New mansions remain unsold across Southern California

[Liberal_in_LA]

I know of a few of these. We aren't talking McMansions. They are honest to god mansions with curvy staircases and the whole 9 yards. Two I drive past have been on the market for 2 years, prices drops of a million haven't led to sales

Too many palatial homes, too few princely buyers
As spec mansions lie unsold across Southern California, stressed sellers may deflate the housing market's high end by lowering their prices.

Two years ago, Larry Igarashi bet he could build a sprawling house in Orange County's foothills that would sell for at least $10 million. These days, you can easily guess how that turned out.

On Saturday he put the eight-bedroom house in the gated Coto de Caza community on the auction block and got a high bid of $6.6 million -- less than he was willing to accept.

Igarashi had gone all-out when he built the "Santa Barbara ranch" house: The master bedroom suite alone is 3,200 square feet, a bit smaller than the 10-car, climate-controlled garage, which measures 4,000 square feet. The driveway is long enough for a firetruck to turn around, and there's a wine storage enclave with room for 1,400 bottles.

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Spec mansions are now amassed in some areas like rising floodwater behind a dam. A search of homes for sale built since 2007 and priced above $3 million shows 39 such properties in Newport Beach and Newport Coast, 27 in Laguna Beach, 19 in Manhattan Beach, 18 in Irvine and 11 on the Palos Verdes Peninsula.

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A bigger question also remains: What if the giant spec homes just never sell?

Stefanos Polyzoides, a Pasadena architect who is an advocate of more dense, compact residences, said sometimes economies change in ways that make the original uses of buildings obsolete. The grand mansions of Newport, R.I., for example, have been converted to condominium buildings or inns, he notes.

Polyzoides doubts such reinventions could work for many of the latest spec mansions. "Some of these are huge albatrosses in exurbia surrounded by nothing. Many of these could face a very hard ending," he said.

http://www.latimes.com/business/la-fi-spec-mansions4-2009oct04,0,1630470.story

[tabatha]

1. Don't you mean remain unsold.

[Liberal_in_LA]

2. thanks. change made.

;)

[tosh]

3. They should be converted to multi-family housing

before they are allowed to sit empty and deteriorate. JMO.

[Liberal_in_LA]

4. read the last paragraph above....location may be a problem

[cliffordu]

5. House the homeless.

[Liberal_in_LA]

6. 3200 sq foot bedroom suite. There would be issues dividing up the space

4000 square foot garage. They weren't built for shared housing.

[cliffordu]

24. Sofa king what

[XemaSab]

25. If 11 Mexicans can live in a one bedroom apartment

how many can live in a 3,200 square foot bedroom suite?

This question may soon be non-rhetorical.

[GreenPartyVoter]

17. I thought of the same thing.

[Barack_America]

7. Honestly, I couldn't care less. Let the rich see blight in their neighborhoods for a change. nt

[Dreamer Tatum]

9. Empty houses mean less tax revenue

so fewer cops, worse schools, etc.

Think it over.

[Barack_America]

12. Property taxes are still owed for houses on the market.

But even if they weren't, I think that the people of Orange County, California have a long way to fall before they experience real hardship.

[Dreamer Tatum]

13. Granted, but a better market increases prices

and I was comparing the potential revenue from what's there to what could be there otherwise.

And the OC is not in such wonderful shape.

[Barack_America]

15. And increasing prices leaves poorer Americans unable to participate.

These houses are not worth what they are selling for. Housing prices remain generally inflated in this country.

This house alone may generate the tax income of 15 less expensive homes, but I'd rather 15 families be housed than just one.

[Dreamer Tatum]

19. Me too. But those 15 people are hard to find.

It's a tough issue right now, for sure.

[Sen. Walter Sobchak]

22. Nice Generalization,

Get five miles from the coast and your in any suburb USA with all the same problems and challenges.

"The O.C." WAS NOT REAL!

[Richard D]

Some of these places are being . . .

. . . bought up by people doing high-end alcohol and drug inpatient centers.

[GreenPartyVoter]

18. That's a good use for them. Anything is better than leaving them empty.

[Dreamer Tatum]

8. Before people get too snarky, consider...

that the act of building a multimillion dollar home increases the value of the property. Even at $6MM, the potential property tax revenue is roughly $90,000 per annum. You'd have to build about 15 $400,000 homes on the same piece of land to yield the same revenue, but then you'd have to extend the infrastructure to support it.

There will be some social benefit to the real estate market coming back, even at a shadow of its former self.

[mainer]

10. It's not even all that nice

Cold and unwelcoming. More like an institution.

[davsand]

"I could never feel at home in something like this."

My mother's comment while we were doing an open house in a local monstrosity...

It started out as the future home to two Doc at the local clinic. He was a heart surgeon and she was some other specialty (can't remember off the top of my head...) Anyhow, he got fired by the clinic, she left along with him and now the builder is stuck with a house that is partially finished.

