‘Tear-Down Fever’ Spreads to Less-Ritzy Westside Areas
In recent years it has been a favorite practice of the rich. Buy a million-dollar home, knock it down and build a multimillion-dollar home. Tear down a mansion and erect a palace.
But the seven-figure status symbols are no longer limited to the best areas of Bel-Air, Brentwood, Beverly Hills, Malibu and Pacific Palisades. “Tear-down fever” has spread throughout Los Angeles’ coastal landscape, sweeping through one-time blue-collar communities that have become executive havens as the price of Westside real estate has shot skyward.
Just ask Don Bourquin, a Mar Vista resident for two decades. In the last year, half a dozen mini-mansions have risen up in his hillside neighborhood, monuments to escalating equity and--often--to bad taste. The explosion of small estates on lots once occupied by two-bedroom, one-bath homes is changing the face of other former middle-class communities, such as Venice, Westchester, Westside Village, Culver City and parts of Santa Monica.
Once Full of Rabbits
“It’s hard to imagine that this was just a barren hill full of rabbits not long ago,” Bourquin said. “But I guess this is progress.”
They have become such familiar sights in Westside neighborhoods that the neighbors can now spot the signs of the next arrival. First, the work crews show up, bearing construction gear. Then the scaffolding arrives. And then along comes the dumpster.
“When the dumpster arrives, you know it’s going to be big,” Bourquin said. “You think at first they’re just putting on a new roof because the shingles are gone. And then, all of a sudden, the rafters are gone. And then the next week, the house disappears.”
What replaces it, often to the dismay of nearby residents, is a house that usually fills every square foot of the lot and juts above other homes in the neighborhood. Some complain that the over-scaled homes destroy the character of the neighborhood; others note that it raises surrounding property values. Everyone agrees that it appears to be a trend without end.
There are numerous explanations for the tear-down boom, including what one person called the “trickle-down theory of tear-downs,” whereby the astronomical prices of homes in Bel-Air and environs has forced even affluent house shoppers to look in “more affordable” areas. Home buyers rich enough to be looking for four- and five-bedroom homes, but not rich enough for Beverly Hills, find that outside the exclusive neighborhoods, such homes are in short supply.
In parts of Beverly Hills, land often goes for more than $3 million an acre, and two-acre lots can sell for up to $10 million. By comparison, an older three-bedroom house in Westchester can be purchased for under $325,000.
So, for an additional $300,000, a homeowner could build a new house of 3,000 square feet that closely matches the value of the lot and their personal taste rather than spend more than $700,000 for a small fixer-upper in Pacific Palisades.
Rise in Land Values
“The reason we’re seeing nice houses razed all over Los Angeles boils down to the escalation of land values in some communities,” said Michael Salkin, an economist and senior vice president at First Interstate Bank. “In many instances, you have land that is worth up to $1 million per acre and a house that’s not worth much at all.
“When you start thinking about putting in a few walls, new air conditioning, a new bathroom and maybe adding a room, you look at the hard costs and you realize that, to put out that expenditure, you can build a new house.”
Salkin offers as an example any of the modest single-story homes in Mar Vista or Santa Monica, many under 1,500 square feet, where the lots are worth as much as $500,000. With the average construction cost of about $100 per square foot for a partial remodeling or a tear-down, he said it makes sense to demolish one home and build another.
“You don’t want a $200,000 house sitting on a $500,000 lot,” Salkin said. “So when you start talking numbers, you end up thinking, ‘Why not just rip the whole thing down, build a new house and call it a day?”
Optimistic property owners are even building vertically, with high-tech structures in marginal Venice neighborhoods.
“Most people don’t have the courage for total tear-downs,” said Venice real estate broker-developer Elaine Spierer. “But it’s the only way people can buy a new, big house and avoid moving to Palmdale.”
Spierer has done two tear-downs in her Windward Circle neighborhood, including a three-story structure that she and her partner recently sold to a well-known musician for $800,000. But when she was considering knocking down a dilapidated shack and building a modern home for herself near a busy street two years ago, she said her real estate colleagues thought that she should seek counseling.
“I believed in it, but everyone else thought I was smoking something,” she said. “The attitude was that we were way overbuilding for the area. But I think the new construction gives people new confidence about their neighborhoods.
‘Buy Now and Dream’
“When people have to buy into what is perceived to be a less prestigious area, they just have to believe that what they are doing to build a new house will make it wonderful later. It’s so expensive that, in many cases, they have to buy a two-bedroom, one-bath house now and dream.”
The tear-down boom is influenced as much by a lack of available housing as by any impulse to build a dream house, said Don Doyle, president of California Development Co. in Santa Monica. He said that unless the urbanized areas of the state can meet the exploding demand for housing, such places as Los Angeles and San Francisco will just have to increase dwelling density or face continued soaring prices.
“People on the Westside and other parts of L.A. will either see a greater density or the housing prices will just skyrocket,” he said. “But until we build a wall around California or enforce a mandatory birth control program, we’re going to have to start responding to our housing needs. The tear-down phenomenon is part of that.”
Los Angeles city building officials do not keep track of the number of tear-downs. In fact, most of the tear-downs are listed as remodeling jobs because homeowners want to avoid the cost of seeking additional permits. By keeping one wall of the original home in place, a tear-down is considered a remodel, and property owners can reap some tax benefits and save up to $2 per square foot in permit costs, according to building officials and contractors.
In addition, they can avoid costly delays and reams of red tape that await them at City Hall.
Doubling Investment
George Christopolous, a real estate agent with Jon Douglas Co., said the tear-down trend has sparked an increase in the number of houses built on speculation by developers. Rather than just adding some remodeling touches to reap a profit on a house sale, he said they are doubling their investment by doubling the size of the house.
First Interstate’s Salkin said those engaging in the tear-down craze, even on the Westside, have to be careful not to “over-improve” a property. He said the rebuilding trend would continue to be most popular in more expensive neighborhoods where there are lots of houses already worth more than $500,000.
Still, he predicts that in the years to come, the largely unaffected areas of Los Angeles, such as the downtown neighborhoods, will see a lot more rebuilding.
“Slowly but surely over time, the smaller and older buildings get removed and they are replaced by newer and bigger buildings,” he said. “You’ll see it in Silver Lake, Koreatown and just about anywhere there is a great demand for homes.”
Perceptions Shifting
Spierer, who sold a large house in Brentwood to build her dream home in Venice “so I could walk my dog and actually see people on the streets,” said the demarcation line between prestigious neighborhoods and semi-affordable areas is being shifted by the tear-down craze.
“All you have to do is look around and you can see all these 1950 ‘war boxes’ with a second story going up,” she said.
Bourquin, who has done some remodeling on his Mar Vista house, said he has no intention of keeping up with the Joneses or anyone else who decides to triple the size and increase the value of their home. Yet he said he is resigned to the prospect of his neighborhood soon being filled with more homes like the two-story brick, pseudo-Tudor mansion with the life-sized Gumby in the window a few doors down from his Keeshen Drive house.
“For the last 10 years, the houses in the neighborhood were all the same, and then these things started appearing,” he said. “I don’t understand why everybody is rushing to build the next ostentatious house. But it’s almost as if you’re out of step if you don’t do something major.”
