Tariff Talk

Hello everyone! Here today on WilliamsLuxuryHomes.com, we’re discussing a topic that directly impacts several major developments across Greater Phoenix. With so much construction already underway such as Optima McDowell Mountain, Ascent at The Phoenician, Summit by Olson Kundig, and Portico and Atavia by Belgravia Group, a pressing question hangs over it all. Will rising tariffs drive construction costs even higher?

Scottsdale’s $1 billion project, The Parque, just submitted its first phase plans to the city. These large-scale projects span years, raising questions about how tariff pressures might shape future phases. Today, we’ll break down what’s happening, what’s next, and what it could mean for the local market.

Rising Material Costs Already Hitting Hard

Recent data shows construction costs climbing as tariffs bite into budgets. Supply chain strains are creating headaches for builders trying to plan ahead. Some numbers stand out:

• Iron and steel prices jumped 3.9%
• Softwood lumber rose 2.8%
• Steel mill products climbed 2.7%
• Tariffs driving 20% to 25% hikes on metals
• Wood costs forecasted to soar 25% to 30%
• HVAC and electrical gear projected to rise 10% to 15%
• Plumbing materials expecting 8% to 10% increases

Material costs make up nearly half of every project’s total budget. Tariffs are adding strain on core commodities and specialty items alike — everything from elevators to electrical systems. Even shifting sourcing strategies to domestic suppliers may backfire as rising demand inflates local prices.

For projects already mid-construction, these price pressures will complicate planning and budgeting in the months ahead.

Also Read: Large Developments Will Reshape Scottsdale In The New Year

Housing Starts Slowing As Uncertainty Builds

Residential construction is flashing early warning signs. As costs rise and financing tightens, builders are tapping the brakes. Recent trends tell the story:

• Permits down 6.8% year-over-year
• Multifamily permits dropped 15.7% from last February
• Single-family permits slipped 3.4% annually
• Bank of America expects housing starts to fall 4% to 5% in 2025

Builders face a perfect storm. Higher mortgage rates, labor shortages, and now tariffs. Roughly one-third of the workforce in construction is made up of immigrants, and new immigration policies could tighten that pool further.

Lately, developers have pivoted toward smaller homes at slightly more attainable price points. But if material costs keep rising, affordability could remain out of reach for many buyers.

Also Read: Optima McDowell Mountain Construction Photos – March 2025

Tariffs Stir Up Bigger Problems For Future Phases

The problem is not just what’s happening today. It is what could hit next. New tariffs keep rolling out, creating a volatile and unpredictable construction environment.

• Tariffs now cover imports from China and Mexico
• European and Chinese counter-tariffs are adding more complexity
• About 27% of U.S. steel is imported, but 50% of aluminum is foreign sourced
• Large projects facing millions in added costs due to tariffs

Contractors are trying to plan for this volatility, but many warn these tariffs are separate from standard cost escalation models. Price swings could easily catch even experienced developers off guard.

In the meantime, major projects across Greater Phoenix may feel the effects during their next construction phases, especially multi-year developments with tight budgets.

Also Read: Big News Regarding The Parque’s First Phase Of Construction!

What Happens Next For Scottsdale’s Big Developments?

This all raises serious questions for the flagship projects reshaping Scottsdale. Long timelines and rising costs mean future rounds of construction could face real hurdles. Here are the ones everyone’s watching:

• Optima McDowell Mountain
• Ascent at The Phoenician
• Summit by Olson Kundig
• Portico by Belgravia Group
• Atavia by Belgravia Group
• The Parque - a $1 billion project

Rising material prices might reshape timelines, design decisions, or pricing models. Developers may need to rethink strategies as tariffs add new layers of complexity.

Stay Updated On These Projects & More

Here today on WilliamsLuxuryHomes.com, we are keeping a close eye on these standout projects. Curious where things stand or when sales launch? Optima McDowell Mountain, Ascent at The Phoenician, Summit by Olson Kundig, Portico, Atavia, and The Parque are all worth watching closely.

Let us know anytime if you have questions or want updates. We are always here to share what we know.