SOME MAJOR ANNOUNCEMENTS FROM LOCATION STRATEGY, LLC

I am grateful for your renewed confidence and support in what we are doing at Location Strategy. You have helped us grow from two employees just 2 years ago to five employees today. In that time, making sure that our service to you is fast and responsive has been very important to me even if, candidly, I haven’t been able to be as fast or responsive as I wanted. Because I beleive you deserve the best service possible, I have two announcements today of our commitment to provide concierge-level to Location Strategy clients.

Elaiza Marie Yap, Client Relationship Manager

Phone: (281) 394-0745

Email: [email protected]

Welcome employee #6: we are very excited to announce the addition of Elaiza to the Location Strategy team - in this role she will be at the heart of our client-centric approach. You can think of her as our “conceirge,” our “chief accountability officer,” or simply the person who knows how to find me when you can’t. With 12 years of expertise in fostering relationships, Elaiza will be the guiding force that ensures your journey with us is seamless and satisfying in translating your unique needs into into tailored solutions. Most importantly, she is committed to your growth. During the study process, Elaiza will be in constant communication with you updating you on our progress and letting you know when you can expect our results.

If you are a client or referral partner of Location Strategy, Elaiza and I will be reaching out to you over the next several weeks for introductions and a more thorough explanation of Elaiza’s role in assisting our clients.

Our Guarantee: Delivery in 30 Days or It’s Free

The first lesson I learned in real estate was that time kills deals. As a result, we complete most of our studies in 3 weeks or less. We hear from you that the competion can’t touch our turnaround times. But we haven’t delivered every study in that time frame. Being late is not acceptable. Starting September 1, we will guarantee to deliver the initial draft of your study 30 days from the receipt of payment or we will refund your money. Not next time, not as a discount on the next study — on that project. We’ll need all the information the project from you up front, too, of course - the details will be fully outlined in your proposal. We’ll still work to hit the deadline you give us - we’ve had several this year as short as one week - but all our studies will be finished in 30 days. I am confident in our staff, our systems and our processes that going forward I will never need to write you a check.

Thanks again for your attention as a reader and for your business if you are a customer or a referral partner. Please remember we’re prepared to help you anywhere with any product on the map below. I hope you enjoy our newsletter.

Thanks

Scott Davis, President

LOCATION STRATEGY CHARTBOOK

I hope you’re not getting your powerball numbers from someone who works at the BLS; they seem to be on a terrible streak of bad luck. After riding a phenomenal streak of job growth all through 2022 and the summer of 2023. Now it turns out they’ve had to revise job growth downward - eliminating 306,000 jobs originally added from March 2022-March 2023. The only good news was that the revisions were expected to be even worse. We’ll have to wait until next summer for revisions for this year. Remember: watching job reports is like watching a play under review in a football game. What you think you saw might be what really happened, but you really need to wait for the referree to jog back out on the field to give you the final ruling.

As if the bad luck with jobs wasn’t enough, now they’ve had to revise every month of home sales downward, and some of these are pretty significant. I’ve found a source of lucky rabbits’ feet in China - someone let me know if you’d like to head up a GoFundMe to send them over to the data department at the BLS.

All joking aside, BLS: YOU HAVE ONE JOB. Clean it up. This is ridiculous.

So far, the US economy has been resilient to the challenges presented by high inflation and high reinterest rates. Key metrics show minor slowdowns or choppy recoveries.

Fed policies can have as much as 12 month lag, so the full effect of interest rate increases probably has not been felt yet.

This is partly why the consensus median forecast is 60% chance of recession in the next 12 months. Goldman has become a significant outlier holding at 20% chance.

And the market is pretty sure - at least based Powell’s comments yesterday - that the Fed isn’t done. The market-implied terminal rate, which represents the maximum expected fed funds rate for the current cycle, reached its highest level since March ahead of the Jackson Hole meeting.

Mortgage rates vs. Treasuries. "The 30-year mortgage has opened up a gap of 3.14 percentage points over the 10-year Treasury. It just keeps going up and up. Higher now than even the widest part of the Global Financial Crisis. Ruthless."

The impact on homebuyers remains brutal where buydown assistance is not available.

Economists have been upgrading their starts forecasts for next year.

Even though the MBA forecasts suggests starts will go lower. I think the MBA people are probably right.

MBA purchase applications are at the lowest levels recorded and are trailing every year since 2014. Admittedly, part of this is the abyssmally low supply of used homes - a possibly bull sign for new product - but still likely to exert downward pressure on starts.

Mortgage lock is real.

Our next chart is somewhat of a test: are you a glass half-empty or half-full person? That is a HUGE gap betwen houses sold and houses under construction and suggests in most places we’ll start to accumulate inventory. But that gap is also rapidly closing with fewer houses under construction AND increasing sales.

Lastly a comment on unit mix with respect to average price. Before 2020, about 40% of new home sales were under $300k; now about 10% are. This is reflected in the rapid increase in pricing of existing housing product. I would expect in high volume areas like Houston, Dallas and Phoenix we are likely to see a shift in mix that will bring those average prices down —- so what looks like a decline actually maybe an adjustment to market conditions to allow more sales. These changes can be easy to misinterpret.

Investor share of purchases still remains elevated, propping the market up some what - it’s the small investor share that’s growing.

They may be OK, home prices tend to lead rents.

And homeowner vacancies are the lowest in decades.