The collapse of Silicon Valley Bank (SVB), a Santa Clara-based lender that had positioned itself as a darling of the tech industry, is expected to shake up one of the country’s most expensive housing markets, analysts say.
Also, failure of Silicon Valley Bank has shook not just the region’s tech businesses, but also Bay Area NGOs working to develop affordable housing in one of the most expensive markets in the country.
For the previous two decades, the bank, which was shut down by federal authorities this weekend, invested more than $2 billion in affordable housing investments and loans in the Bay Area.
As well as additional ventures in Massachusetts and Los Angeles.
As the federal government vows to protect depositors, affordable housing developers who rely on the bank for construction financing face greater uncertainty.
SVB’s demise threatens to cause building delays and to upset funding deadlines that developers must follow in order to qualify for federal incentives.
Federal Deposit Insurance Corporation (FDIC) announced the liquidation of Silicon Valley Bank (SVB) on Friday, marking the biggest U.S. financial institution failure in almost 15 years.
“People, in general, are worried. As we were talking about the regional banks, that’s a major issue,” the real estate developer said.
“We’re developers. And so, a lot of our construction financing comes from regional banks.
And so, the impact of the fallout here of something like this happening with the regional banks is definitely a large concern.”
Read also Trading STOPPED for BNP Paribas after 8% plunge
Bitcoin Ad on display in front of Silicon Valley Bank Headquarter
“Mortgages, of course, [are] going to be a concern because are people going to be able to get mortgages?
There’s definitely going to be an impact on the real estate market. But, you know, it all depends, again, where you are,” he added.
When mortgage rates climbed back above 7% earlier this month, it “stifled momentum that had been building as rates originally drifted down to start the year.
Today, falling mortgage rates could thaw what was shaping up to be a fairly frozen spring home shopping season,” Olsen wrote.