Friday December 30 2016 Housing and Economic stories

TOP STORIES:

Even Single-Family Rentals Sink in Once Hottest Markets - (www.wolfstreet.com) Median asking rents in some of the most expensive markets in the US have started to decline on a year-over-year basis, with landlords throwing incentives into the mix, even where incentives are rare. This has hit the formerly hottest rental markets: San Francisco, New York City, Boston, Washington D.C., Chicago, Miami, and Honolulu. At the same time, rents are still rising in other cities. In Seattle, the median asking rent jumped 10% in November year-over-year, but even there, cracks are appearing. More on that in a moment. I’ve been reporting on this spreading phenomenon for months, most recently for November rents, based on rents in multi-family buildings, often owned by institutional investors. These markets are experiencing historic construction booms of apartment and condo towers (many condos end up on the rental market).

U.S. Startups Increasingly Tapping Debt Markets As VCs Pullback From Egregious Valuations - (www.zerohedge.com) After investing nearly $80 billion into startups in 2015, Venture Capitalists, growing slightly weary of the $1 billion valuations being handed out like candy to every 22 year old with an app that can replace your face with that of panda, have pulled back a bit in 2016 resulting in a 10% reduction in equity capital for America's graduating snowflakes.  But as Bloomberg points out, that's not a problem as many of Silicon Valley's revenue-free startups see debt capital as a better alternative anyway...sure, what could go wrong? Venture deals in 2016—for all but the hottest startups, anyway—required founders to give up more equity in exchange for less money than they did last year. So, despite cautionary tales from tech blog GigaOm and game console maker Ouya, which both flamed out after failing to pay back lenders, U.S. startups have loaded up on debt, enabling them to borrow money without ceding a potentially lucrative stake.

Exclusive: Investors shun Italian bank Monte Paschi's share offer - sources - (www.reuters.com) Monte dei Paschi di Siena (BMPS.MI) has all but failed to pull off a last-ditch rescue plan and a state bailout for the ailing Italian bank now looks inevitable, sources said on Wednesday. Confirming an earlier Reuters report, the bank said late on Wednesday it had failed to secure an anchor investor for its offer of new shares, which has just hours left to run. Two sources close to the matter told Reuters this had in turn dissuaded other institutional investors from supporting this part of the 5 billion euros ($5.2 billion) rescue plan. The bank needs to raise the money in the share offer and a separate debt-for-equity swap by the end of this month to avert being wound down by regulators, a move that would rock confidence in the euro zone's fourth-largest banking sector.

Paschi Falls to Record as Investors Balk, Liquidity Dries Up - (www.bloomberg.com) Banca Monte dei Paschi di Siena SpA will probably fail to lure sufficient demand for a 5 billion-euro ($5.2 billion) capital raise, said people with knowledge of the matter, making a state rescue likely. No anchor investor has shown interest in the recapitalization so far, the Siena-based company said in a statement late Wednesday after a board meeting. Two debt-for-equity swap offers will raise about 2 billion euros, with investors converting bonds for about 2.5 billion euros, the lender said. Qatar’s sovereign-wealth fund, which had considered an investment, hasn’t committed to buying shares, people with knowledge of the matter have said. 

Spanish banks face $4.2 billion hit from European court's loan ruling - (www.reuters.com) Spanish banks must repay customers more than 4 billion euros ($4.2 billion) after Europe's top court overturned on Wednesday a Spanish ruling that capped liabilities relating to a disputed mortgage clause, posing a new challenge to some lenders. Banks will have to compensate customers for what they lost even before May 2013, when Spain's Supreme Court declared the mortgages invalid if the terms had not been presented clearly. The home loans had an interest rate that could not fall below a certain level meaning customers missed out when rates dropped beneath this level. New charges resulting from Wednesday's ruling by the European Court of Justice could eat into bank earnings, which have already been eroded by record low interest rates and fierce competition for a shrunken loan pool, and encourage more mergers.

OTHER STORIES:

U.S. Stocks Decline as Oil Slips With Dollar: Markets Wrap - (www.bloomberg.com)
Trump picks China hawk Peter Navarro for new trade post - (www.cnbc.com)
Trump to name Icahn as special adviser on regulatory overhaul, will help to select SEC head

Bad loans, bad growth, bad politics: Things are tough for European banks - (www.cnbc.com)
Investors Worry as Financial Picture of Italy’s Oldest Bank Deteriorates - (www.nytimes.com)