A report from the Idaho Statesman. “The median price of a single-family home in Ada County in February was $492,115, according to the Intermountain Multiple Listing Service. That’s down 10.5% from February 2022, when the median price was $549,900. In Canyon County, the median price of a single-family home in February was $389,945, according to the Intermountain Multiple Listing Service. That’s down 10.3% from February 2022, when the median price was $434,900, and down $5,500 from January. Single-family homes in Ada County spent an average 78 days on the market before going under contract in February. That’s up 143.8% from February 2022, when they spent an average 32 days on the market. The last time that metric was higher than 78 days was in February 2012, according to Boise Regional Realtors.”
“Mike Pennington, of John L Scott Real Estate in Boise, said most home builders have already taken steps to slash retail prices and, therefore, profits. He said he doesn’t see prices dropping much further. ‘Prices will slowly continue to creep upward,’ Pennington said. ‘Buyers who believe that if they wait to purchase a new home, prices will continue to drop dramatically. This simply will not be the case. If we are not already at the bottom, we are very close.’”
The National. “The US banking system faces risks amid the fallout from the collapse of Silicon Valley Bank and two other lenders as the Federal Reserve raises interest rates to curb inflation, Moody’s Investors Service has warned. The rating agency lowered its outlook on the US banking system to negative, from stable, due to the Fed’s rapid monetary tightening and weak risk management that amplifies the underlying asset-liability management risks of banks.”
“‘We have changed to negative, from stable, our outlook on the US banking system to reflect the rapid deterioration in the operating environment following deposit runs at SVB, Silvergate Bank and Signature Bank (SNY), and the failures of SVB and SNY,’ the rating agency said in the outlook note. In a separate note, Moody’s said that while the three banks were unique in their focus on cryptocurrency and venture capital or private equity, areas of non-bank finance that grew quickly during the era of easy monetary policy, ‘it is increasingly evident that other US banks are also facing ALM strains.’”
The Commercial Observer. “Following the collapse of two regional banks — including Signature Bank, one of New York City’s most active commercial real estate lenders — the market is abuzz with speculation around the health of other financiers, and First Republic Bankis top of mind. The San Francisco-based lender’s stock dropped nearly 62 percent Monday. First Republic may simply be the bank hitting headlines, sources told Commercial Observer.”
“‘What I can tell you is that they are not the only bank being scrutinized. There’s at least 20 banks that are getting super scrutinized by the FDIC and regulators,’ said Manish Shah, senior managing partner at real estate investment firmPalladius Capital Management. ‘The public may have latched onto First Republic because they are located in Silicon Valley and San Francisco and they happen to have a lot of private equity clients. But, if you look at it, there’s multiple banks that have regional or sector-specific focuses.’”
Bisnow Boston in Massachusetts. “Days after the second-largest bank failure in U.S. history, Boston’s life sciences and tech sectors are pivoting from worrying about short-term problems around accessing funds to the longer-term ripple effects the collapse could have on the region’s economy. ‘There’s a big SVB-sized hole in the ecosystem,’ said Ari Glantz, executive director of the New England Venture Capital Association. ‘I think the big question in the short term is: Who is able to step up and fill that role as a champion and service provider for these companies?’”
“Tech companies drove Boston’s office leasing market in the first two years of the pandemic, but the sector began to show cracks last year. The share of Boston leasing activity from TAMI firms — technology, advertising, media and information — fell from 41% in 2021 to 24% last year, according to CBRE. Many of those firms also began looking to give back office space last year. Boston’s overall sublease availability had a net addition of 1.5M SF in 2022, and tech companies made up 47% of the available sublease space at the end of the year, CBRE found.”
From ABC News. “Silicon Valley Bank’s failure on Friday raises concerns over the potential impacts on the climate technology industry, where SVB was heavily involved. Kiran Bhatraju, CEO of Arcadia, a tech company focused on combating climate change, expressed concern over the downfall of SVB on Twitter Saturday, writing, ‘What’s missing from the narrative is SVB is a climate bank.’”
“‘A point that seems to be getting lost in the conversation around SVB is the failure of the San Francisco Fed to monitor the risks that were growing at Silicon Valley Bank,’ Sen. Bill Hagerty, R-Tenn., a member of the Senate Banking, Housing and Urban Affairs Committee, tweeted Sunday night. ‘It is abundantly clear that SVB was terribly mismanaged. Their executives appeared to be more focused on diversity and ESG than managing their own risks. But why didn’t the SF Fed see this before it was too late? Was it because their CEO was on the board of directors of the SF Fed? Or were these regulators just asleep at the wheel? We need answers.’”
