Condo Only, NWMLS Area 701 (Belltown & Downtown Seattle)
Condo Only, NWMLS Area 701 (Belltown & Downtown Seattle)
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With the recent announcement regarding a $90 million load by U.S. Bank to Olive 8, the condominium project is being allowed two years to adjust while the market recovers by renewing thier construction loan.
Full press release:
U.S. Bank Leads Syndication of $90 million Loan to Olive 8, Providing Financing for Green Downtown Seattle Condominiums
Two year extension of construction loan is a ray of hope in today’s market
(Seattle) December 14, 2009 ― Long-time Seattle developer R.C. Hedreen Company has received a crucial renewal of its construction loan for up to two years for Olive 8 through a $90 million loan syndication led by U.S. Bank. At a time when many regional projects are at a standstill and unable to secure financing, this loan renewal helps Olive 8 earn its distinction as an urban and sustainable condominium project that has been able to move forward as planned while continuing to be a desirable option for buyers.
Olive 8 is Seattle’s first Leadership in Energy and Environmental Design (LEED) Certified (Silver) hotel/condominium building. Hyatt at Olive 8 occupies the first 17 floors with another 22 floors of luxury condominiums above. Of the 229 condominium homes, 51 have closed. A wealth of new research indicates green building is forward-thinking, offers many long-term financial benefits and is an investment that pays off in terms of lower energy and water bills, as well as healthier indoor air.
R.C. Hedreen President David Thyer says, “As the developer, it’s not unexpected for us to think Olive 8 is unique and will hold its value in the long-term. But the extension of this loan syndication led by our long-time partner, U.S. Bank, reinforces our belief that this hotel/condominium combination in the heart of Seattle is a project with a strong future. We see it as a very positive sign in what has been a slow and challenging market.” Olive 8 was designed by the internationally acclaimed New York City firm Gluckman Mayner Architects in partnership with local architect, MulvannyG2.
Minneapolis-based U.S. Bank’s history of doing business with R.C. Hedreen dates back 15 years, with a variety of projects being financed over the years.
“We are proud to be involved with the construction of Olive 8, which shares our commitment to quality and environmentally-sound business practices that help sustain our resources and the environment,” says John Swanson, senior vice president in commercial real estate at U.S. Bank. “Also, this a shining example of the fact that U.S. Bank is a strong leader within the banking industry, and that we continue to make loans and provide financing to projects like Olive 8, even in this difficult economy.”
Due to its sustainable design and construction, which includes one of the largest green roofs in Seattle, Olive 8 is expected to use 23-percent less energy and 36-percent less water than a comparable non-green building. It is the first building in Seattle to participate in King County’s Transfer of Development Rights program; in exchange for higher building rights, R.C. Hedreen paid nearly one million dollars toward the preservation of 284 acres on Sugarloaf Mountain in rural King County, as well as vital salmon habitat. The carbon footprint of the Olive 8 building will soon be reduced by 21-percent when Seattle Steam Company, which provides heating for the hotel, will begin using mostly biomass as fuel instead of natural gas. Olive 8 also features preferred parking spaces for highly fuel-efficient vehicles and outlets for electric cars in the underground parking lot.
Condo Only, NWMLS Area 701 (Belltown & Downtown Seattle)
Market Conditions Today vs. 1-Year Ago
We’re a little late posting on this topic which seems to have been beat in the head since everyone caught wind of it, but we’re not sure that this “bad news” is really all that bad at all. It might also be fair to say that it’s not all that interesting either. We’d rather spend the time available to post an update on ENSO (coming soon). But, there were some questions we bounced back and forth between a couple of the lenders we regularly refer business to (btw, a good reliable lender can sometimes be like a pint of your favorite ice cream) and we had to get our facts straight.
If you have yet to be filled in, the government backed loan program (FHA), has become a resourceful option for first-time buyers, but the program is moving towards congressional tightening on standards with FHA applicants during an economic upswing–or even better known as a plateau. There’s certainly no doubt that the peak of the market during 2006/07 won’t be coming back anytime soon, but why ruin the party when people are finally starting to show up?
In a quick pre-summary, FHA is looking to make three major changes that could hinder the market’s momentum: increasing FICO score requirements, decreasing the allowable percentage of contributions a seller can provide to meet lending guidelines, and increasing the down payment minimum from 3.5% to a whopping 5%.
A lot of what’s attracting the attention to these changes is that standards will become tighter for mainly first-time buyers, yet FHA loans have become a popular and inexpensive option for those who are having a hard time coming up with a 20% down payment for a conventional loan. Although conventional loans will allow borrowers to go down to 5%, they require a buyer to pay for additional fees such at private mortgage insurance (PMI), as well as have a credit score of at least 740. That’s just for single-family homes. Condos are another story. Condos require a minimum of a 10% down payment in order to obtain PMI on a conventional loan. Therefore, FHA is the only option for buyers that cannot even come up with that initial 10% on a condominium.
Also, a seller can currently contribute to a buyer’s purchase through concessions of up to 6%, and many feel that bringing the newly proposed maximum to 3% will be more in line with common norms. However, what most industry professionals are most concerned about is the additional FICO score increase, which hasn’t had any positive influence with a lot of Americans over the last couple years. The requirement had already been raised recently, and FHA is looking at increasing the minimum down payment amount which could put a lot of potential buyers out of the game.
