The still-tightening market for financing real estate is not only taking a bite out of individuals’ ability to buy homes. It’s also starting to affect the ability of large new construction projects to get financing to even begin building. New projects like a waterfront condo complex in Everett.
The start of condominium construction on the Everett waterfront will be delayed by at least six to nine months after a major financial backer dropped out because of the nation’s mortgage mess, developer Maritime Trust said Monday.
“They just flat out got out of the construction market and are selling the unit that was going to do our construction loan,” Maritime’s Bert Mears said Monday.
He was referring to Merrill Lynch, which fired its CEO this fall after reporting a third-quarter loss of $2.24 billion, primarily due to writing off $8.4 billion in losses in subprime loans.
Lynch had agreed to be the main lender for the $98 million project that involves 137 condominiums. That’s the first phase of a $400 million redevelopment called Port Gardner Wharf for up to 660 condos and additional retail, office and commercial space on 65 acres.
Mears said he’s still seeking a replacement lender and may have to wait because of all the publicity about problems in the national housing market.
“We’re talking to a couple of other people,” Mears said. “I don’t think anyone wants to push the button until we get some of this (problems in the nation’s housing market) off the front page.”
“It’s extremely important that this project happen,” [Port commissioner Connie] Niva said. “It’s the beginning of a lot for Everett. It signals that private investment can be successful in Everett. If it looks like we can’t get a quality development done in Everett, that’s a problem.”
I really am amused by the rationalization that people are frightened away from investing by news headlines. Of course it doesn’t have anything to do with market realities or the financial bottom line. It’s those darn scary front pages. If only the news would buck up and start reporting all the good things about the housing market, project financing would appear, a horde of individual buyers would storm the market, and the pretty pink ponies would again walk the streets in peace and harmony.
Or something like that.
But not to worry, because the Seattle area is temporarily the most driest part of the sinking ship that is the housing market.
Mears said he’s confident of financial backing for the project because the local economy is strong.
“The good news is that of all the (housing) markets in the country, this is the strongest,” Mears said. “The great news about the Seattle area is the incredible amount of jobs at places like Boeing and Microsoft.”
Ahh yes, Boeing and Microsoft. That would be the Boeing that added less than 200 jobs in Everett (half of which pay $10-$13 an hour) for the fancy new 787 Dreamliner. And the Microsoft that has what, one small office in Everett? Yeah, those two are definitely a great reason to spend 400 million dollars building hundreds of waterfront condos.
I can’t fathom why the investors aren’t falling over each other to throw money at that. I mean seriously. Boeing! Microsoft!
(Mike Benbow, Everett Herald, 12.18.2007)