From NDTV. “Signature’s collapse on Sunday, when New York regulators swooped in after a surge of panicked withdrawals, was the third-largest bank failure in the US ever, behind Washington Mutual in 2008 and Silicon Valley Bank’s cataclysmic drop days ago. ‘Their downfall came when they got into this crypto business,’ said Al D’Amato, the former senator for New York, who was a director from 2005 to 2021. ‘They took their eyes off of that small entrepreneur.’”
“On Wall Street, views on virtual riches vacillate between scorn, suspicion and envy. Inside Signature, it was seen as an opportunity. Signature Bank was flying high when co-founder Scott Shay mused about success on a podcast early last year. ‘Banks essentially gave the back of the hand to the cryptocurrency world. And they were all thinking alike: ‘This is just a little fad, it’s some teenagers in a basement,’ Shay told an executive coach on the podcast. ‘Not to mention names, but some famous banking CEOs really said the whole thing was a joke.’”
The Guardian. “The question now is how Silicon Valley will adapt to these new realities. Amid a broader economic downturn and rising interest rates, the industry has far less cash flow than it once did – and without SVB the space will be even shorter on financing. ‘SVB was really the core foundation of the tech surge we’ve seen over the last decade,’ said Dan Ives, an analyst at Los Angeles-based investment firm Wedbush Securities. ‘The ripple effect will be felt for years to come This is going to tighten up the spigot on cash coming into startups in the Valley. With SVB – which was really the Godfather in the space – down, they are facing a very arduous path.’”
From CBC News in Canada. “According to the B.C. Real Estate Association (BCREA), more than 4,700 residential unit sales were recorded in the Multiple Listing Service (MLS) last month, down 46.5 per cent compared to February last year. During the real estate market’s peak, in February 2022, the average MLS listing price was $1.1 million, the association says. In February 2023 that number had dropped by 14.7 per cent to $941,575.”
From ABC Business. “Australia’s economy is still holding up on the back of household spending, but there are warning signs that a severe downturn may be nigh, with business confidence falling and consumer confidence at sustained lows not seen since the 1990s recession. The widely watched Westpac-Melbourne Institute survey of sentiment came in below 80 for the second month in a row — 100 is the level where optimists equal pessimists.”
“‘Runs of sub-80 reads have only been seen during the late 1980s/early 1990s recession and in the ‘banana republic’ period of concern in 1986, when the Australian dollar was in freefall after the federal government lost its triple-A rating,’ noted Westpac’s veteran chief economist Bill Evans.”
“Centrestage Costumes owner Mary Gurry has seen several recessions during her 40 years of running the shop. She remembers the downturn in the 1990s as the worst for her business. While she believes costume shops are somewhat recession-proof because ‘people love to party’ especially when times are gloomy, she expects another downturn to hit her business later this year. ‘We will see a downturn in the next 18 months … there’s no doubt because there’s mortgage stress out there already,’ she said.”
News Hub New Zealand. “The homes in some of Aotearoa’s wealthiest suburbs have plummeted in value in the latest data provided by CoreLogic. CoreLogic recorded a drop in value of more than $300,000 or more for 10 suburbs across the motu. CoreLogic chief property economist Kelvin Davidson said the drop in value would only be an issue for homeowners who were trying to sell now, after buying during the peak of the market. But it wasn’t just the upper end of the market that saw a drop in value. Davidson said more than a third of suburbs across the motu saw double-digit declines over the last year. ‘Wellington made up the bulk of the suburbs that posted the biggest falls.’”
“Property values fell by 20 percent or more in 31 suburbs, 30 of which were in the wider Wellington region. Davidson said Rotorua’s Fordlands was the only suburb outside of the Wellington region. ‘This confirms that this downturn has been pretty deep and broad-based across many parts of the country – to the detriment of existing property owners, but a sign of hope for aspiring buyers who have their finances approved.’”
Reuters on China. “Shanghai-based Zhenro Properties Group Ltd on Tuesday warned of a huge loss for fiscal 2022, hurt by a steep decline in demand for new homes amid a crisis in the country’s real estate sector. Cash-strapped Zhenro is expected to post an attributable loss of between 12.5 billion yuan (US$1.82 billion) and 13.5 billion yuan for the year ended Dec 31, compared with a profit of 809 million yuan recorded a year earlier. Zhenro is one of several Chinese developers that has missed offshore bond payments and struggled to repay debt in the past year amid slowing sales, with some now scrambling to enter into restructuring agreements with their creditors. Financial results from several property developers in recent days, including Kaisa Group, have revealed big losses.”