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Originally Posted by viewguysf
I hope that you are right BT, and you may well be. What do you see looking forward, beyond construction of any private building that has already locked in financing? Do you foresee a long downturn?
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I generally agree with what you said except in the case of buildings that are ready to turn dirt like I assume ORH #2 and 45 Lansing are. It's also harder to predict in SF because it's so hard to entitle a project and the artificial shortage of housing is so great that there's a lot of incentive to build when and if you can. I do think 555 Mission (or, if we are lucky, 535 Mission) may be the last "spec" office building put up for a couple of years--that is, one without at least an anchor tenant signed up before construction begins. Which, of course, brings up the matter of the TransBay Tower--I just don't know what to expect there.
But construction fans here are lucky in that some projects will go forward. I was remembering after I posted above that both the Golden Gate and Bay Bridges were also built during the Depression and let us not forget that the Eastern Span replacement for the Bay bridge will certainly move forward. So will UC projects at Mission Bay (I'm not so sure about some of the housing and independent commercial buildings). The "seawall lot" across from AT&T Park is a question mark, I think.
But let me make a prediction: I think we are getting near the denouement of this financial crisis. There IS a solution: The government could make the "implicit" guarantee of Fannie/Freddie bonds explicit and empower the FHA to begin a massive program of refinancing ARMs into fixed rate mortgages for those who can qualify. And I think there's a pretty good chance they will do something like that before the November election because I think things are going to get worse and worse until they wake up in Washington. There is so much in our financial system that is collateralized with agency bonds like those of Fannie and Freddie (and others including The Federal Farm Credit Banks, Federal Home Loan Banks and Tennessee Valley Authority) and with high quality (meaning "prime") residential and commercial mortgage bonds and if the market for those gets back on the tracks, I think lending for solid projects will resume.
Personally, I hope they don't bail out the people who got "liar loans" by telling lies and who never could afford the properties they bought or the people who qualified for loans only at the low "teaser" rate but not at the eventual rate. And I think the markets can absorb the losses tied to those people as long as the paper that will eventually be good--like Fannie Mae bonds--is priced appropriately.