2024 Q1-Residential Housing Market Review-Movie.pdf

The purpose of this presentation is for the founder of Adkins Capital Management (ACM) to provide an overview and assessment of:
The events and trends that have transpired in the U.S. residential housing market for the first quarter of 2024:
The implications of the costly spread between the 30-year mortgage rate and the 10-year Treasury yield; and
The monetary policy actions of the Federal Reserve to help curtail the impact of inflation on the U.S. economy.
The home price level for a select group of cities that make up the Adkins 60-City Home Price Index:
Top Five Overpriced Cities in the U.S.; and
Top Five Underpriced Cities in the U.S.

1. Adkins Capital Management
“Helping Prospective Home Buyers Make A Prudent Home Purchase Decision”
U.S. Residential Housing Market Review
Adkins 60-City Home Price Index Analysis
First Quarter, 2024

2. PRESENTATION CONTENTS
➢The purpose of this presentation is for the founder of Adkins Capital Management
(ACM) to provide an overview and assessment of:
➢The events and trends that have transpired in the U.S. residential housing market
for the first quarter of 2024:
➢The implications of the costly spread between the 30-year mortgage rate
and the 10-year Treasury yield; and
➢The monetary policy actions of the Federal Reserve to help curtail the
impact of inflation on the U.S. economy.
➢The home price level for a select group of cities that make up the Adkins 60-City
Home Price Index:
➢Top Five Overpriced Cities in the U.S.; and
➢Top Five Underpriced Cities in the U.S.
➢Conclusion.
➢Resources for Prospective Home Buyers.
➢Important Disclosures.
1Adkins Capital Management LLC. 2024 Q1 – Residential Housing Market Review

3. Adkins Capital Management
➢Privately owned and independently operated company.
➢Exclusive focus on residential real estate.
➢ACM is not affiliated with any parties associated with the
residential housing industry.
➢Our mission is to bridge the gap in the residential
housing market, where deficiencies in education, public
policy, regulation, product structure, and personnel
Adkins Capital Management LLC. 2
➢More than 20 years of real estate analysis experience, more than 10 years of
institutional investment consulting experience, more than eight years of
freelance financial and investment writing experience, and more than five
years of state government experience at the agency and legislative levels.
➢Author of more than 25 published financial and investment articles, including
publications by Forbes, Investor’s Business Daily, Yahoo, Investopedia,
Financial Edge, and more than 230 news organizations worldwide.
➢2023 inductee into Marquis Who’s Who.
OVERVIEW OF ACM FOUNDER AND CORPORATION
2024 Q1 – Residential Housing Market Review
have created an environment where prospective home buyers need objective
information and useful analytical tools to make a prudent home purchase decision.

4. 3Adkins Capital Management LLC. 2024 Q1 – Residential Housing Market Review
Interest Rate Spread Analysis
An overview of the implications of the
costly spread between mortgage rates
and Treasury rates

5. 4Adkins Capital Management LLC. 2024 Q1 – Residential Housing Market Review
MORTGAGE-TREASURY SPREAD
➢During the first quarter of this year, home loan interest rates remained elevated amid the unusually
large spread between the 30-year mortgage rate and the10-year Treasury yield.

6. 5Adkins Capital Management LLC. 2024 Q1 – Residential Housing Market Review
IMPLICATIONS OF THE MORTGAGE-TREASURY SPREAD
The large spread between the 30-year mortgage rate and the 10-year Treasury yield can have several
implications for the housing market, the economy, and the financial markets. Here’s what a wide spread
could mean for home buyers:
➢A wide spread often indicates that mortgage rates are higher relative to Treasury yields. This is
because the spread reflects the risk premium that lenders demand over the risk-free Treasury
securities. For home buyers, this translates to higher monthly mortgage payments and potentially
higher total interest costs over the life of the loan.
➢Higher mortgage rates can lead to increased borrowing costs, making home loans more expensive. As
a result, some buyers may find that they need to adjust their home-buying budget or look for less
expensive properties.
➢If mortgage rates are high due to a wide spread, it can dampen demand in the housing market. In a
slower market, there might be less competition among buyers, which could be beneficial for those
who are still able to purchase.
➢For current homeowners looking to refinance, a wide spread means that refinancing options could be
more expensive. This in turn may make refinancing less attractive or affordable.
➢A wide spread can signal various economic conditions, such as increased credit risk or market
volatility. Home buyers should consider these broader economic factors as they may influence long-
term financial stability and housing market dynamics.
Overall, a large spread between the 30-year mortgage rate and the 10-year Treasury yield can signal
various economic and market conditions, from increased uncertainty and market risk aversion to changes in
monetary policy and inflation expectations.

