Ten years, three remodels and a couple hundred thousand dollars ago, Rochelle Giuseffi and her family moved into a "fixer-upper" in Fountain Valley that was built "a little along contemporary lines." The house cost $110,000.
"The first thing we did was extend the kitchen out," Giuseffi recalled. Then a pool was added and the back yard was done over. And 3 years ago the house was restuccoed, painted and had 5 feet added to each of two upstairs front bedrooms.
Now the house has nearly 3,000 square feet, five bedrooms and four bathrooms. It is worth, by Giuseffi's estimate, close to $400,000.
Giuseffi figures the family can get back far more than whatever they paid for the three major remodeling jobs. "That's not the problem. The problem would be getting into something similar," in the same price range, should they move.
Because of that problem--finding a comparable house in the county for what you get when you sell the house you're in now--residents are increasingly giving up or delaying their dreams of "trading up," real estate sources say.
Instead, they are improving the homes they are in, figuring they are better off staying close to their children's schools, in a neighborhood they know, among friends and familiar shops, rather than stretching budgets to the limit for another, more expensive house.
And because of the dramatic rise in home prices in Orange County--the median price of a resale house in the county was $173,311 in January, 1988, and $236,890 in January, 1989--many in the real estate business say it's nearly as rare as snow in Newport Beach for a first-time buyer today to find a reasonably priced fixer-upper that will be the foundation of the American dream: owning a home of your own.
Instead, it's the investors--or speculators, as some prefer to call them--who grab the fixer-uppers as soon as they hit the market. Paint, a remodeled kitchen, $10,000 or $50,000 worth of improvements, and the house is sold--without anyone having lived there during the make-over. No longer a fixer-upper, it's now a house ready to command top dollar--and beyond the reach of all but a few first-time buyers.
"Most of the time," said Dennis D'Ambra of D'Ambra Construction in Westminster, when fixer-uppers come on the market, "you'll find those (buyers) are investors, where they think they're going to spend a few dollars and fix it up and then sell it."
Bob Wolf, president of Wayne Howard Construction, which does a lot of remodeling in Huntington Beach, said that "there are some (fixer-uppers) around," but nearly all the time, "if there are any deals, real estate people grab it, and fix it up or whatever. They never get to us" or to people planning to buy the home and live in it.
Joyce Kahn Mogabgab, a partner in LLM Construction in Santa Ana, said that, by and large, "people are not buying new (homes). . . . They are staying where they are and adding on."
Indeed, the Construction Industry Research Board reports that in 1980, permits for $81 million in remodeling were issued in the county; last year the amount had jumped to $190 million.
Some people do move from one house to another but still remodel their new digs, figuring that is their best chance to get what they want within their budget--even a big budget.
Ralph and Elda Caraco bought a $730,000 home on Balboa Island in June, 1987, tore it apart, remodeled to the tune of $180,000 and now have a home that Caraco--a general contractor himself and thus a man who knows something about property values--figures could fetch $1.5 million or so.
Caraco, 44, wore a baggy sweat shirt and paint-spattered shorts as he wandered through the bay-front home recently, showing what had been done and looking pained that he might somehow be considered arrogant, a braggart, a man in a million-dollar-plus home.
"Most of our friends aren't as fortunate," he said, insisting that "we're pretty down-to-earth people. We're not yuppies. I don't have collars that stand up. I don't have pink shirts. I don't have yellow ties. In fact, I don't have many ties."
The 1,400-square-foot house the Caracos bought was built in 1936 and had four bedrooms and two bathrooms. When the 5-month remodeling was finished in October, it had 2,118 square feet, two bedrooms, 2 1/2 baths, a family room and a gym.
The family room has a phone booth, two pinball machines and a projection TV. The living room faces Newport Bay, where ducks swimming by can be seen through the 6-foot-tall windows that cover nearly the entire front. Another wall has a fireplace, flanked by two floor-to-ceiling speakers. Opposite the windows is a couch and beside it a rack of audio equipment.
After seeing the house in 1987, the couple decided in "10 minutes" to buy it. They had previously lived on Balboa Island and missed it, so they sold their Laguna Beach house and moved back to the island.
"We wanted a house on the bay front, with a dock, a fireplace in the bedroom and three blocks from Marine Avenue," said Elda Caraco, 33, a travel agent.
Why not just pay $900,000 or so for a house and skip the grief of remodeling, a process that Caraco admitted involved "a lot of discussions, a lot of arguments"?
"You couldn't do that," he maintained. "That's not possible, because a house that looks like this, you couldn't get for that kind of money."
For the Tripps of Santa Ana Heights, the remodeling was not quite as expensive, but it sure was traumatic.
"This is a very sore subject," said Jeannie Tripp, though because the chaos of a year's remodeling is behind her, she is now able to say it with a laugh. "We would never, ever, ever do this again. Wait, we would do it again, but we'd never live through it (in the house). We lived here the whole time. We should have rented a house."
The Tripps started with a three-bedroom, two-bath house, added a second story, knocked out walls here and there and ended up with four bedrooms, three baths, a den, a living room and a dining room.
Bob Tripp, an electrical contractor, estimated that it cost about $15,000 for each new room, with the game room costing $30,000, the kitchen remodeling $12,000 and the total adding up to about $132,000.
Tripp estimated that the home he bought 10 years ago for $75,000 is worth about $350,000 today. But if they were to sell now, the Tripps figure that they would be lucky to get back $100,000 of the $132,000 they spent remodeling.
"We overbuilt the area," he said, meaning that their house is now one of the better ones in the neighborhood.
(A rule of real estate, at least for buying a new home, is to try to buy a home in the best neighborhood you can afford--even if it's not one of the better homes in the neighborhood--rather than buying the best home in a lower-priced area.)
But the Tripps did not remodel to make money. "It's a situation where I plan on staying there the rest of my life," he said.
Jeannie Tripp said the couple decided to stay because when they were house-hunting, "everywhere we looked was so terribly expensive."
They looked in an upscale area of Newport Beach, but the homes were "terrible--they were falling apart, and they still wanted $400,000 for them," she said.
Mary Melton, who works for a publishing company, said the problem that she and her husband faced when shopping for new houses was that the rooms are too small and "you have to put $25,000 to $30,000 just in landscaping and improvements to have what you want."
So the Meltons bought an older single-family home in El Toro that had just about what they wanted, except for the kitchen. After spending about $5,000, the kitchen is up to snuff.
Melton said it is difficult to estimate how much of the money spent on the kitchen improvements could be recaptured if she and her husband sold the house now, because county real estate prices are increasing so much regardless of improvements that almost anything is worth more than someone paid even a few months earlier.
"I would guess we would get at least half (of the $5,000 investment back). I do know the appearance of a house makes an incredible difference (to a potential buyer). I will say, with kitchens, if couples are looking for a house, that's one thing they always look at (closely). We don't like scummy, inconvenient kitchens," she said.
Dennis D'Ambra of D'Ambra Construction in Westminster, which did much of the most recent work on the Giuseffi home in Fountain Valley, said that when his company started business 23 years ago, a large part of its work was "adding a bedroom that was just a necessity because the wife was expecting."
Nowadays, the trend is "people looking at new homes--and can't afford it--so they give us a call and ask us to remodel from what they've seen."
Like a dozen other contractors in the county, D'Ambra said business is booming: "We're doing major remodeling and room additions on homes. It's a big market right now."
Company officials drew up a budget at the start of the year and estimated how much work they expected to do for the full year.
As of mid-April, "we've already exceeded expectations," he said.