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On top of existing barriers to new construction in the Bay Area, including labor costs and zoning laws, tariffs on imported lumber and steel have driven up material costs as well.

While residential building permits are up 2% from last June in San Francisco and the East Bay, permits have dropped nearly 10% in the San Jose metro area. Some current projects have stalled or undergone redesigns as costs have risen. For example, a 29-story tower by Oakland, Calif. modular developer RAD Urban was cut to 15 stories after steel prices rose by 30%.

According to local analysts and developers, new apartments, condos, and communities for low- and medium-income residents could be the hardest-hit by these rising material costs. “We’re building, but we’re not building fast enough,” said Sean Randolph, senior director of the Bay Area Council Economic Institute. “Increasing housing costs due to tariffs doesn’t help.”

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