BRIEFINGS ARE BACK. NOVEMBER 15, 2023

Location Strategy is proud to announce its first forecast briefing presentation on November 15, 2023, from 7:30–10:00 AM. Click here for full details and to reserve your seat.

We have a panel of distinguished builders, developers, and lenders covering affordability across the pricing spectrum and the outlook for project and home lending in 2024. Panelists include:

• Jennifer Keller, Hamilton Thomas Homes

• Becky Ullman, Lennar/Friendswood Development

• Matthew Brodd, AmCap Home Loans

• Lawrence Dean, Veritex Community Bank, moderator

The Panel will be followed by the 2024 economic forecast to be given by Scott Davis.

Don’t delay; limited seating is available. Click here to reserve your seat.

Swiper No Swiping!

It is has come to our attention that someone in the Houston market may have obtained unauthorized copies of Location Strategy’s intellectual property, including copies of our report format, and may be using them to attempt to sell “consulting services.” We have sent a cease and desist notice to the offending party. If you were the victim of one of these counterfeit reports, please let us know immediately. We will be happy to review and correct the materials you received and prepare a new report at no charge to you.

Location Strategy Chartbook

Let’s hit a few key issues first: the government shutdown which we assume starts next week.

How many workers will be furloughed in the upcoming government shutdown? Below is an estimate from Oxford Economics. Looking back at 2013, the estimated impact of one week of shutdown was about $10 billion. That shutdown lasted for two weeks, so about $20 billion. The current shut down would cost much mor than this, but still a drop in the bucket compared to the size of the economy. So far, the shut down story is about convenience and politics and does not appear to have a significant effect on the economy. Yet.

Next up are student loans and I’ve come around on this one. Yeah the total interest is a big number, but this week I saw this: nearly half of all outstanding federal student loan debt is being held by only 10% of borrowers who are holding debt of $80,000 or more. I would suspect most of those are attorneys or doctors or other high-paying professions. I think this issue over

The last topical issue is the synchronization of US manufacturing PMI with Chinese credit cycles - this shows that the industrial sector seems to be taking economic struggles in China in stride.

Growth continues to suprise to the upside, even as the overall rate seems to be slowing - it’s slowing far less than expectedd.

Since so many have forecasted a recession, it’s relatively low bar show growth, but the real data still continues to come in higher than forecast.

Sales plunged by 8.7% MoM in August (vs. -2.2% est), the most in 11 months.

Elevated mortgage rates, combined with mortgage applications at multi-year lows (2nd chart), indicate further declines in home sales.

Weak homebuilder confidence signals a slowdown in residential construction.

Americans want to move: more than 1 in 4 homeonwers are looking to relocate. But only about 1/3 of those who did were able to move in the last year.

A big reason for that is rate lock-in: only about 5% or mortgagees have rates at 7% or adove. Morgan Stanley estimates that a buyer needs about a 25 bps drop to consider refinancing.

“On a year-to-date basis, the National Composite has risen 5.3%, which is well above the median full calendar year increase in more than 35 years of data. Although the market’s gains could be truncated by increases in mortgage rates or by general economic weakness, the breadth and strength of this month’s report are consistent with an optimistic view of future results,"

Home prices are increasingly outstripping wage growth

Half of the 20 cities tracked by Case Shiller saw home prices hit new highs. Houston, Austin and San Antonio are not part of the Case-Shiller index, but declines are as follows; Houston, -1% YOY, -5% since peak; San Antonio, -1.5% YOY, - 5.5% since peak; Austin, -8% YOY, -16% since peak.

new home sales by stage of construction.

Here is a look at housing inventories by price tier in terms of months of supply.

Median monthly new homebuyer payments are at a record $2,666 (at 7.19% mortgage rate).

History suggests that once US food prices rise, they generally don't come down.