Ran into this issue as well on VS 2013 and TFS – every time I opened my team explorer it would take 10+ seconds to show all projects, then when I would expand the project in source control, another 10+ seconds would roll by.
Earlier today I began to experience the “local storage is being used” error when trying to save data in class files. I did some original research, and this following link saved the day for sure. Now TFS is blazing!
Local Data Store Solved
What you do is edit workspace (including all projects associated), and change the “Location” dropdown from “Local” to “Server”. It took about 4-5 minutes for the changes to finish, but well worth it.
Hopefully this will help someone down the road.