June 2023: We are officially in the Atlantic Hurricane season. Please remember to check your home insurance policies to make sure you have appropriate and adequate coverage. Additionally, take time to check the condition of your roof, exterior paint, and landscaping. Have a roofer or handyman inspect your roof. It is something that we often overlook. I’ve seen significant water intrusion damage on the ceilings of houses that resulted from just a single popped nail on the roof! Address any areas of concern and ensure they are properly repaired and sealed.
Remember that the exterior paint of your home serves a functional purpose beyond aesthetics. It helps keep your house watertight, preventing water from seeping through the walls during heavy rains, especially when driven by strong winds. Regularly sealing cracks and caulking around windows are essential maintenance tasks to protect your investment.
Trimming back tree branches and managing overgrown landscaping is also advisable, as they can pose a risk during strong winds and potentially cause damage. While we hope to avoid hurricanes in Orlando this year, it’s always best to be prepared.
Throughout May, I had insightful discussions about various real estate topics with friends and clients. Some matters have been resolved, while others are still unfolding. One positive development is the resolution of the debt-ceiling crisis, which has averted a government default. Such a default would have immediately plunged our country into a recession. From a real estate perspective, it would have had serious implications for future borrowing costs and further depressed the housing market.
The U.S. government’s debt is widely regarded as the safest investment, resulting in the lowest interest rates that investors expect to earn. From this “bottom rate”, all other types of loans have higher interest rates based on their risk profiles. If the U.S. government were to default on its loans, investors would require higher future interest rates to account for the increased risk. This would elevate the baseline interest rate, affecting all other loan types. Therefore, the U.S. government meeting its debt obligations and paying its bills is the fundamental stabilizer of our economy.
Our current housing market relies on buyers’ adaptation to mortgage interest rates of around 6-7%. If rates decrease, we anticipate a corresponding and proportional housing boom. Conversely, if rates rise, we expect further stagnation and a buyer pull-back. Many people ask us what the housing market will look like going forward. We answer, “Just watch the interest rates.”
Switching gears, Senate Bill 264, which imposes limitations on real estate investment from certain foreign nationals, has raised questions among our Chinese clientele. Our professional real estate organization is diligently analyzing the potential implications of this bill. Once we have clarity and guidance, we will provide the necessary updates.
I’ll stop here. Keep your questions coming. We enjoy discussing them with you.
~Yien and Alysa Yao
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