7. 6Adkins Capital Management LLC. 2024 Q1 – Residential Housing Market Review
FEDERAL RESERVE
POLICY ANALYSIS
Ongoing hawkish monetary policy via higher
interest rates set forth to curb inflation

8. 7Adkins Capital Management LLC. 2024 Q1 – Residential Housing Market Review
MONETARY POLICY ACTIONS OF THE FEDERAL RESERVE
➢During the first quarter of this year, the Federal Reserve continued to convey that it is primarily
concerned about reducing rampant inflation levels in the U.S., but also stressed concern about its
impact on the economy.
➢Accordingly, the Federal Reserve maintained the target range for the federal funds rate that was
set in July at 5.25% and 5.50% for the first quarter of 2024.
➢The Federal Funds rate has not been at this high of a level since January 31, 2001.
➢In comparison, the Federal Reserve was holding the federal funds rate at around zero as
recently as the first quarter of 2022.
➢The Fed has raised rates11 consecutive timessince March of 2022.
➢While calls for rate cuts are now a prevalent topic of debate, it is less likely to be cut
significantly this year.
➢The national average mortgage loan interest rate for a 30-year, fully-amortized fixed rate
loan reached an all-time low of 2.67% on December 17, 2020, and the all-time high of
18.63% in October of 1981.
➢ Due to a host of economic factors, the national average mortgage loan interest rate for a 30-year
fully-amortized fixed rate loan began the year at 6.61% and ended the quarter at 6.79%.

9. 8Adkins Capital Management LLC. 2024 Q1 – Residential Housing Market Review
HOUSING ANALYSIS
METHODOLOGY
Overview of the proprietary analytical methodology
and comprehensive software application developed
by Adkins Capital Management

10. ➢THE ADKINS RESIDENTIAL HOME VALUATION ANALYZER
CALCULATES THE JUSTIFIED MORTGAGE LOAN INTEREST RATE
➢Represents the cost of debt for a 30-year fully-amortized fixed-rate mortgage
loan that justifies the home price level with the household income level.
➢Justification based on the assumption that 28% of household income is the largest
amount of money that should be spent to repay the principal and interest costs for
a 30-year fully-amortized fixed-rate mortgage loan.
➢THE ADKINS RESIDENTIAL HOME VALUATION ANALYZER
CALCULATES THE JUSTIFIED PERCENTAGE OF HOUSEHOLD INCOME
➢Represents the percentage of pre-tax household income that justifies the
relationship between the home price level and the cost of debt for a 30-year
fully-amortized fixed-rate mortgage loan.
➢Justification based on the month-ending national average mortgage loan interest
rate for a 30-year fully-amortized fixed-rate mortgage loan.
Justified Home Price = Function of (Household Income Level) &
(Percentage of Household Income Allocated to Loan Costs) & (Cost of Debt)
9Adkins Capital Management, LLC.
FINANCED-BASED ANALYTICAL METHODOLOGY
2024 Q1 – Residential Housing Market Review

11. 10Adkins Capital Management LLC. 2024 Q1 – Residential Housing Market Review
COMPREHENSIVE RESIDENTIAL
HOUSING ANALYSES
Houses are Overpriced in 51 Cities Among the
Adkins 60-City Home Price Index

12. TOP FIVE OVERPRICED CITIES IN THE U.S.
➢Based upon the justified percentage of household income amount, 51 cities in the Adkins 60-City Home Price
Index were classified as overpriced for the first quarter of 2024.
➢Los Angeles, San Francisco, Newark, New York City, and Boston were identified as the five most overpriced cities
in the index.
➢In terms of a relative price-level analysis, it is not possible to justify the home price level for the top five overpriced
cities by reducing the 30-year fixed rate mortgage loan interest rate from 6.79% to 0.0%.
➢In addition, in terms of a relative price-level analysis, it is not possible to justify the home price level for the top five
overpriced cities as underpriced, because prospective home buyers would have to spend more than the respective
justified percentage of household income amounts, which falls within the unrealistic range of 81% to 99% of
household income.
11
Adkins 60-
City Home
Price Index
Median
Household
Income
Level
Median
Home Price
Level
Justified
Mortgage
Loan
Interest
Rate
Justified
Percentage
of
Household
Income
Required
Median
Household
Income
Level
Justified
Home Price
Level
Los Angeles $77,456 $980,000 None 99% $273,809 $277,226
San Francisco$119,136 $1,410,000 None 93% $393,949 $426,404
Newark $41,335 $475,000 None 90% $132,713 $147,944
New York City$67,046 $764,000 None 90% $213,459 $239,967
Boston $81,744 $838,000 None 81% $234,134 $292,573
Adkins Capital Management LLC. 2024 Q1 – Residential Housing Market Review

