By Sharon Simonson

San Ramon-based SummerHill Homes has broken ground on a 53-unit single-family housing development in Mountain View proposed as executive-level family and later-life housing for empty nesters looking to downsize. Units are to be priced in the $1.7 million range.

Robert Freed, SummerHill chief executive, said the first models should be delivered by June if not sooner. Lots are to measure on average in the 8,000-square-foot range, with some large enough to accommodate a primary residence and a small accessory building suitable for a home office or guest quarters. That is consistent with the single-family housing development that surrounds the property on all four sides and should enable the project to compete with existing home sellers in the area.

The first phase is being financed with a $25 million land acquisition and construction loan from Union Bank, Freed said. Three banks, including Bank of America and Bank of the West, fought for the business.

The site, at 3119 Grant Road, is in Mountain View but is very close to the Los Altos city limits.

"I still think there is plenty of risk in residential real estate development, but there is less risk in a project like this," said Freed, a former top-ranking executive with Los Angeles-based KB Home and a long-time home builder in the San Francisco Bay Area. "The economy is still fragile, and mortgage loans are more difficult to obtain, so only buyers with top credit and a big cash down-payment" can qualify.

Freed attributed bankers' interest to SummerHill's not having defaulted on any of its debt obligations in the last several years despite the most difficult home-building environment in generations. Going forward, he believes that performance record should give the company a competitive advantage in financing its products and with land sellers.

Freed attributed the decision to make good on all debt to George Marcus, founder and board chairman of The Marcus & Millichap Co., SummerHill's parent. Palo Alto-based Marcus & Millichap is also parent of the Marcus & Millichap Real Estate Investment Brokerage Co., a commercial property investment-sales company active in the Bay Area. George Marcus is also board chairman of Essex Property Trust Inc., a Palo Alto-based real estate investment trust that specializes in multi-family development. Essex also has been active during the bust, buying several Bay Area apartment properties in recent months.

Home values in Mountain View and Los Altos, though depressed from boom-time highs, have been buoyed by proximity to healthy employers such as Mountain View-based Google Inc. and the world-renowned Stanford Research Park. In addition, the subdivision will be served by Mountain View High School in the Mountain View-Los Altos School District, a well-regarded public school system.

The home-building industry, flattened by the housing-led financial crisis and economic bust, is showing signs of renewal. According to data from the Construction Industry Research Board, Santa Clara County leads the state as measured by gains in the number of new housing units permitted compared to 2009, up 227.8 percent year over year through August. Builders pulled permits to construct 2,024 housing units countywide through August, according to the board's most recent report. That is up from 631 units in the same period of 2009 and comparable to activity levels in 2008. New home construction is also outpacing 2009's level in San Francisco and Alameda counties as well.

That said, new-home construction is at a cyclical low statewide and is expected to remain there for the next 14 months, according the research board. "The 2008, 2009 and forecast 2010 and 2011 new housing unit totals are lower than in any prior year on record," the board said in a Sept. 22 report on private building construction statewide. Total new housing units are forecast at 46,500 in 2010, up 28 percent from 2009. The total should increase to 80,000 next year. Previous lows were 85,656 in 1982 and 84,656 in 1993, according to the CIRB.