Location Strategy Chartbook 07.25.2026

WSJ: Back in May, traders in the futures market were acting as if the chance of a quarter point hike was close to zero. Peace had broken out in the Middle East, and oil prices were having their weakest quarter in years, easing inflationary pressure.
 
That implied probability has risen to about one-third. New Fed Chair Kevin Warsh has abandoned his predecessors’ hints, called “forward guidance,” pledging to let the data talk instead.
 
So the creeping suspicion that the Fed will hike for the first time in more than three years isn’t crazy. At the June meeting, Warsh’s first as chair, nine of 18 participants (only 12 of them vote) foresaw at least one hike this year, up from zero at the previous meeting.
 
Now oil prices are up by a third just this month, reigniting inflation fears. And Warsh told Congress just 10 days ago that he’d have “no tolerance” for inflation, which has now been above the Fed’s target for more than five years.

The US 30-year bond yield is trading above 5% for the longest stretch since the dawn of the financial crisis, echoing investor concerns about a growing debt pile and sticky inflation.

So far this year, the 30-year has traded beyond 5% for 27 days — or about 19% of all sessions. It traded above that level for 50 days in 2007. Unlike that year, however, the Federal Reserve’s benchmark is currently 150 basis points lower, suggesting investors are demanding even more compensation for holding the longest maturity sold by Treasury than at the start of the subprime debt implosion.

What is middle income anyway? Defining “middle income” is more complicated than it sounds. There is no single, universally accepted threshold, and where someone falls on the income spectrum depends on factors such as household size, education, marital status, age and geography. For example, the median or middle-income level is much lower if you’re single or have only a high-school degree and more than doubles for those who are married or college-educated. Generally, though, the Census suggests that middle income ranges from $60,000 to $130,000 annually for ages 25 to 74 years old.

Middle-income households’ spending contributed nearly a quarter of GDP in 2024. BofA credit and debit card data suggests this cohort’s spending growth has improved since last year. And though their overall card year-over-year (YoY) spending growth has eased slightly compared to lower-income families, they are still outpacing them on discretionary spending growth

Groceries, hobbies and general merchandise depend on the middle

As of June 2026, inflation outpaced middle-income households’ after-tax wage growth, based on a comparison of BofA deposit data and CPI inflation data from the

BLS

A joint venture between Conor Commercial Real Estate and Globe Corp. has landed nearly $79 million in permanent financing for a newly completed luxury apartment complex in East Dallas.

LS Notes: There are many reasons why a project may lag in performance compared to other projects from location, parking, quality, floorplans, pricing, density to volume of supply. But it doesn't help when you are delivering the same unit mix everyone else is.

This project is studios, 1 and 2 bedroom units.

Where are the 3+ bedrooms, townhomes with direct access garages, or even apartments with private garages in the shared garage space

-Dallas, just east of downtown.
-5 stories
-327 units
-Marketed as a high-end property with a mix of studio, one- and two-bedroom apartments averaging 832 square feet of space. Finishes include quartz countertops, hardwood-style flooring and stainless-steel appliances. These are no longer considered high end- they are basic to middle of the road/ expected as the delineation of luxury has been ameliorated by cheaper looking materials.

Within a 10 mile radius of this property, built since Jan 2015, there are 316 buildings that are at least 50+ units

5% are 3+ bedroom

People who want 3+ bedrooms

-Families with kids
-DINKS who want a guest room & a home office or 2 home offices or a workout or gaming room
-Boomers downsizing- they have a lot of stuff, they may want to host friends and family and they no longer want the maintenance of owning a home

Over half of new single-family homes built in 2025 were two or more stories, according to the Census Bureau’s Survey of Construction. But the share of homes started with two or more stories fell in 2025, reflecting increased building activity in regions that prefer single-story homes.

Nationwide, the share of new homes with two or more stories fell from 52.5% in 2024 to 51.4% in 2025, while the share of new homes with one story rose from 47.5% to 48.6%. This share varied significantly across the nation.

Two-story homes remain more popular in most areas of the country. But the areas seeing the most new homes built tend to prefer single-story homes.

Even in areas that prefer multistory homes, the single-story share is growing. For example, the single-story share in the Pacific has increased in seven of the last eight years, from 32.7% in 2017 to 47.5% in 2025. This could reflect the increased cost to build homes and developers focusing more on moderate and low-cost housing.

The median lot size for newly built single-family detached homes edged up slightly in 2025. But the increase was modest and did not alter the broader trend toward more compact neighborhood development.

Data from the Census Bureau’s Survey of Construction show that the median lot size of a new single-family detached home sold in 2025 increased slightly to 8,543 square feet, up from 8,506 square feet in 2024. Although this represents a small year-over-year increase, the typical lot remains under 1/5 of an acre and well below historical levels.

Close to two-thirds (64%) of new single-family detached homes were built on lots under 9,000 sq. ft. (1/5 of an acre or less). In 1999, just 46% of new homes were built on lots under 1/5 of an acre.

New England is known for strict local zoning regulations that often require very low density. Therefore, it is not surprising that single-family detached spec homes started in New England are built on some of the largest lots in the nation, with half of the lots exceeding 0.4 acres. The East South Central division is second on the list, with the median lot occupying 0.3 acres.

At the other end of the spectrum, the Pacific division, where densities are high and developed land is scarce, has the smallest lots, with half of the lots being under 0.13 acres. The bordering Mountain division also reports typical lots smaller (0.15 acres) than the national median.

The latest NAHB builder and developer regulatory surveys were both conducted in March of 2026. Table 1 shows the estimates of regulation as a percentage of both the lot cost, and the final house price. The table shows the share of developers subject to the regulation and the average cost of the regulation across all homes (i.e., with the “zeroes” included in the average).

As of this writing, the first estimate of the January 2026 average sales price is available from the Census Bureau, and is $499,500. Applying this to the percentages from Table 1 shows that the regulation captured by the NAHB surveys accounts for $131,734 of the price of an average new home built for sale. Of this, $46,795 is attributable to regulation during development of the lot. The remaining $84,939 is due to regulation imposed during construction of the single-family structure