|Market conditions and tight money are causing some builders to shut down large housing projects here, despite relatively firm prices and brisk sales of completed homes.
At least two large developments have been halted or dropped so far, after the builders were frightened off by negative signs in the housing market. Two others are rumored to face problems.
Just east of Highway 237 near the Sunnyvale border is evidence of the trouble. At 505 E. Evelyn Ave., a maze of driveways makes its way around the huge lot but leads up to only four model homes on the corner. The other 147 have yet to be built, and there have been no signs of construction for nearly a year.
Dave Best, the project manager at Shea Homes, denied rumors that Shea was having trouble getting bank loans for the project.
"It's not that we don't have the money to build it, we just have decided not to put our efforts in that particular project," he said. "When we determine the market has come back and it makes sense to build, we will continue."
By comparison, another large project that started at the same time as the Shea development is selling quite well at 1950 Colony Street, east of downtown, where 108 row houses are being sold by Regis Homes.
The difference may be all about location. Real estate broker Nick French says homes are still selling well in the city's nicer neighborhoods, like Monta Loma, Cuesta Park and Waverly Park.
Single family home prices have dropped in Mountain View over the last year, from just over $1 million to $963,000. Statewide, prices have dropped 26 percent, according to the California Association of Realtors.
"Talk about disparity between us and them," French said, comparing Mountain View to the rest of the state. "That's not us."
Displaced auto shops
Mozart Development, which operates as Classic Communities, recently withdrew its application for a 96-home project at Evelyn and Calderon avenues at Abate's Industrial Square -- but not before several auto shops at that location were evicted to make way for the project.
City staff said the developer gave two reasons for its withdrawal: the housing market cooling, and remarks from certain City Council members who said they wanted a lower density project. Scott Ward of Classic Communities declined to comment.
Classic Communities may eventually re-apply to build housing on the site, which is zoned residential.
Some of the auto shops found new places after being asked to leave last year, but the developer is now leasing spaces again at Abate's Industrial Square.
City officials were concerned that the market trouble might also knock out 39 row homes under construction next to Landels Elementary School. The builder, Castle Companies, told city officials that the project could be stopped if pre-sales did not do well. But major construction appears to be continuing.
Sales still brisk
There are fewer houses on the market than in previous years, French said, but those that do sell are continuing to sell faster than houses in surrounding cities.
Thomas Koger, a small developer building three homes on the corner of Murlagan Avenue and Annie Laurie Street, has also noticed the trend. Housing development is "an expensive game," he said, but still worth pursuing in Mountain View.
"We see houses that are on the market that don't seem to be there that long," he said. He added that having numerous jobs available nearby at Google and Microsoft doesn't hurt either.
Koger says he expects a profit of between $200,000 and $700,000 for his Annie Laurie project, one of four small developments he is working on in Mountain View. He said he had to live in the house recently demolished on Annie Laurie Avenue for three years to gain equity for a development loan. The city also wanted over $200,000 in fees for the project. If he had to build one less house on the lot, it would not have been viable, he said.
A few blocks away at 291 Evandale Ave. is the 64-unit Summer Hill Apartments, which is slated for demolition soon to make way for 144 condos. It has remained fenced off and empty, however. A rumor is circulating at City Hall and among developers that developer Sal Teresi may be having a hard time getting a loan for the project, which forced about 250 low-income tenants to relocate last year. The vacant site was recently used for police training.
Teresi was not immediately available for comment.
Bubble to blame
Like most other market watchers, real estate broker French traces today's problems to the subprime loans given out by banks in recent years, which ultimately led to foreclosures all over the country.
"The reality is people were buying houses that they shouldn't have been," French said. With more restrictions on current loans, the few who do qualify can be "picky," he said.
This means that high quality homes are still "flying off the shelf," French said, but homes that may be below par are on the market longer.
Council member Jac Siegel said developers are also facing "much stricter requirements on financing -- it's a big issue."
But the market isn't slowing down plans for over 400 units at 100 Mayfield Ave., said Jo Price of Toll Brothers, who on Monday was preparing to deliver a check for $60,000 in fees to the city.
The Mayfield project is scheduled for final City Council approvals this year. This is despite the fact that Toll Brothers is having troubles across the country, which has caused its stock price to fall.
"Toll has a lot of cash," Price said. "In this market today that goes a long way. We have a lot more cash than other builders out there."
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