A report from Business of Homes on California. "It’s been a gloomy few months in Silicon Valley. In the first quarter of the year, nearly every major tech company has had mass layoffs. Local architect Megan Blaine had two projects under construction that were funded by the clients’ Meta stock, which took a nosedive earlier this year. 'Both clients were waiting to cash out, thinking that if they left their money in those stocks, it would keep growing during the yearlong build-out,' says Blaine. Instead, the stocks tanked, forcing her clients to find alternate funding and slash their budgets by roughly 40 percent."

"Blaine has laid off three employees in the past six months, roughly 24 percent of her staff. 'It does feel like business owners in the Bay Area are the canaries in the coal mine right now,' she adds. 'There are obvious areas where I’ve been like, ‘OK, we don’t need that, let’s scale back there.’ Maybe I haven’t paid as close attention to some things over the past few years, but now it’s time to prepare for a leaner time, so we pay better attention and do some things differently.'"

The San Francisco Chronicle in California. "A downtown San Francisco office building has reportedly sold for roughly 75% less than its previously estimated value, a bad omen for the sagging commercial real estate market. 350 California St., which was first listed for sale in 2020, sold to SKS Real Estate Partners for somewhere between $60 million and $67.5 million, according to a report by the San Francisco Business Times. The Financial District building is mostly empty — Union Bank, which occupied about 75% of the building, has largely vacated the 22-story tower."

"This wasn’t the first time the owners of 350 California tried to sell the property. In 2021, bidding for the building never surpassed $180 million and owners took it off the market, according to the Wall Street Journal. In 2019, the property was estimated at around $300 million, brokers told the publication."

Axios on Massachusetts. "Foot traffic around Boston’s Financial District is barely half of what it was pre-pandemic, according to anonymized mobile device connectivity data. Downtowns became ghost towns during the height of the pandemic as people sought to 'flatten the curve' by staying home as much as possible. Even as the pandemic ebbs, the era of remote and hybrid work it ushered in means fewer people visiting restaurants, bars and shops. That has big implications for downtown economies, which have historically relied on commuting workers who spend money before, during and after their daily 9–5s."

The New York Post. "Beastie Boys’ Mike D’s childhood home at the famed Eldorado on Manhattan’s Upper West Side will have a new owner. The Central Park West stunner just went into contract following a roughly $4.5 million price chop. The sprawling six-bedroom duplex co-op with picture-perfect views of Central Park and the Reservoir was last asking $14.99 million — down from its initial ask of $19.5 million last year. Maintenance fees are $22,300 a month."

From KBTX. "After recent bank failures and the federal government raising interest rates Sorin M. Sorescu, a finance professor at Texas A&M’s Mays Business School joined First News at Four on Monday to discuss the future of the economy. 'We did a study at Texas A&M University and we uncovered over $1 trillion in unbooked losses throughout the banking sector,' Sorescu said. 'Most of which came because of increases in interest rates by the federal reserve. Those are all paper losses and paper losses don’t become real unless people panic and take the money out of the bank.'"

The Washington Post. "Banking sector stress has shot up as a concern for stability in the financial system, according to the latest Federal Reserve survey on major risks to the economy. Also on Monday, a new Fed survey on bank lending practices underscored that lenders expect to tighten loan standards even more in the near future, including for commercial real estate loans. 'Banks most frequently cited an expected deterioration in the credit quality of their loan portfolios and in customers’ collateral values, a reduction in risk tolerance, and concerns about bank funding costs, bank liquidity position, and deposit outflows as reasons for expecting to tighten lending standards over the rest of 2023,' the survey said."

The Commercial Observer. "The business model at the core of the regional banking crisis is not too different from traditional banking theory: borrow short, lend long. But this fundamental theory — or even law — of responsible asset management has created an 'inherent instability' in the banking system, according to Christopher Thornberg, founding partner of Beacon Economics, especially once the Federal Reserve raised its benchmark federal funds rate 10 times in 14 months (after keeping interest rates between zero and 2 percent for much of the past 15 years)."

"'They did what banks should have done: They bought a whole bunch of debt securities at low interest rates,' Thornberg said. 'None of these banks have a problem with their lending base. They’ve made good loans. They’re not seeing losses because they made bad loans, and that’s what’s so infuriating.'"

"The ongoing regional banking pressures are being caused not so much by greedy short sellers, but by reckless monetary policy from unelected bureaucrats at the Eccles Building in Washington, D.C., according to Thornberg. 'The Federal Reserve made the choices that have caused the banks to fail,' he said. 'And for them to sit around and point fingers at Silicon Valley Bank (SVB) and others and say, ‘You guys didn’t use the right term structure,’ well, no bank was prepared to deal with this insane roller coaster of monetary policy the Federal Reserve has put them all on.' 'If the Fed doesn’t back off, there’s going to be massive consolidation in the U.S. banking system,' he added."

From Bloomberg. "One of Sweden’s biggest commercial landlords plans to halt payment of its dividend after suffering a ratings cut, in another sign the funding squeeze gripping Sweden’s leveraged property sector is worsening. SBB — as Samhallsbyggnadsbolaget i Norden AB is more commonly known — is seeking to push back its dividend payment date until 'at the latest' ahead of its 2024 annual general meeting. The development is symptomatic of a wider problem for Sweden’s commercial property firms as they scramble to roll over $40.8 billion of maturing bond debt over the next five years, a quarter of which falls due in 2023. They have been viewed as the canary in the coal mine for Europe’s property sector because much of that debt is short term and floating rate, making it particularly exposed to interest rates."

"The refinancing woes in Sweden have also coincided with a 15% decline in residential home prices, making it one of the world’s worst routs. That is in turn pressuring the Nordic nation’s construction industry, which may be facing years of drought as investment in housing plummets."

From Scoop. "Aotearoa New Zealand’s average home value is zeroing in on the $900,000 mark following yet another month of widespread declines across the motu. QV Nelson/Marlborough manager Craig Russell said market activity remained subdued with modest levels of properties transacting. 'We are seeing a clear oversupply of properties in the $900,000 to $1,500,000 bracket in Richmond. Properties that are not being priced to meet the market are becoming stale and tend to result in asking price reductions,' Mr Russell said."

South China Morning Post. "Housing authorities in Kunshan, a county-level city, said that Kunshan Jiabao Wangshang Properties and Kunshan Changtai Properties had 'slashed prices significantly and arbitrarily that could disturb the normal order of the real estate market and cause social instability.' Both companies were pulled up for their 'bad behaviour' and ordered to rectify the issue immediately and close online registrations related to buying homes in their projects. The regulators stepped in after previously capping the discounts at up to 15 per cent."

"The two developers launched campaigns to boost sales during the May Day holiday. While one of them offered buyers discounts of up to 26 per cent, the other dangled a free parking space. An 86-square-metre home was available for 16,000 yuan (US$2,311) per square metre, down from 21,733 yuan per square metre, according to an advertisement circulated online."

"The developers have been pulled up in a bid to stabilise home prices and homebuyers' expectations, according to analysts at China Index Academy, one of the mainland's largest property consultancies. 'As market sentiment has been dampened recently, developers are increasingly willing to drop prices to boost sales,' they said in a note on Monday. 'It is likely more regulatory moves will be seen at the local level in the short-term to stabilise home prices and strengthen expectations for social stability.'"