A report from Candy‘s Dirt in Texas. “‘We’re seeing the results of buyer exhaustion. These poor guys and gals are no longer willing to be one of 40 offers and pay so far beyond an already inflated asking price,’ said Travis Lee-Moore with Coldwell Banker in Fort Worth. ‘The sellers got greedy for a minute and their agents were actually encouraging them to do so. Nobody can afford to or wants to wait several years for their purchase price to catch up to their actual value and defer their equity like that. It never was sustainable and I’m surprised it lasted as long as it did.’”
“As Dr. Jim Gaines, a research economist at the Texas Real Estate Research Center at Texas A&M, told us earlier this year, employment is the factor to watch: ‘widespread job loss — similar to what we saw at the onset of the pandemic — could create complications for the economy and, in turn, the housing market.’ Could that cause a bubble? Maybe, Gaines said, especially if marginal borrowers defaulted en masse.”
From Yahoo Finance. “Rocket Companies CEO Jay Farner joins Yahoo Finance Live to discuss how the Fed rate hikes will impact the housing market and why he thinks there’s an imminent recession. ‘So it creates opportunity because what we’re seeing is capacity come out significantly. You’re watching lenders cut everywhere.’”
The Arizona Republic. “Carvana, the fast-growing used-car seller based in Tempe, announced Tuesday its plans to lay off 2,500 employees – more than 10% of its workforce – as losses mount. Sergio Silva said he was laid off Tuesday morning from his position as a customer advocate. ‘We were completely blindsided,’ said Silva, a 37-year-old Maryvale resident who had worked at the Tempe complex for six months. The company made the announcement during a Zoom meeting Tuesday after notifying employees the day before not to come into the office. ‘People were just freaking out,’ he said.”
The Independent. “Bitcoin is teetering on the precipice of an abyss, according to some crypto market analysts. Suicide hotline numbers have been pinned to the top of the popular sub-Reddit for the Terra (LUNA) cryptocurrency, after 98 per cent of its value was wiped virtually overnight. Members of the forum are reporting losing their life savings, while some retain a sliver of hope that the project can be rescued. ‘I should’ve cashed out when it was $100, then I would have been up $25,000,’ wrote Reddit user No-Forever. Another member wrote: ‘I lost over $450,000, I cannot pay the bank.’”
The San Francisco Examiner in California. “Startup workers came into 2022 expecting another year of cash-gushing initial public offerings. Then the stock market tanked, Russia invaded Ukraine, inflation ballooned, and interest rates rose. Instead of going public, startups began cutting costs and laying off employees. The number of people and groups trying to unload their startup shares doubled in the first three months of the year from late last year, said Phil Haslett, a founder of EquityZen, which helps private companies and their employees sell their stock. The share prices of some billion-dollar startups, known as ‘unicorns,’ have plunged by 22% to 44% in recent months, he said.”
“‘It’s the first sustained pullback in the market that people have seen in legitimately 10 years,’ he said.”
“That’s a sign of how the startup world’s easy-money ebullience of the last decade has faded. Each day, warnings of a coming downturn ricochet across social media between headlines about another round of startup job cuts. And what was once seen as a sure path to immense riches — owning startup stock — is now viewed as a liability. ‘Everything that has been true in the last two years is suddenly not true,’ said Mathias Schilling, a venture capitalist at Headline. ‘Growth at any price is just not enough anymore.’”
“Sheel Mohnot, an investor at Better Tomorrow Ventures, said his firm had recently reduced the valuations of seven startups it invested in out of 88, the most it had ever done in a quarter. The shift was stark compared with just a few months ago, when investors were begging founders to take more money and spend it to grow even faster. That fact had not yet sunk in with some entrepreneurs, Mohnot said. ‘People don’t realize the scale of change that’s happened,’ he said.”
The Globe and Mail in Canada. “The chill in Toronto-area real estate has spread to Ontario’s cottage country. ‘Incrementally, sanity is returning to our marketplace,’ says Anita Latner, broker at Anita Latner Realty Inc. in Muskoka. ‘You can sense that the wind is changing.’ The season is not yet in full swing but Ms. Latner already senses that buyers are becoming more discerning. Offer dates come and go without any bids in some cases, she adds, and some sellers are reducing their asking prices. ‘The greed is going out of our market. If you’re greedy, you’re going to be sitting there.’”
“The cooldown comes after a fierce run-up as buyers competed for scarce inventory. ‘The market didn’t rise – it skyrocketed,’ Ms. Latner says. Paul Crammond, broker with Chestnut Park Real Estate Ltd. in Port Carling, Ont., says sales in this past winter were much less hectic than one year earlier. ‘That year people were panic-buying cottage properties – you couldn’t even see what the terrain was like. Even island properties were selling in the winter. People were going over on the ice.’”
“Alexis Victor, real estate agent with Royal LePage Signature Realty, says prices have already started to slip in Ramara township and other areas northeast of Toronto. The median price fell to $800,000 in April from a peak of $875,000 in February, according to data from Information Technology Systems Ontario. ‘It was just on a dime – boom – everything shifted,’ Ms. Victor says. Sellers who became used to hearing about prices constantly setting records will have to temper their expectations she adds. ‘You may see a little bit more confusion because there was a bar set and that bar is where people are.’”
From Bloomberg. “A Wall Street bank and some of the world’s largest money managers stand to lose hundreds of millions of euros in the crisis that’s rocked the world of German real estate. ‘Adler was always a leveraged play on the German residential sector, which is cyclical in its nature,’ said Ash Nadershahi, a portfolio manager at Three Bridge Capital, a New York-based investment management firm. ‘There are time bombs in all these portfolios.’”
“‘Investors didn’t really know the risk, but QE and the rush to buy yield pulled them in and it’s proving to be fatal,’ Nadershahi from Three Bridge Capital said. ‘And this is just the beginning.’”
Stuff New Zealand. “ANZ senior economist Miles Workman said the institute’s figures, along with information such as listings, auction clearance rates, and anecdote, showed the market remained firmly in a downtrend. ‘That’s great news for those who have been locked out of the market, but bad news for recent first-home buyers who are more likely to have high debt, are facing rising mortgage rates, and are watching their equity go up in smoke.’”
From Yahoo Finance. “RateCity research director, Sally Tindall, said the RBA rate hikes have the capacity to apply a ‘significant handbrake’ to Australia’s property market. ‘Falling interest rates have been a driving force behind soaring property prices over the last 18 months,’ she said. ‘Now home loan rates are on the rise, property prices could actually come back down to Earth – or, at least, closer to it.’ Tindall said anyone planning to borrow at the maximum capacity could see their budgets shrink over the next few weeks. ‘As a result, they’ll suddenly find they can no longer bid as high at the next auction they go to,’ Tindall said.”
From Bloomberg. “Sun Hongbin, dubbed the ‘white knight’ in China for bailing out fellow billionaires and their empires, was unable to rescue his own from the property crisis that’s engulfing the world’s second-biggest economy. Though he dipped into his own pocket to the tune of $450 million, tapped investors to buy shares and raised more than $2 billion in all, it wasn’t enough for Sun to avoid default at his Sunac China Holdings Ltd. Sunac joins more than a dozen developers including China Evergrande Group that have defaulted on dollar bonds in the past few months.”
“The struggles at Sunac — China’s No. 4 developer by sales — may herald further distress among property firms that were deemed too strong to fail just a few months ago. ‘Sunac’s default means that no private Chinese developer is now safe from default this year’ without new financing, said Wei Chong, head of bond research at Fuhui Juli Wealth Management Corp., a hedge fund that owned Sunac’s onshore debt before selling earlier this year.”