What does a weakening US Dollar mean for investors?

Question

I just got back from my annual summer break in Europe and have felt the very real implications of the USD losing value against the Euro. 400 Euro from the ATM hit my bank account now as 500USD - almost 100 bucks more. But the Dollar is also losing against the CAD and MXN.

This means vacations cost more, but it also means imports will cost more. And that is on top of tariffs.

I used to work for a construction equipment manufacturer and was in charge of a product line that was manufactured in Europe and sold in the US, so I am keenly aware of the impacts of tariffs and exchange rate issues. What I am pondering these days is what a weaker dollar will mean for the housing market long term? I can see the cost of materials and supplies go up, from lumber to faucets to joist hangers, which in turn will drive new construction prices. Our median spec home in Milwaukee costs now 660k - before Covid you could still buy one for 499k.

Charles Clark · Answer

@Marcus AuerbachThat’s a valuable insight — it really highlights how complex and slow reshoring can be. With uncertainty around tariffs and stretched capacity, it’s no surprise we’re seeing pressure on both supply and pricing. Thanks for sharing your experience!

Charles Clark · Answer

@Marcus Auerbach

Really great insight — and you’re spot on. The weakening dollar isn’t just a vacation problem, it’s a structural economic pressure that trickles into real estate, construction, and long-term affordability.

As the USD slides against currencies like the Euro, CAD, and MXN, we’re likely to see continued upward pressure on construction costs, especially for imported materials — which still make up a surprising chunk of our supply chain (from finish hardware to specialty windows to HVAC components). Add in tariffs, and it’s a double hit.

What you said about that $499K spec home now costing $660K in Milwaukee is the perfect real-world example of this compounding effect — exchange rates + supply costs + labor shortages = permanent price resets.

Long-term, I think we’ll see:

• Delayed new construction starts due to tighter margins
• Investors pivoting more to value-add and repositioning existing stock rather than building new
• Increased focus on local sourcing and prefab to control costs
• And possibly, more institutional buyers pushing into lower-tier markets as affordability worsens elsewhere

Delayed new construction starts due to tighter margins

Investors pivoting more to value-add and repositioning existing stock rather than building new

Increased focus on local sourcing and prefab to control costs

And possibly, more institutional buyers pushing into lower-tier markets as affordability worsens elsewhere

Marcus Auerbach · Answer

It will take a long time to bring production back to the US. I have been involved in building a new factory here in Menomonee Falls for a new product line. That took about 5 years from discussing it to the first products being shipped.

When I talk to old colleagues, they say the company will eat the tariffs for now and not move production as long as they don't know for sure if tariffs are on or off.

It all seems to add up to less supply and more demand, and we are already totally stretched.

Marcus Auerbach · Answer

Yes of course, foreign buyers.. That worked out well for them - 15 years later the AUD is still at 1.5 against the Dollar. I've seen a report about a lot of high-end RE in Manhatten is just sold as investments and sits empty.

Jay Hinrichs · Answer

last time I saw the AUD get on par or rise above the US dollar the Ozzies came over an bought US real estate in droves :)