A report from Hawaii News Now. “The Honolulu Board of Realtors says the median price of a single-family home on Oahu fell slightly to $1,105,000 for April. The number of homes pending sale also fell — a sign rate hikes by the Federal Reserve are starting to have an impact. ‘Whatever they could afford before, they cannot afford now. Let’s say if you are able to purchase $2 million before with a lower rate. Now, your budget is most likely reduce to let’s say 1.5 million or 1.6 million,’ said Vanessa Kop, executive vice president at NAI CBI Hawaii.”
The Troy Record in New York. “Encouraged by the market activity and most likely aware of planned rate increases, 1,207 sellers entered the Capital Region real estate market by listing their homes in March, the report said. However, closed sales decreased by 17 percent from March 2021 to 904 for the month, marking seven consecutive months of decline. ‘The rates of the last two years were an anomaly due to the pandemic. Buyers and potential buyers should keep in mind that historically, a 5 – 7 percent rate is still low for a 30-year fixed rate mortgage – nowhere near the 16 percent rate buyers dealt with in the early 1980s,’ Greater Capital Association of Realtors CEO Laura Burns said in the report. ‘It’s not the 2 – 3 percent of 2020 and 2021 but that was a forced low rate to keep money moving during the pandemic.’”
From Bloomberg. “Lenders have seized control of the property where China Oceanwide planned to develop one of lower Manhattan’s tallest towers. Oceanwide defaulted on a $165 million loan on the project, at 80 South St., in January, leading to the transfer to a receiver as the property’s custodian, according to a filing by the developer’s Hong Kong affiliate. Oceanwide had invested $410 million in the project.”
“‘The borrower has failed to pay all amounts demanded under the notice of default,’ Oceanwide reported in the filing. ‘The company is continuously assessing the legal, financial and operational impacts of the actions to be taken by the initial lender.’”
From My News LA in California. “A Santa Clarita man who invested in real estate and sold “coupon bonds” that promised regular interest payments on top of principal repayment has agreed to plead guilty to a federal criminal charge for defrauding investors out of more than $1.7 million, the Department of Justice announced. Matthew Skinner, 45, who in 2014 founded a company called Empire West Equity Inc. and later established Simple Growth LLC, was charged Tuesday with securities fraud, according to the U.S. Attorney’s Office.”
“Skinner admitted that he did not intend to purchase, develop or resell real estate, and that he instead used investor funds to pay older investors, his employees and himself. He ‘used investor funds from those entities and accounts to pay for personal trips, his mortgage, his utility bills, cosmetic surgery, and alimony payments to his ex-wife,’ Skinner acknowledged in the plea agreement. Simple Growth raised $1,744,946 from more than 20 investors — none of whom received any of their money back. The securities fraud charge against Skinner carries a penalty of up to 20 years in federal prison.”
The Hartford Current. “Greenwich real estate developer whose business went bust in a market downturn and who was accused later of swindling $1.5 million from friends and associates, was sentenced in federal court Tuesday to three years in prison. Samuel Klein, 66, lived in a multi-million dollar mansion in the Greenwich back country and collected sums ranging from tens to hundreds of thousands of dollars from friends and associates on promises that he could make substantial and in some cases guaranteed profit on real estate deals.”
“Federal prosecutors said Klein stole to subsidize a lifestyle he could not longer afford. ‘Klein prioritized his own lavish lifestyle which included accommodations at an exclusive resort and staggering credit card expenditures,’ prosecutors said in a court filing. ‘He spent far beyond his means, and funded some of his extravagance with victim investors’ funds, which he plowed through at an aggressive clip.’”
From WLNS. “A 61-year-old real estate developer is looking at some potential prison time after pleading guilty to tax evasion. According to a statement from the United States Attorney’s Office of the Western District of Michigan, Scott Chappelle ran an operation that kept the IRS from collecting his business and personal taxes for close to a decade. All the businesses were involved in real estate development and property management in the East Lansing area.”
“When the IRS went to collect the unpaid taxes, Chappelle lied to the agency about his and his companies’ assets and income, concealed his vacation house on Lake Michigan and purchased real property in nominee names instead of his own. Chappelle also told the IRS he couldn’t afford to pay his tax debts when he was using business bank accounts to pay for mortgage payments on two houses and a condo, college tuition for his children, personal credit card bills, life insurance premiums, multiple car payments, and expenses for the boats he owned.”
From CBC News in Canada. “A court-appointed investigator looking into the Epic Alliance group of companies says the public may never fully know what happened to the hundreds of millions raised by the failed Saskatoon real estate venture. The report establishes that entrepreneurs Rochelle LaFlamme and Alisa Thompson created Epic Alliance in August 2013 and ran it until they told 121 investors in a video meeting on Jan. 19, 2022, that there was no money left.”
