Developer Makes His Move : Real estate: Torrance builder is betting he can compete with pricey communities for high-end home buyers. The jury is out.
On Crest Road in Rancho Palos Verdes, a 4,500-square-foot estate home once priced at $2 million sold for $725,000 in a bank foreclosure sale last year.
This was just one of dozens of posh homes on the peninsula that nose-dived in value when the bottom fell out of the real estate market.
But developer Rob Dick bets that high-end home buyers still want to move into a new home overlooking the ocean, even if the $700,000-plus homes are slightly smaller and have a decidedly less exclusive mailing address: Torrance. The 28 homes he plans to build in the Hollywood Riviera, a beachfront section of the city that neighbors the peninsula, are among only a handful of pricey digs being built in the Los Angeles basin.
In April, the first four-bedroom model is scheduled to open in the Riviera Beach Colony, offering buyers gated access, views of Santa Monica Bay, in-home security and built-in stereo systems.
With interest rates still low, Dick said, house hunters will have the confidence by spring to buy once again.
“You have got to gear up and be ready for when things turn,” Dick said. “That’s when people get caught, when things turn around and they are not prepared to be competitive.”
He said more than 300 people have expressed interest in touring the first of the Mediterranean-style homes.
“You’ll always be affected by the layoffs, but there’s also a huge percentage of people working,” he said. “And people forget that there still are people moving in, executives relocating . . . or retirees who have a larger home and want something a little smaller but still offering an active lifestyle.”
Fran Walsh and her husband, Jim, both 66, looked over the development a few weeks ago in hopes of finding smaller quarters than their five-bedroom Rolling Hills home built on a half-acre lot.
“A lot of people our age want to get out from under the responsibility of a large home,” Fran Walsh said. “You have the gardeners, all the landscaping, the utilities. It all adds up.”
But she is not sold on the Riviera Beach Colony. Because of nearby apartments, she said she fears more noise and traffic.
Dick and his sales force plan to impress buyers with amenities: expansive master bedrooms with walk-in closets, whirlpool baths and fireplaces; media rooms designed to hold home theater systems.
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But even with all the frills, real estate agents say his project will be a tough sell. Median home prices on the hill have declined from a peak of $665,000 in 1990 to $474,000 last year. Sales have picked up--from 478 homes sold in 1992 to 696 sold in 1993--but the majority of homes were $500,000 or below, said Carolyn Malmquist, a Palos Verdes Estates real estate agent.
“These will have to be dynamite, wonderful homes,” Malmquist said of the Riviera Beach Colony. “It’s a tough price range.”
In the past eight months, only three of six new homes near the old Marineland site have sold. The asking prices were $1.3 million to $1.4 million, but the homes have fetched about $900,000, said Larry Arman, broker at RE/MAX Rolling Hills.
About 80 homes repossessed by banks and other lenders on the peninsula may be unloaded at deep discounts, Arman said.
“They’re going to have a hell of a time (in the Riviera Beach Colony),” Arman said. “Whoever’s doing it now is insane.”
Dick says he has a safety net. Only three homes are under construction, and the rest will be built as they are bought. Even selling seven homes a year would make the project profitable, he said.
“If we stop building (because of the market), we stop building,” he said. “But everyone assumes the market is going to turn.”
He remains optimistic even after last week’s earthquake, which destroyed the chimney of his own Santa Monica home but caused no damage to the Riviera Beach Colony.
“People come here for jobs and stay here for jobs,” he said. “The earthquakes are part of the equation. It’s a negative, but you live with it.”
Already, sales of homes priced at $1 million or more have increased because that is where buyers see large discounts and a “window of opportunity,” Malmquist said.
In any case, the Riviera Beach Colony project’s planners will have another marketing challenge on their hands: convincing buyers that Torrance can be just as desirable as the more affluent Manhattan Beach or Palos Verdes.
“Manhattan Beach has gotten too crowded, and you have residents in Palos Verdes Estates who want to be closer to the sea,” said Mark Paolucci, executive vice president of Roddan Public Relations and Advertising in Redondo Beach, which is marketing the project. “What you have with this project is a small, intimate enclave.”
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Marketers also are touting the area’s history. In the 1920s, Clifford Reid purchased 640 acres on the Torrance-Redondo Beach border, where he envisioned a French Riviera-like colony populated by movie stars. The Depression stymied his plans, and just a beach club was built. Reid finally sold the club in the 1940s.
In the 1950s and ‘60s, modest single-family homes and apartments were built, Paolucci said.
“The Riviera Beach Colony is really tied to the whole history of the area,” Dick said. “It’s what the original developer had in mind, just 50 years late.”