13. TOP FIVE OVERPRICED CITIES IN THE U.S.
➢In order to justify the median home price level for each city, the median required household
income level would need to increase to a level within the respective range of $132,713 and
$393,949.
➢Based on the median household income level, the quarter ending national average mortgage loan
interest rate, and the assumption that no more than 28% of pre-tax household income should be
spent in order to repay the principal and interest costs of a mortgage loan, the justified home price
level for the top five overpriced cities fell within the respective range of $147,944 and
$426,404.
➢Prospective home buyers should use the Adkins Residential Home Valuation Analyzer in order to
assess the level of overpricing of homes in their community.
12Adkins Capital Management LLC. 2024 Q1 – Residential Housing Market Review
Adkins 60-
City Home
Price Index
Median
Household
Income
Level
Median
Home Price
Level
Justified
Mortgage
Loan
Interest
Rate
Justified
Percentage
of
Household
Income
Required
Median
Household
Income
Level
Justified
Home Price
Level
Los Angeles $77,456 $980,000 None 99% $273,809 $277,226
San Francisco$119,136 $1,410,000 None 93% $393,949 $426,404
Newark $41,335 $475,000 None 90% $132,713 $147,944
New York City$67,046 $764,000 None 90% $213,459 $239,967
Boston $81,744 $838,000 None 81% $234,134 $292,573

14. TOP FIVE UNDERPRICED CITIES IN THE U.S.
13Adkins Capital Management LLC. 2024 Q1 – Residential Housing Market Review
➢Based upon the justified percentage of household income amount, nine cities in the Adkins 60-City
Home Price Index were classified as underpriced for the first quarter of 2024.
➢Detroit, Cleveland, Jackson, Des Moines, and Fargo were identified as the top five most underpriced
cities in the index.
➢In order to classify homes in the top five underpriced cities as overpriced:
➢The national average mortgage loan interest rate would have to increase from 6.79% to more than
the respective justified mortgage loan interest rate amount for each city (8.2% - 19.7%); or
➢It would have to be deemed imprudent by prospective home buyers to spend as much as the
respective justified percentage of household income amount for each city to repay the costs of a
mortgage loan.
Adkins 60-City
Home Price Index
Median
Household Income
Level
Median Home
Price Level
Justified
Mortgage Loan
Interest Rate
Justified
Percentage of
Household Income
Detroit, MI $85,784 $90,000 19.7% 9%
Cleveland, OH $62,315 $113.000 15.4% 15%
Jackson, MS $39,969 $90,000 12.1% 18%
Des Moines, IA $73,131 $194,000 10.1% 21%
Fargo, ND $92,843 $290,476 8.2% 25%

15. ➢Access the Adkins Residential Home
Valuation Analyzer
➢Review the Adkins 60-City Home Price
Index
➢Review our interactive map of city housing
analyses
➢Review our comprehensive news feed of
pertinent housing information
14Adkins Capital Management LLC.
RESOURCES FOR PROSPECTIVE HOME BUYERS
➢Review our comprehensive housing methodology patent application
➢Review our comprehensive reverse mortgage loan analysis
➢Watch our movie catalog of quarterly residential housing market reviews
➢Watch our comprehensive housing valuation methodology movie presentations
➢Review or strategic residential real estate model portfolio hedge fund
2024 Q1 – Residential Housing Market Review

16. THANK YOU!
Adkins Capital Management
residentialrealestateanalysis.com
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Contents of this report are the property of Adkins Capital Management. No part of this report may be reproduced,
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Adkins Capital Management LLC. 15
IMPORTANT DISCLOSURES
2024 Q1 – Residential Housing Market Review