Houses Built on Speculation Become Costly Hillside Eyesores

As interest rates have come down, “For Sale” signs have gone up on Phyllis Kaufman’s street in Woodland Hills.

The signs don’t refer to houses. They are advertising Woodland Hills’ last remaining inventory of land--hundreds of steep lots left behind by the community’s first wave of subdividers.

The lots are being snapped up in many cases by speculators who are willing to gamble that they can build a marketable house where no one has wanted to build before.

Worth the View

To do so, they probably will build a huge, expensive house with soaring ceilings and multiple floors to compensate for the steep backyard. Instead of a front yard, they will build balconies with a view of the San Fernando Valley below.

Most of the hillside “spec houses” have eventually found buyers willing to trade yardwork for a view.

But some of the dwellings remain empty for years, and some residents fear that a new flurry of building on the hillside lots could further exceed demand for that type of housing, leaving vacant eyesores in their neighborhoods.

Hillside construction in Woodland Hills has prompted one homeowners group to push for a temporary moratorium on development. The one-year building ban, tentatively approved by the Los Angeles City Council Nov. 7, would give city officials time to review ways of regulating construction of large houses on small lots.

Woodland Hills Homeowners Organization President Gordon Murley said his group persuaded City Councilman Marvin Braude to propose the moratorium for a hilly area around the Woodland Hills Country Club.

Murley said 25 homes in his immediate neighborhood are unsold spec houses. Some sat “vacant and shabby” for as long as four years before they were sold or rented to a succession of transients, he said.

“Nobody in the city sees the terrain before they issue permits,” Murley said.

“One of the houses was built about nine years ago and has never sold. Banks are very stupid to loan money without knowing how it’s going to be used on these houses.”

The proposed moratorium will not include Kaufman’s neighborhood, however. Near her hilltop home, two dozen lots are for sale. On three other lots, houses are under construction.

Vacant 6 Years

On two lots on Kaufman’s street, the houses sit empty--including one next door to Kaufman that has been vacant for six years.

It is a $275,000 home that has a commanding view of Warner Center and the western San Fernando Valley from the rear. But part of the wood exterior in the front has peeled away, and trash has piled up in front of its garage.

Neighbors along Medina Road say they have complained for years that the vacant house is an eyesore.

“This neighborhood doesn’t deserve this,” Kaufman said. “Periodically, someone comes by and rips things out of the house and puts it out on the curb, and it sits and sits. We live in a fire area and it’s a fire hazard. That house terrifies all of us up here.”

Neighbor ‘Giving Up’

Said another neighbor, John Rasmussen: “We’ve called the city, the police, the health department. But I’ve given up. Either the city can’t do anything, won’t do anything or is terribly ineffective, for whatever reason.”

City officials said they have kept close tabs on the house since they issued a building permit for it in 1979. A Building and Safety Department computer, which lists activity at construction sites, backs up that assertion.

The computer shows that periodic building activity and inspections have occurred at the house. It is not considered a structural or safety hazard and is not a candidate for city-ordered demolition, which officials can require in extreme cases.

Although officials said no occupancy permit has been issued for the home, two pieces of furniture were visible last week through the front windows.

Several attempts to reach the house’s developer were unsuccessful.

City Permits Renewable

Earl Schwartz, assistant general manager of the Building and Safety Department, said the city has no way of knowing when a house will be finished when it issues a building permit, which is good for two years and is renewable. Spec houses are not identified as such on permits.

“What generally happens with spec builders is, if the project goes well, there are no problems. But if they run into financial or legal problems, that delays the project,” Schwartz said.

He said that foreclosure of a project can add to the delay if the lending institution that takes it over doesn’t have expertise in hiring contractors and coordinating work on a half-built house.

Real estate agent Kathy Mehringer, who has sold property in hilly areas of Woodland Hills and the Las Virgenes region west of the San Fernando Valley, said spec homes are “a very tough sell,” even when they are finished.

Skimping on Features

She said some builders run low on cash during construction and may cut corners on the final phase of the project. They install cheap kitchen appliances, lighting fixtures and hardware that turn buyers off, Mehringer said.

But such is not always the case.

In Agoura Hills, city officials say they have generally had good experience with spec homes. “They seem to be better built,” city Planning Director Paul Williams said.

However, three of Agoura Hills’ most prominent houses are spec homes whose builder ran out of money. They are two-story hilltop homes that tower over Agoura Road and are visible to Ventura Freeway motorists.

The houses have been vacant since they were built about six years ago, Williams said. Three months ago, vandals set one on fire, he said.

Taken Over by S&L

A savings and loan has taken over the project and is negotiating with city officials over sewer and storm-drain easements for the houses, Williams said.

“In order to complete them, they’ll have to renew their permit, and they’ll have to do work beyond normal because the houses have not been heated and cooled,” Williams said. “The wood’s dried out. Basically, they’ll have to rework the wood.”

South of Agoura Hills, in a mountainous area of unincorporated Los Angeles County, five spec houses begun in 1980 were completed this year. The project languished when financing problems arose in the early 1980s; a savings and loan finally paid to finish the house.

Real estate agent Tom Geiser, who is selling the Old Mill Creek Lane homes as luxury estates, said four of the five have been sold. The last one, a seven-bedroom model, is on the market for $995,000.

“More money was spent on these houses than on a normal spec house,” Geiser said. “They had visions of grandeur. They overextended themselves. Maybe they thought the pool would never dry up.”

Neighbors Relieved

Nearby homeowners, who clashed four years ago with Los Angeles County officials over the half-built homes’ potential fire danger and the safety hazard posed by their open basements, said they are relieved that the project is finished.

Ken San Miguel, a senior county building inspector familiar with the Las Virgenes area, said it is not uncommon for spec houses to change hands three times before they are finished.

He said county building permits are valid for one year, but they can be renewed. The county does not keep statistics on permits issued to spec builders, San Miguel said.