THE LOCATION STRATEGY TOP 10 CHARTBOOK

A QUICK REVIEW OF MARKET CONDITIONS FOR HOUSING.

JOB NUMBERS REVISED AGAIN

Once again the job numbers are revised because they have overstated growth. This time, it's because of fraud. A week ago, the Department of Labor's report on unemployment insurance filings showed that the number of weekly initial claims jumped by 22,000 to land at their highest level since October 2021. However, a large share of those new claims came from Massachusetts, where the state labor department said the reported gain was a reflection of an increase in fraudulent activity and not necessarily a spike in people filing for unemployment benefits.

Mortgage rates are inching upwards again.

Home sales are outperforming mortgage demand - indicating a risk for the market as it becomes increasingly reliant on cash sales.

Although the share of cash buyers has gone up in all generations, Boomers and Silents have increased share dramatically. Among Older Baby Boomers aged 68 to 76, more than half paid all cash for their recent home purchase. Among the Silent Generation (make up just 4% of recent buyers), 53% paid all cash for their home. Before last year, about one-third of Older Boomers paid for their home without a mortgage, and among the Silent Generation, the share never surpassed 48% in the historical data. Older buyers have significantly more housing equity, helping them make housing trades without needing a mortgage today.

Single women buyers are the most likely buyer to purchase their home with all cash. These women may be widowed or divorced and have housing equity to make these trades—twenty-eight percent purchased without a mortgage. For married couples, the share stands at 27% of buyers.

New home sales were stronger than expected in April, rising 10.7% above 2022 levels.

Inventories of new homes dipped below last year’s levels.

However, the market for new houses is not nearly as tight as with existing homes

New home sales are outperforming existing. The mortgage trap is real.

This chart shows new home sales by stage of construction. Backlog has dropped significantly, homes under construction will soon follow.

Home prices. 

"The median U.S. home sale price fell 4.1% ($17,603) year over year in April to $408,031. That’s the biggest drop on record in dollar terms and the largest decline since January 2012 in percentage terms."

Economists boosted their forecasts for next year’s housing starts.

Rents have significantly outpaced household incomes.

AI WILL CREATE MORE JOBS THAN IT DESTROYS

We've seen a lot of media over the last few months over how many jobs will be destroyed by AI. But that hasn't really been the pattern historically: technological revolutions do destroy jobs but end up creating more jobs by their end.

According to BofA’s Jim Reid: "So even though virtually all of the jobs of 1755 no longer exist, the automation of different tasks did not lead to an ever-increasing spiral of unemployment … technology has always created the wealth and time to free up labor for alternative more productive employment and created industries and jobs we never knew we needed at the time."

Scott Davis

LOCATION STRATEGY, LLC

1302 Waugh Drive #178

Houston, Texas 77019

832.304.DIRT (3478)

www.locationstrategyllc.com