“The Ernst and Young report revealed that, from 2019 to 2022, much of the new investor cash went to fill in the gaps on earlier obligations. It showed that 82 per cent of the company’s revenues came from investors and 18 per cent came from the operations of its businesses. Saskatoon lawyer Mike Russell represents the investors. Russell said the investors must now decide what, if anything, they can do get back some of their money.”
“‘This report would either provide investors with an idea what assets would be available for them to go after, or it would say there are no assets but at least give them an overview of what happened with these companies,’ he said. ‘I think it does an extraordinary job of the latter.’”
The Toronto Star in Canada. “The Toronto Regional Real Estate Board (TRREB) released its report for April showing a 9.2 per cent decline in the combined average price for all dwelling types since hitting a record high in January. The average price for detached and semi-detached houses, and townhouse and apartment condominiums dropped from $1,367,444 in January to $1,241,658, with all housing types seeing month-over-month price declines for a second straight month.”
“The average price for detached homes in Brampton peaked in January at $1,652,088 and has fallen each month since to an average of $1,474,967 in April — a decline of $177,121 or 10.7 per cent in just three months. Semi-detached homes hit a record high in February at a monthly average sale price of $1,262,256. Last month, semi-detached units sold for an average of $1,122,428, marking a $139,828 or 11 per cent in two months.”
“Price declines in the condo sector have been less pronounced with townhouse-style condos falling 8.4 per cent from a monthly average high of $910,184 in February to $833,411 last month. Brampton apartment condos also set a record high in February at $693,955 and have declined 5.1 per cent in average price to $658,500 since hitting that high-water mark.”
“‘Based on the trends observed in the April housing market, it certainly appears that the Bank of Canada is achieving its goal of slowing consumer spending as it fights high inflation. Negotiated mortgage rates rose sharply over the past four weeks, prompting some buyers to delay their purchase,’ said TRREB president Kevin Crigger.”
The Guardian on Australia. “The days of the bull run are over, said John, standing on the street in Redfern as we watched a tepid auction over a terrace not so much unfold, as haltingly and painfully reach some kind of an ending. John was filming this auction for a segment on the ABC 7pm news bulletin. And the story? A slowing market. ‘The end of 2020 you’d have 400 people go through a house in half an hour before it was auctioned. You’d have 60 registered bidders, it was rapid fire and crazy,’ he said.”
“Prices were still stratospheric, of course. But gone was the craziness, the prices climbing quickly until the house was millions over the reserve, the paddles in sweat-soaked paws and the dilated pupils, the weird feeding frenzy of trying to grab a piece of the hot market that seemed it would surge on forever. Bids were going up slowly by thousand dollar lots. An old punk walked through the auction expressing his disgust at all of us – ‘Oh excuse me! Walking past an auction,’ he said sarcastically, pointing at the house and saying ‘Woo hoo, an auction.’”
“‘Better not put your hand up mate – you’ll be the owner soon,’ said some wag in the crowd, breaking the tension and everyone laughed, and even the old punk smiled. The Redfern house (which needed a lot of work) eventually sold for $2.876m. Then on to Parramatta. This one – a three-bedroom house on a large block in a quiet street at $1.5m would surely attract plenty of bidders. But the atmosphere was funereal when I arrived.”
“The agents were packing up their boards and flags. There were two registered bidders but neither showed up. The property was passed in. Agent Broderick Wright asked me if I wanted a lift to the station. We hopped into his new-model Mercedes and drove past a little gem he’d just sold that morning for $1.1m – a heritage two-bedroom cottage in central Parramatta. But as to the north Parramatta property that just got passed in? ‘It was surprising to me because we had two buyers who were registered to buy but they did not register to bid. Plus we have lots of stock on the market in the area.’”
“The owners were mum and dad investors who had once lived in the property but had moved to another part of Sydney. ‘There were a few other properties around that were at a lower price. Buyers are looking for reasons not to pay so much.’”
From Bloomberg. “It’s ending as fast as it began for retail day traders, whose crowd-sourced daring was the pre-eminent story of pandemic equities. Nursing losses in 2022 that are worse than the rest of the market’s, amateur investors who jumped in when the lockdown began have now given back all of their once-prodigious gains, according to an estimate by Morgan Stanley. The calculation is based on trades placed by new entrants since the start of 2020 and uses exchange and public price-feed data to tally overall profits and losses.”
“A craze born of the coronavirus outbreak and nurtured by Federal Reserve largesse is being laid low by a villain of identical lineage, inflation, which global central banks are racing to combat by raising the same interest rates they cut. The result has been a lumbering bear market in speculative companies that surged when the stimulus started flowing in March 2020.”
“‘A lot of these guys started trading right around Covid so their only investing experience was the wacked-out, Fed-fueled market,’ said Matthew Tuttle, CEO at Tuttle Capital Management LLC. ‘That all changed with the Fed pivot in November, but they didn’t realize that because they have never seen a market that wasn’t supported by the Fed,’ he said. ‘The results have been horrific.’”