A report from Herald and News in Oregon. “Jim Chadderdon, executive director of Discover Klamath and a owner of local real estate, says he knows people who have fallen behind on their mortgages and the end of the moratorium will have an effect on them. At the end of the day, there may be some kind of forbearance, but banks will always come to collect on their loans, Chadderdon said.”
“‘I don’t think it’s going to be a bloodbath on day one,’ Chadderdon said. ‘But I think if we go out six months there’s going to be people hurting. They’ll find out the banks aren’t helping them out. It’s going to be a debacle.’”
From WHYY in Pennsylvania. “Developers could build a record number of rental units in Philadelphia in 2022. Based on the volume of building permits approved by the city in 2021, the final figure for the year could balloon to 10,000 — more than triple the average annual total of 3,000 to 4,000 new apartments. ‘This is a massive wave of new construction. Much bigger than we’ve even seen before,’ said Kevin Gillen, a senior research fellow with the Lindy Institute for Urban Innovation at Drexel University and the analyst behind the data.”
“Last summer, home prices were up 20%. They’re now up just 10%, a noteworthy drop and a potential sign that prices could level out sooner rather than later. ‘You’re not seeing signs to say this thing is cooling. We’re not there yet. But we are definitely seeing signs of deceleration from the white-hot conditions that were occurring over the last year,’ said Gillen. ‘With our poverty rate, we cannot afford to have the house price levels that are approaching the levels of other, more affluent cities.’”
The Waco Tribune Herald in Texas. “Seven months on from a bank foreclosure, The Containery remains ready for a new owner. Waco commercial real estate agent Gregg Glime confirmed interest by a party waiting in the wings. He said the prospect foresees little, if any, change in potential uses for the 33,888-square-foot development built with stacked shipping containers front and center. Some city leaders could not contain their shock at The Containery’s appearance, specifically the paint job.”
From CNS on California. “A former San Diego real estate agent was sentenced Monday to more than five years in prison for orchestrating a fraud scheme that bilked investors out of millions of dollars. Alexander Avergoon, who was also ordered to pay nearly $10 million in restitution, pleaded guilty to federal charges in connection with what prosecutors described as a series of investment fraud schemes spanning nearly a decade.”
“According to the U.S. Attorney’s Office, Avergoon, 46, persuaded more than a dozen investors to partner with him to buy real estate properties such as apartment buildings and split the income from renting out the properties. However, prosecutors said he didn’t use the investor funds to buy properties, and forged documents in order to make the investments appear legitimate.”
From 3AW in Australia. “The housing market is set for an ‘inevitable’ slowdown in 2022, analysis from CoreLogic suggests. Head of Research at CoreLogic, Eliza Owen, says it’s ‘probably going to be impossible to say what the extent of price falls would be, but what we do know is some of the things that could trigger that decline. What we’re expecting is that when interest rates start to rise fairly continually we can see that demand for housing falls and prices fall off the back of that,’ she told Emily Power and Jimmy Bartel. ‘What we’re also starting to see is increased level of supply coming onto the market, particularly across the major cities of Sydney and Melbourne, so that gives more choice to buyers, more bargaining power to buyers.’”
From Reuters. “Investors in financial products issued by China Evergrande Group protested outside the cash-strapped company’s offices in Guangzhou on Tuesday, with many worried that their returns would be sacrificed to keep real estate projects afloat. Members of the crowd of roughly 100 people shouted ‘Evergrande, return our money!,’ reprising a chant used by disgruntled investors and suppliers last autumn as the deterioration in its financial position became apparent.”
“‘I think it’s hopeless, and I’m scared, but if we don’t fight for our rights, that’s worse,’ said a retired woman surnamed Du who was among those outside Evergrande’s offices in the southern Chinese metropolis and said she had invested one million yuan in Evergrande wealth management products. ‘The economy’s not good at the moment, these are ordinary people and they need this money for kids, for supporting their parents,’ she said.”
“Lured by the promise of yields approaching 12%, gifts such as Dyson air purifiers and Gucci bags, and the guarantee of China’s top-selling developer, tens of thousands of investors bought wealth management products through Evergrande.”
“‘We worry we will be sacrificed,’ said a 34-year-old protester who works in e-commerce and would only give her name as Sophie, for fear of reprisal from authorities. ‘It’s okay for younger people like me, we can still earn it back, but I’m worried about the older ones who put everything into this,’ she said. Sophie said police had taken her to the station four times since she joined protests at Evergrande’s headquarters in the nearby city of Shenzhen in September. ‘We don’t know what happens to our money but we’re expected to keep quiet, it’s not right,’ she said.”
The Los Angeles Times. “Elizabeth Holmes, the founder and CEO of the medical device company Theranos, was convicted Monday of fraud and conspiracy counts in federal court in San Jose following a three-month trial. For the most part, the jury found against Holmes on charges that she plied investors with fraudulent claims.The case raises the important question of whether the testimony and result will serve as object lessons for investors confronted with cheery promises in the future. Bet your money that the answer is ‘no.’ High-tech investing is predisposed to take even clearly hyperbolic projections as part of the game.”
“All entrepreneurs making pitches to venture capital funds are inclined to promise castles in the air and riches beyond the dreams of Croesus, or they won’t be invited through the door. In 2013, when venture investor Aileen Lee first coined the term ‘unicorn’ for startups valued at $1 billion or more, she identified 39. Today, the venture research firm CB Insights lists more than 900. The first investments beget further investments in what may appear to be the next big thing, as firms pile in out of FOMO — ‘fear of missing out.’ Sober judgments about the technology underlying entrepreneurs’ promises? Don’t expect them.”
“To attract investors, a company no longer has to demonstrate that it has a working technology or rational business plan, but merely to promise to ‘disrupt’ an established industry. Uber would ‘disrupt’ the taxi industry. Zillow would disrupt homebuying. How has that worked out? Uber lost $8.5 billion on $13 billion in revenue in the pre-pandemic year of 2019, and lost $1.5 billion on $11.7 billion in revenue in the first nine months of this (hopefully) pandemic recovery year, and still hasn’t shown that it has a path to profitability.”
“Zillow, which aimed to capture the gains from flipping homes by applying a high-tech algorithm to home valuations, discovered that the concept doesn’t work in markets as complex as residential housing. Last month it shut down its buying and selling business and announced plans to down the value of its remaining inventory by more than $500 million. Its market value has plummeted from nearly $50 billion to $15.5 billion.”