With the proposal of a new bill, the new guidelines would also raise minimum down payment to 5% as opposed to the current 3.5%. It’s important that the program survives and many feel that raising FHA standards could be detrimental. At the same time, the tax credit has certainly pulled a lot of first-time buyers over the fence, and now it’s time for those who sold to continue the stimulation by moving up. Regardless, if FHA doesn’t survive as a viable option for buyers that need help with getting their foot in the door, then there’s not really any other options out there at this time. The next generation of buyers are going to need to pull together more resources and put in a little more effort up front.
That said, it’s really not all that bad of news, compared to real estate-related headlines we’ve gotten used to. In fact, the spin would be that the market has been stimulated, there has been a positive track record of activity, and therefore it’s time to tighten the reins a bit. Of course, being in real estate sales, we’re always “for” programs and incentives that help us sell more product, but there’s not too much on this news to argue. Looking back, is it fair to say that maybe a big contribution to the financial crisis was due to too many loans given to too many people whose credit scores could have had a higher rating? Could it be argued that allowing a seller to assume responsibility on 6% of a loan ($18,000 on a downtown “starter”) for a product they’re selling is really just a creative way to sneak a buyer into a purchase they really can’t afford to begin with? And, is a minimum of 5% for a down payment really too high, or is 3.5% pretty darn low?
It was very interesting on how this news got around the other day as we pointed out the other day in a previous post. Today the official press release was…released. Here it is.
Condo Powerhouses Williams Marketing, Inc and MCM Group Collaborate to Create Matrix Real Estate—the Largest Condominium and Townhome Sales and Marketing Firm in Washington
SEATTLE, WASH. — December 3, 2009 — Today, Seattle-based residential real estate marketing and sales firms MCM Group and Williams Marketing, Inc announced the joint creation of a new company, Matrix Real Estate. With the most experienced professional sales staff in the region and listings valued at more than $300 million, Matrix will become the largest real estate firm dedicated to condominium and townhome sales and marketing in Washington.
The Matrix team will be spearheaded by partners Leslie Williams, founder of Williams Marketing, Inc, and Mike Miller and Chaun Mackey, co-founders of MCM Group. Mackey will also serve as the president of Matrix and will oversee the day-to-day operations of the company. MCM Group and Williams Marketing, Inc will merge both companies’ talent, resources and employees into Matrix.
“This exciting collaboration means we will be able to provide our clients with the combined strength, broad knowledge and long-term experience necessary to excel in the current market and be well-positioned to capitalize on future opportunities,” Williams said. “We see Matrix Real Estate as a pace setter in this new chapter of the Seattle real estate market.”
Since 2005, Williams Marketing, Inc and MCM Group have each closed more than $1 billion in sales. Williams and Miller continue to provide developer and lender clients with unparalleled experience—offering services from site selection and product design consultation through construction, strategic pricing and marketing strategies. As Matrix, the firm will specialize in sales and marketing for condominiums, townhomes and high-rise communities in urban and suburban locations throughout the greater Puget Sound region and beyond.
In addition, the company will offer a rare combination of consumer-targeted capabilities with services for private resale clients and buyers as well as sellers of new construction and conversion condominium properties and townhome communities—a mix unique to the Seattle market. This consumer-focused approach will position Matrix as a one-stop-shop for homebuyers and sellers—whether they are looking to buy or sell an individual property or addressing the strategic marketing and sales needs of a larger project or community.
“This new relationship may come as a surprise to some because as staunch competitors for more than a decade, we were also each other’s most admired competitors; Williams Marketing, Inc and MCM Group have each had a formidable presence in the marketplace,” Miller said. “But as Matrix, we can now offer our sellers the strength of our collaborative partnership. When a seller hires Matrix, they’ll have me, Leslie, Chaun along with an entire team of seasoned professionals working collaboratively on the sales and marketing strategy.”
As leaders in the condominium and townhome sales and marketing industry, Matrix will represent some of the largest sellers and projects in the region including Vulcan Real Estate’s Enso and Veer Lofts communities in South Lake Union and Pryde + Johnson’s Hjarta project in Ballard, as well as its Florera project in Green Lake.
“The combination of MCM Group and Williams Marketing, Inc will give an unprecedented market share to Matrix,” said local real estate economist Matthew Gardner, principal at Gardner Economics, LLC. “No other real estate company in the Puget Sound region has the breadth of experience that Matrix will be able to offer to its clients.”
Suzie Langford, will be the vice president and broker of Matrix Real Estate while Kim Sharpe Jones will serve as vice president of marketing and Sera Venis will serve as the controller. For more information about Matrix, visit www.matrixrealestate.com.
We first recognized Matt’s blog post after checking it out from seeing Ben’s status update on Facebook which was simply a retweet of Susan’s from about 3 hours ago. Two of the largest real estate marketing companies (MCM and Williams) are merging. Although their agents will be under a company named Matrix Real Estate, we’ve been told that MCM and Williams will continue to use their current brands.
MCM tends to have most of their clientele in more surburban neighborhoods, and Williams has made a good name for themselves in the more urban neighborhoods. If the two companies plan on being “the ONE”, merging may be a good for them–especially since new construction has pretty much stopped and sales have been slim.