WHEN THE current mortgage crisis ends, someone is going to make big bucks. Probably developers. They'll buy up houses at bargain prices, tear them down, put in a subdivision and start hawking mortgages. The L.A. investor's rule: It's never about the house; it's about the land. Few knew this better than speculator Henry E. Huntington.
One of America's richest men, Huntington rolled into town around 1900. For a decade, his land company assembled vast tracts for development, operating secretly to keep prices low. L.A. myth says he bought a mansion in San Marino -- today the site of the Huntington Library, Art Collections and Botanical Gardens -- for its panoramic view of the San Gabriel Valley. In fact, his interest was the land.
In 1903, Huntington and his partners picked up the house and its 500 acres for $225,000. At $450 an acre, the deal was a bargain, even then. Huntington never moved in. He lived above the Huntington offices in downtown L.A. and continued his buying spree. He acquired so many farms that he created the city of San Marino in 1913 to protect his investment. The master plan: Keep growing oranges, and when the market is right, subdivide.
Though nothing to Huntington, the San Marino house was one of Southern California's most famous. It began as a simple farm house built in 1877 for James de Barth Shorb of Maryland and his wife, California rancho heiress Sue Wilson. Far from the East, Shorb must have felt right at home. Clapboard houses like his were found across America. New York architect and landscape visionary Andrew Jackson Downing promoted such "villas" as models of American truth and simplicity.
Not much stayed simple (or honest) after the Civil War, when business boomed and bigger-is-better became the American way. With seven children and an empire that included vineyards, orchards and flowers for perfume, Shorb hired leading L.A. architecture firm Keysor & Morgan to dress up the family place.
As anyone who's added a garage or a master bath knows, renovations veer out of control, fast. Off came the roof, on went a third story, in went 13 bedrooms and three baths, fireplaces, hard-wood floors and that ultimate status symbol, a billiards room. When Shorb was finished in 1885, he had turned a country villa into a French-style mansion.
Shorb died in 1895 after going bankrupt in the financial panic of the time. A Los Angeles bank owned the mortgage on his land and house when Huntington showed up.
One man's McMansion is another man's cottage. And it was cottage that must have come to mind when Henry's soon-to-be wife saw the Shorb place around 1906. Art collector and investor Arabella Huntington lived the high life in New York and Europe. If she was giving up Fifth Avenue for L.A., she'd bring Paris to Pasadena. Henry went along with her grand ideas for a San Marino estate. The developer was in love, and as long as land prices kept soaring, he could spend freely. At $4,000 an acre, Huntington's ranch was worth about nine times what he had paid; improvements could only drive up prices in the neighborhood he owned.
Huntington hired local architects Myron Hunt and Elmer Grey to draw up plans. In 1908, down came Shorb's dream house and up went Huntington's. Shorb's villa had been a 12,000-square-foot mansion; Huntington's was a $450,000, 35,000-square-foot palace -- the region's largest house until 1984, when TV mogul Aaron Spelling tore down a 14,000-square-foot manse in Holmby Hills to build a 56,000-square-foot palazzo.
So the story ends as Huntington intended. Arabella had her house -- now the Huntington Art Gallery, recently renovated for $20 million -- and Henry had his land. He continued right on subdividing his ranch and Los Angeles, where the cycle just keeps rolling along. Buy for land, not the house.
Watters is author of "Los Angeles Houses, 1885-1935."