuilding sector.

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Why the Fed Lowered Interest Rates Again

By Karl Russell and Jeanna Smialek
The New York Times
September 18, 2019
Category: Finance & Economics
Region: United States

The Federal Reserve on Wednesday lowered interest rates for the second time this year, as it tries to guard the United States economy against trade-related uncertainty and slowing global growth. The central bank cut borrowing rates in late July for the first time since the financial crisis. The moves are part of an effort to keep borrowing cheap, credit widely available and businesses and consumers confident.

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Eight recession signals flash orange, none flash red

By Gregory Daco
The Hill
September 16, 2019
Category: Finance & Economics
Region: United States

The U.S. economy is now in its longest but also its slowest expansion on record. While it has been growing for 123 months since June 2009, the pace of GDP growth has averaged only 2.3 percent. …Combined, these “longest” and “slowest” factors have brought back misguided fears that expansions “die of old age.” But while slow growth certainly exposes an economy to potential adverse shocks, long expansions are not more strongly correlated with recessions than shorter ones.

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U.S. mortgage applications rise as rates fall

The Mortgage Bankers Association
Reuters in The Financial Post
September 10, 2019
Category: Finance & Economics
Region: United States

U.S. mortgage applications to buy a home and to refinance one rose in early September as most home borrowing costs fell with some 30-year rates hitting their lowest levels since late 2016. …The average interest rate for 30-year fixed-rate mortgages, with conforming loan balances of $484,350 or less, fell to 3.82%, which was the lowest since November 2016. It stood at 3.87% in the prior week.

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WRI’s Global and European Sawlog Price Indices Have Both Fallen Over the Past Two Years

By Wood Resources International LLC
Yahoo Finance
October 4, 2019
Category: Finance & Economics
Region: International

Wood raw-material costs for many lumber producers in Europe and North America have fallen over the past year both because of increased timber harvests and reduced log demand, particularly in North America and Asia. Some of the biggest price changes in the 1H/19 have been seen in the Western US, Central Europe and New Zealand.

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Softwood Lumber Trade was up 5%, China Reaching Record-high Imports

By Wood Resources International LLC
Cision Newswire
October 2, 2019
Category: Finance & Economics
Region: International

Demand for lumber in China, the United Kingdom, Egypt and the Netherlands increased this year despite a slowdown in the global economy. Global softwood lumber trade was up just over five percent year-over-year during the first half of 2019. Of the major importing countries in the world, only Japan and Germany have experienced major declines in imports so far this year.

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Softwood consumption expands for 3rd year in a row

By Wood Resources International LLC
The American Journal of Transportation
September 9, 2019
Category: Finance & Economics
Region: International

The global flow of softwood logs from countries with a surplus of wood raw- material to regions with tight, or costly log supply, and higher consumption of forest products continued to expand for the third consecutive year in 2018. Sawlog prices fell throughout the world in the 1Q/19 due to either plentiful supply or reduced demand for lumber, depending on region. The Global Sawlog Price Index (GSPI) fell 1.8% to the lowest level noted since the 2Q/17.

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Here are all of the Chinese products that are set to face a 30% tariff this month

By Gina Heeb and Bob Bryan
Business Insider
October 2, 2019
Category: Finance & Economics

On October 15, the Trump administration plans to raise the tariff rate on on $250 billion worth of Chinese products to 30% from 25%. Here are the major product categories that are set to get hit. …Wood: fuel wood; charcoal; various types of wood including oak, beech, maple, ash and cherry; moldings; rods; particleboard; various types of plywood; doors; corks and stoppers; wicker and bamboo baskets. Wood pulp products. Paper: Newsprint; writing paper; vegetable parchment; carbon paper; self-adhesive paper; cigarette paper; envelopes.

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How The Trade War Will Impact Rent Prices

By Ryan Coon
Forbes Real Estate Council
September 10, 2019
Category: Finance & Economics

You don’t have to dig too deep to see how the Trump administration’s tariffs on China will likely impact the real estate industry. Tariffs On Building Materials = Less Construction. …In the short term, the higher cost of building materials will likely mean less construction. Developers will be on the lookout for other suppliers, certainly, but regardless, the cost of materials will likely increase.

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