A report from Yahoo Money. “This week’s more than quarter-point jump in mortgage rates is sending a dire message to homebuyers and owners: Time is running out. ‘The short answer is it’s painful, I won’t lie. Rates have been escalating every single day for basically the last 45 days,’ Scott Sheldon, branch manager at New American Funding in California, told Yahoo Money. ‘It’s not very fun to be a mortgage originator in this environment. You quote one rate one day and it’s something different a few days later.’”
From Market Watch. “According to Black Knight, in January there was a seven-fold increase in foreclosure starts as compared to December, with roughly 33,000 loans referred to foreclosure. What’s more, ATTOM Data Solutions revealed that lenders repossessed 2,634 U.S. properties through completed foreclosures in February 2022, which is an increase of 70% from last year.”
The East Aurora Advertiser in New York. “Erie County Clerk Michael Kearns and the Stay In Your Home Campaign released a report on the Post-Moratorium Pre-Foreclosure Notices received by many homeowners across Erie County. ‘What Belmont counselors are seeing is that families in default have been unable to recover economically after either experiencing a loss of income, illness, having to stay home for the children, increase in expenses and are simply unable to resume the income they once had,’ stated Sandy Becker, Senior Housing Programs Director, Belmont Housing Resources of WNY. ‘The data shows it is affecting all communities and all income brackets. Homeowners just can’t catch up.’”
From Bisnow. “As much as 70% of U.S. office buildings face a loss in value in the near future, including roughly 30% of the nation’s inventory, or about $1.1T worth at current valuations, facing complete obsolescence, according to a new study by real estate consultancy Zisler Capital Associates. While that means 30% are safe, another 40% of the office building inventory is marginal, the study says. Many of those properties will need to be sold at prices low enough to justify the capital improvements necessary to bring them up to the energy efficiency and health standards of the near future.”
“‘The problems going forward are going to come from primarily markets that have sizable amounts of dated properties that are not particularly desirable to big drivers of demand these days,’ Trepp Senior Managing Director Manus Clancy told Bisnow. ‘You’ll see episodes in New York, Chicago and other places where big buildings that back loans with nine-figure balances become distressed.’”
From Esquire. “As another adaptation of a tech start-up scandal hits screens this week with AppleTV+’s WeCrashed, there’s something indescribably satisfying in watching so many fine actors portray ethically challenged humans getting impaled on the horns of their own unicorns. While watching the screeners for WeCrashed, I found myself thanking God, not so much for Monday or Friday, or any other day of the week, but for the invisible hand of the market, which has rendered this bonkers period in American business officially kaput.”
“In addition to WeCrashed on Apple TV+, on March 3, Hulu premiered The Dropout, which tells the story of Elizabeth Holmes (Amanda Seyfried), the disgraced, deep-voiced founder of blood-testing startup Theranos. Showtime’s Super Pumped, in which the adorably bedimpled actor Joseph Gordon-Levitt plays Uber’s toxic bro founder Travis Kalanick, dropped on Feb. 27. While the specifics of all these tales may be different, the psychological profiles of the subjects at their center, specifically their voracious appetites for risk and their wanton disregard for others, will remain signatures of the fake-it-till-you-make-it era.”
“The vestments might have been casual but the visions were exalted: WeWork wasn’t renting desks; it was ‘elevating the world’s consciousness.’ Uber wasn’t a cab operator; it was ‘a ride-sharing service’ that gave people ‘flexibility’ and ‘freedom.’ Theranos was not a blood-testing company; it was going to give consumers control over their own health information so ‘no one has to say goodbye too soon.’”
The Silicon Valley Business Journal. “Special purpose acquisition companies don’t seem so special anymore. Last year, as they were touted as providing a better and easier way for startups to make it to Wall Street, the entities known as SPACs exploded. Record numbers were created and never-before-seen numbers of operating companies went public via mergers with them. Now though, SPACs clearly have lost a good deal of their appeal, thanks in no small part to poor market and operating performance.”
“The number of new blank-check companies has plunged. So, too, has the number of mergers involving them. Conversely, a growing number of the investment vehicles are canceling their initial public offerings or aborting planned mergers. Meanwhile, many pre-merger SPACs and nearly all public companies that hit the New York Stock Exchange or the Nasdaq via a SPAC merger have seen their share prices slump.”
“Michael Klausner, a professor at Stanford Law School, saw this coming. In 2020, just as SPACs were starting to get hot, he co-authored a pessimistic report about them. ‘The whole thing’s been a bubble,’ Klausner said.”
“So how did SPACs go from being red hot to absolutely not? Part of it has to do with what’s been going on in the stock markets and the broader economy. With the economy largely recovered from its Covid slump and inflation spiking, the Federal Reserve is curtailing its pandemic-related easy-money measures and raising interest rates. That’s led to volatility on Wall Street. Investors have shifted money away from fast-growing, money-losing businesses toward more stable sectors.”
“Of the 41 Bay Area companies that went public via SPAC mergers since 2020, none were trading above the price at which they went public as of March 14. Even worse, 25 had lost more than half their value. Stanford professor Klausner believes the tide has turned on blank-check companies. A research paper he’s now working on essentially sums up his view — if a bit hyperbolically — that the good times are never coming back. Its tentative title? ‘The Death Spiral of SPACs.’”