Location Strategy Chartbook 03.22.25

Government Executive: The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, the federally backed mortgage institutions, has so far this week shuttered two of its divisions, resulting in a cut to nearly 10% of its workforce. The moves follow the confirmation of Bill Pulte to lead FHFA and his decision this week to fire the majority of both Fannie Mae and Freddie Mac’s boards and name himself as the chair of both panels.

US payroll gains have averaged 200,000 over the past three months, not very far off the pace sustained since the hole from Covid was filled in as of June 2022. The unemployment rate, at 4.1% last month, remains historically low — the mean over the past three decades is 5.6%.

But still waters can be deceiving, masking worrying currents underneath. One development of concern is a gauge of dynamism that measures the number of workers transitioning directly from one employer to another.

If lots of people across the economy are able to go straight from one job to the next without a period of unemployment, it suggests strong demand for employees. The Federal Reserve Bank of Philadelphia keeps tabs on this measure, and the latest readings marked the lowest levels since 2021, back when the economy was still reeling from the pandemic.

Barclays: US exceptionalism has kept the dollar strong for several years. But as confidence in the US economy's resilience ebbs, is the dollar's heyday over? Market sentiment toward the dollar has shifted in recent weeks, with many analysts turning outright bearish. Meanwhile, some of the underlying elements of structural support for a strong dollar are starting to change. The likelihood of meaningful fiscal stimulus in the US is declining in the face of difficult dynamics in Congress. Without fiscal subsidies, tariffs will likely take more from consumers than they add to the budget or to corporates' coffers, with the difference ending up as a welfare loss to society and the economy. Welfare loss happens when production and consumption of goods happen at quantities where marginal benefit does not equal marginal cost. While the execution of Trump's agenda has been erratic, the policy response from trading partners has been strong – including boosts to defense spending in Europe and other fiscal steps to expand public spending – which can offset some of the tariff pressures on other currencies.

“The economy is experiencing a late-cycle slowdown,” Joseph Brusuelas, chief economist at RSM US LLP wrote Monday. “But should demand for goods ease further, a broader bout of risk aversion will dampen outlays on capital expenditures, hiring and durable goods subject to import taxes. In that case, one should anticipate transportation and trucking indices to capture that in near real time and we will have to revisit our growth forecast for this year.”

The Gallup polls, conducted by surveying 70,000 people globally over the course of 2023 and 2024, found that less than a third of under-30s in the US trust the government. The proportion of US young people who said they lack freedom to choose what to do with their lives also hit a record high at 31 per cent in 2024 — a level worse than all other rich economies, bar Greece and Italy. “For younger people in the US the future seems kind of bleak,” said Julie Ray, managing editor at Gallup.

Bloomberg: It's hard enough for central bankers and Wall Street traders to make sense of the post-pandemic economy with the data available to them. At Wells Fargo & Co., senior economist Tim Quinlan is particularly spooked by the “phantom debt” that he can't see. That specter lurks behind buzzy “Buy Now, Pay Later” platforms, which allow consumers to split purchases into smaller installments. The major companies that provide these so called “pay in four” products, such as Affirm Holdings Inc., Klarna Bank AB and Block Inc.’s Afterpay, don’t report those loans to credit agencies.

There are signs that consumers are struggling to afford their BNPL debt, too. A recent survey conducted for Bloomberg News by Harris Poll found that 43% of those who owe money to BNPL services said they were behind on payments, while 28% said they were delinquent on other debt because of spending on the platforms. For Quinlan, a major concern is that economic experts are being “lulled into complacency about where consumers are.” “People need to be more awake to the risk of BNPL,” he said in an interview.

In the coming decades, US GDP may be surpassed by that of China and India, but US stock market capitalization is still projected to lead the world, according to Goldman Sachs Research.

Housing economist Tom Lawler: New leases are basically flat year-over-year (something other data is showing). Renewal rent growth is slowing. Occupancy rate is falling. Recent single-family rent trend at Invitation Homes (INVH) and at AMH (American Homes 4 Rent)

Lennar reported its lowest Q1 gross margin in over a decade today. Their CFO said on their December call that they expect their "gross margins to be between 19% and 19.25%" for Q1 2025

It ended up being 18.7%

Bloomberg: Many workers have pushed back against in-office mandates, in part because they got used to the years of flexibility. Another factor at play is the lengthier commutes. A recent National Bureau of Economic Research paper found that US employees lived about 11 miles farther from their workplace in 2023 compared to pre-pandemic, and one in ten people hired after March 2020 lived at least 50 miles from their office — three times the 2019 share.

Highly paid employees in their 30s and 40s and in sectors like finance and professional services were more likely to live even farther from the office. The pandemic has reshaped the geography of US labor markets, the authors argued.

Apart from a few cities like New York, where the majority of workers are back in the office, remote and hybrid work appears to be entrenched.

TPG’s mortgage real estate investment trust is offering $1.1 billion in bonds through a commercial real estate collateralized loan offering, TRTX 2025-FL6.

The offering is the eighth such nonbank lender bond offering of 2025, totaling a combined $7.7 billion, according to CoStar data. That is about four times more than the same period last year.

TPG expects institutional investors to acquire about $963 million of the bonds. A portion of the money will be used to pay off investors in a 2019 offering. The new issuance and the redemption of the earlier bonds are expected to net TPG about $211.1 million for new investments, the company said.

The primary assets are 20 loans secured by 85 commercial properties. About 61% of the loan balance is tied to multifamily properties.

However, the largest originated loan in the offering is for $115.5 million on seven industrial properties in Atlanta, Georgia; Fort Worth, Texas; and Brooklyn, New York, owned by Bridge Logistics Properties, according to the ratings firms’ analysis.

The largest multifamily loan in the offering is for $109.7 million on four multifamily properties in Spartanburg, South Carolina; Columbus, Ohio; and Omaha, Nebraska, owned by Hamilton Point Investments. The portfolio includes the 224-unit Sixty610 at Stone Creek apartments in Omaha.