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| LIFE IN SOLERA | JULY 2024 | | LIFE IN SOLERA | JULY 2024 | 7 Experts insist the housing market will improve. Unfortunately, sellers and buyers continue to see a delay in this transformation, thanks partly to inflation, which is taking its time to cool off, further delaying the Federal Reserve from cutting the federal funds rate. Mortgage rates indirectly track this benchmark interest rate that banks use as a guide for overnight lending. Consequently, with the federal funds rate at its highest level in over two decades, mortgage rates, sellers and borrowers — are feeling the impact. However, one rate cut could lead to mortgage rates easing enough to improve housing market conditions. For example, a drop in mortgage rates from 6.8 percent to 6 percent could significantly increase a buyer's purchasing power. But experts don't expect such a drop to happen any time soon. "With mortgage rates remaining around 7 percent, significant improvements are unlikely in the short term," said Jiayi Xu, economist at Realtor.com. Meanwhile, U.S. home prices remain unaffected by persistently high mortgage rates, posting an annual 6.5 percent gain in March — the ninth consecutive month of year-over-year increases and a new all-time March high — according to the latest S&P CoreLogic Case-Shiller Home Price Index. e Index has hit new highs in six of the past 12 months. For a housing recovery to occur, several conditions must unfold. "For the best possible outcome, we'd first need to see inventories of homes for sale turn considerably higher," says Keith Gumbinger, vice president at online mortgage company HSH.com. "is additional inventory, in turn, would ease the upward pressure on home prices, leveling them off or perhaps helping them to settle back somewhat from peak or near-peak levels." And, of course, mortgage rates would need to cool off, but the timeline for that development seems to be getting more protracted with rates lingering around 7 percent. e 30-year fixed mortgage rate slightly dipped to 6.99 percent the week ending June 6, according to Freddie Mac. However, when mortgage rates finally go on the descent, Gumbinger says don't hope they cool too quickly. Rapidly falling rates could create a surge of demand that wipes away any inventory gains, causing home prices to rebound. "Better that rate reductions happen at a metered pace, incrementally improving buyer opportunities over a stretch of time, rather than all at once," Gumbinger says. He adds that mortgage rates returning to a more "normal" upper 4 percent to lower 5 percent range would also help the housing market, over time, return to 2014-2019 levels. Yet, Gumbinger predicts it could be a while before we return to those rates. (Sources: Forbes Advisor, S&P CoreLogic Case-Shiller Home Price Index, NAR, Zillow.) In Solera, median prices have dropped. Only six homes have closed escrow in the past 90 days. On June 10, median prices were: Princess: $362,500; Trillion: $430,000; and Emerald: $477,500. Of course, if your home is significantly upgraded, has a view, pool or mello roos paid off, your home may sell for more than the prices listed here. (Source: CRMLS) REAL ESTATE REPORT e State of the Housing Market By Diana Mangan, Realtor and Resident

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