What 1930 Can Teach Us About 2025’s Housing Market
Back in the 1930s, the United States passed the Smoot-Hawley Tariff Act in an effort to protect American jobs and industries during tough economic times. It ended up doing the opposite. Global trade slowed tremendously, the Great Depression deepened, and real estate markets, which were already under pressure, took a serious hit.
So, with the recent enactment of broad tariffs, it’s only fair to ask: could something like that happen again? And more importantly, what does it mean for real estate here in Orange County?
Let’s break down the differences, the parallels, and what homeowners, buyers, and sellers should keep in mind as we look toward the rest of 2025.
| Category | 1930s (Smoot‑Hawley Era) | Today |
|---|---|---|
| Pre‑Tariff Economy | Already in decline post‑1929 crash | Still growing, but cooling |
| Stock Market | Crashing | Near record highs |
| Jobs | Unemployment rising fast | Unemployment near historic lows |
| Consumer Spending | Weak | Still strong, but tightening |
| Housing Market | Declining, high foreclosure rates | Low inventory, high prices |
| Interest Rates | Low | Elevated to fight inflation |
| Debt Levels | Lower, but banks were fragile | Higher, but consumers relatively stable |
Clearly, we’re not in 1930. Today’s economy is more diversified, technology-driven, and resilient. But that doesn’t mean tariffs don’t matter… they do! Especially if they impact the confidence of buyers, investors, and builders.
How Tariffs Could Impact the Economy Today
Broad tariffs, especially on major trading partners, can drive up the cost of imported goods. That means everything from electronics to construction materials gets more expensive. This could potentially:
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Reignite inflation just as the Fed is trying to cool it
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Delay interest rate cuts or even prompt further hikes
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Increase the cost of new construction and home renovations
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Reduce consumer confidence in future financial stability
This wouldn’t necessarily lead to a crash, but it could introduce friction at a time when the housing market is already navigating high mortgage rates and affordability challenges. We’re already starting to see it in the stock market with major indexes bouncing up and down like a yo-yo.
Real Estate in a Tariff-Driven Economy
Here’s how the ripple effect could reach the Orange County real estate market:
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Higher Rates for Longer: If inflation ticks up, mortgage rates could stay elevated, slowing buyer activity.
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Higher Construction Costs: Builders may delay new projects or increase prices, adding to the inventory crunch… just as we’re starting to see some improvement.
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Consumer Hesitation: Economic uncertainty often leads people to pause on big decisions like buying or selling a home.
But here’s the good news:
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Inventory is still incredibly low.
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Homeowners have substantial equity in their homes.
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Lending standards have been tight, which means no subprime bubble.
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The Fed, FHA, and other institutions have more tools (and lessons) than they did in the 1930s.
In short, the fundamentals of the housing market remain relatively solid, even if some economic speedbumps arise.
Final Thoughts: Stay Informed, Not Alarmed
History doesn’t always repeat itself, but it often rhymes. Smoot-Hawley is a reminder that broad tariffs can have unintended consequences. But we’re operating in a very different world today… one with stronger safety nets, global interconnectivity, and a more informed approach to economic management.
If you’re a current homeowner, or maybe even buyer or seller in today’s market, the best thing you can do is stay informed, lean on trusted professionals, and focus on your long-term goals.
Whether you’re planning a move this year or simply keeping an eye on how economic changes might impact your investment, we’re here to help you navigate it all.