The original contract was for it to be in excess of $4 million. By the time the docs walked away the builder was in for more than he could recoup on it, and complete with mechanic's liens it is now on the market for a Million Five.

1.5 million will get you a really cool house in a nice new subdivision. That house has particle board for a floor--no finish on that yet, a room for a kitchen that you can skate in--but no cabinets or even fixtures. The plumbing and electrical is all roughed in, but nothing is hooked up to anything.

For all that money you get no bathroom fixtures in the ten baths, a lovely chandelier in the entry (it is there for "display" only" according to the little sign) and a hole in the back patio to put a lap pool in. The entire basement has no walls--just studs to frame in the media room and exercise salon.

It is gonna be a lovely house, but how many buyers ARE there in a town of 100,000 for a $1.5 house that is probably gonna cost at least another $500,000 to properly finish?

While I don't have a lot of sympathy for the two docs, I DO feel pretty bad for that builder and those craftsmen that put all that time in and never got paid, and may never recoup what is owed them.


Laura

[Liberal_in_LA]

27. Cable house flipping show focused on a recently well off couple struggling to unload

an unfinished mansion. They'd sunk his entire retirement pot (600K!) into the purchase and renovation of a mansion. He got laid off and the housing market dived. They were living in a hotel, trying to finish the renovation so they could sell the place. They took a huge hit on their investment and got about 15K out of the house. It was a financial tragedy. If they'd only left the retirement pot alone, they'd been able to weather his layoff (they looked near retirement age).

[Phoebe Loosinhouse]

11. Some have predicted that McMansions in the exurbs will be the new

place to warehouse the poor who then will be conveniently out of sight and out of mind.

Overbuilding in the past, like the Newport mansions cited, or overbuilt Victorians in almost every city HAVE ultimately ended up sub-divided to provide more units of less expensive housing. What else can you possibly do with it? I guess we could see a return to the boarding house - private bedrooms with shared kitchen and common rooms. I don't see anything wrong with that either.

[Cleita]

16. I don't either. If I were a business person, I would also hire a chef to

make meals for the tenants. I wonder what you could get per bedroom? If you could make your investment pay? It could work out well for a single working person too, who might find an apartment too pricey, but room and board more affordable.

[kayla9170]

14. Maybe if the "Little People" can acutally

Restructure their mortgage (A.K.A. ARM's) without losing what little credit they have left. Then again.....who care about the "Little People". Not the super-rich emptying the mansions of California, not the Congressional Leadership that did not pass a REAL Homeowner Reform bill after 6 straight years of FRAUD by the banks and not the White House that only could manage to pass the HOPE homeowners program that has only manage to restructure a whopping 13% of all the FRAUD based ARM's the bank underwritten.


Can you tell I do not care about the super-rich and their so-called empty mansions :)

[Sen. Walter Sobchak]

20. I went to look at one of these with my girlfriend for a laugh

The master bathroom had a bidet with gold plated fixtures. Yeah, I am going to hose my ass off with something gold plated.

When we were there they were filming an MTV Cribs style promo for it with was so bad it was hilarious as the model they were using didn't have two brain cells to keep each other company and was struggling with words like "granite"

[Mari333]

21. animal sanctuaries

fill em up..no kill sanctuaries.

[Odin2005]

23. Divide these monsters into apartments.

Or maybe a group home for the disabled.

[mainer]

31. I suspect zoning would forbid it

I remember an article about another giant estate somewhere outside of San Diego which was perfect for a group home or spa or rehab retreat. But zoning forbade it, so it remains empty. People in these neighborhoods would pitch a fit if homes were converted to anything but single family.

[daleo]

26. Turn them into mausoleums

They can be dream homes for the dead.

[aint_no_life_nowhere]

28. A 16,500 square foot home

That's about 16 times the size of my current 2-bedroom house. I'd get lost in a house that size. I wonder what the property taxes are like. On my 1,000 square foot house in Orange County, California, the property taxes are slightly over $3,000 a year. What must they be in a mansion like this?

[treestar]

29. I thought the rich were getting richer?

How can this occur? It would mean there are fewer rich.

[Phoebe Loosinhouse]

30. There were a lot of make believe rich people

Who actually believed the figures in their 401Ks and who thought they had tons of equity to play with and draw from.

[sendero]

32. As tragic as it is..

... it is hard for me to feel sorry for any builder building anything in this environment.

If I were them, I would not saw one board that had not been paid for in advance.

It's amazing how folks are lulled into believing that everything will be like 2006 any month now.

It will never be like 2006 in our lifetimes again, unless maybe you are under 30.

[Phoebe Loosinhouse]

33. I heard a builder on the radio the other day

who was turning his entire business into remodeling and additions and he sounded like a man who had just found religion. "The owner pays for it and I don't do a lick of work or buy any supplies until they are paid for" which is quite a difference from building on spec and hoping you get a good return which is what he had been doing previously.

It's funny because I got the impression he had always looked down on the remodeling end of things, but he sounded rueful like he had just discovered what a dumbass he had been for having his financial ass on the line all the time.