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Location Strategy Chartbook 100524
Real Estate Market Insights

The US economy added 254,000 jobs in September. That’s way above expectations and a nice bounce from 159,000 in August. (Both July & August revised up)
Unemployment rate: 4.1%. (Down from 4.2% in August). Wages: +4% in past year (vs. 2.5% inflation)

U.S. Treasury yields jumped Friday as investors digested a better-than-expected September jobs report.
The 10-year Treasury yield rose more than 11 basis points at 3.961%. The yield on the 2-year Treasury was more than 17 basis points higher at 3.888%.

Mortgage rates jumped up to 6.53%

Annual real personal income growth of 3.1% continued to outpace annual real growth in personal consumption expenditures of 2.9% in August, according to the Bureau of Economic Analysis’ monthly personal income report released last week.
Recent economic headlines have focused on sluggish job growth and rising debt delinquencies as risks to continued consumer spending.

The revisions show that year-over-year income growth outpaced expenditure growth for all of 2024 so far, a reversal of the relationship between the two variables for the entire year. Prior to the revisions, year-over-year consumer spending outpaced personal income growth in almost every month of 2024, prompting a narrative of an over-extended consumer.

With stronger income growth than previously estimated, the most substantial upward revision came in the personal savings rate. At 4.8%, the savings rate is essentially on par with levels seen through 2023 and better than lows of between 2% and 3% during the height of inflation in 2022.

Still, a look at more recent monthly trends of incomes and spending makes for a fuzzier narrative. Monthly growth in consumer expenditures largely matched or exceeded monthly growth in personal income in each of the past four reported months, and revisions brought disposable income growth in July down to 0.2%, from the initially reported 0.3%.

Nearly 16% of all mortgages carry a rate greater than 6% now. By the end of the year that'll climb further. If mortgage rates fall further, the question is how many of the people in the 4-5+ category will consider selling and moving? If builders continue to offer rate buy downs, this might get some people who want to buy a new home off the fence.

The group with the fastest spike in unemployment appears to be 25 to 34-year-olds with a bachelor's degree or higher. Their unemployment rate has nearly doubled in the last 4 months, from 2.1% to 4.0%. This is the biggest non-Covid surge since tabulations began in 2000.

The housing power dynamic has shifted towards buyers in Florida. Active inventory: +59% year-over-year (YoY). Actives: +9% above pre-pandemic
The power dynamic remains in favor of sellers in Connecticut. Actives: +19% YoY. Actives: -72% below pre-pandemic
