Valley’s Luxury Home Market Is Rich in Newfound Customers

For years, only the loftiest reaches of the San Fernando Valley boasted million-dollar homes. Not anymore.

Last year, 159 homes in the Valley sold for $1 million or more, according to the Southland Regional Assn. of Realtors--up from 76 the year before.

This year’s million-dollar market also seems off to a roaring start, with 20 homes closing escrow for $1 million or more in April, the beginning of the home-buying season.

“This April was one of the best months I’ve seen in a long time,” said Stephanie Vitacco, an agent with Fred Sands Realtors who has sold homes here since 1988. Besides the 20 sales that closed, Vitacco pointed out, 12 more went into escrow.

The range of homes is also expanding. Million-dollar home sales were once largely confined to the toniest areas of Studio City, Toluca Lake, Sherman Oaks and Encino, but real estate brokers say they are seeing more such sales in Calabasas, Chatsworth, Granada Hills, Northridge, West Hills and Woodland Hills.

There are even million-dollar tract homes.

The high-end market is being powered by several factors, including the strong economy, Wall Street’s bull run and even higher prices on the Westside, which is driving bargain-hunters north of Mulholland Drive.

“The luxury home market has grown tremendously in the Valley,” said Jim Pascucci, an agent with Re/Max Centre in Encino. “In 1978, there were maybe a dozen bona fide million-dollar-plus homes in the Valley, at places like Lake Encino, the Clark Gable Estates in Encino, and certain choice homes in Toluca Lake or Studio City.”

By contrast, just one of the Valley’s luxury home developments, Mountain View Estates in Calabasas, has sold 385 homes since the early 1990s, Pascucci said.

The stock market gets some of the credit for those sales.

“A lot of people who have made a lot of money in the stock market in the past few years are taking some of it out and investing it in real estate. There are a lot of new millionaires,” said Nidal Ibrahim, a spokesman for Newport Beach-based Capital Pacific Holdings Inc., builders of the Mulholland Park development in Tarzana, overlooking Braemar Country Club.

Since Mulholland Park opened in March 1996, Capital Pacific has sold 112 of the 173 homes planned for the development--163 tract homes and 10 custom lots.

“Based on the success we’ve had with our Mulholland Park project, we have decided to focus our Southern California new home projects in the high-end market,” Ibrahim said. “We have six projects coming on line [in other parts of Southern California], each averaging about $1 million per home.”

The Valley isn’t alone, of course. A record 5,121 homes priced at $1 million or more were sold in California last year, up 37% from 1997, according to Acxiom / DataQuick Information Services Inc., a La Jolla real estate research firm.

The 1998 total was 20% higher than the previous record set in 1989.

At the same time, housing prices in general are going up. In May, prices for single-family homes in the San Fernando Valley hit a six-year high, increasing 17% over prices for May 1998 to a median resale price of $220,000. That is still below the peak of $245,000 set in May 1989.

“A million dollars just won’t buy what it used to,” said Bob Bray, an analyst in Santa Monica with the Meyers Group, a real estate consulting firm. “L.A. is in a league of its own, except for maybe the Bay Area, for what you get in terms of lot size and home size.”

To many luxury buyers, $1-million homes in the Valley are a bargain compared to what they would get for the same money in Westside areas such as Beverly Hills and Brentwood.

“You can easily spend $700,000 or $800,000 for 1,800 square feet on the Westside,” Vitacco said.

By contrast, $1 million is likely to buy 4,000 to 6,000 square feet--and a larger lot--in the Valley, she said.

Pascucci said the “high prices on the Westside help the million-dollar-plus market in the Valley because, obviously, you get a lot more for your money.”

“We have a lot of people who start out looking on the Westside and end up buying over here,” he added.

The Valley even has a few of its first “tear-downs.” These are expensive homes that buyers tear down to build even more expensive homes, a phenomenon best known in Beverly Hills and other high-end Westside neighborhoods.

According to Winnie Davis, an agent with Coldwell Banker Residential Real Estate in Northridge, buyers of million-dollar homes will often pay more for a vacant lot than many middle-market buyers pay for a home.

At Indian Springs and Indian Falls, two gated communities near the Topanga Boulevard exit of the 118 Freeway, 2-acre lots are selling for about $400,000, she said.

Added Vitacco, “I’ve sold more vacant land in the past year than I have in the past five, because now, a lot more people want to buy lots and build custom homes.”

Virtually all million-dollar homes were once built on custom lots, but $1-million tract homes have become commonplace in recent years at developments such as Mulholland Park and Mountain View Estates.

Mulholland Park offers five floor plans ranging from about 4,000 square feet to nearly 6,300 square feet, according to Ibrahim, who added that Capital Pacific spent $2 million on an entry gate featuring pools of cascading water and lush landscaping.

“The builders are being smart,” Vitacco said. “They’re giving the buyers everything they want in gated communities with all the amenities and terrific upgrades. These are quality homes. It’s just that instead of building one, they’re building 50.”

According to Davis, some of the hottest luxury markets are Mountain View Estates, Mulholland Park and Westchester County Estates in Woodland Hills.

But it’s hard to single out any one development as the hottest, the brokers say, because rising demand is driving sales in all of the luxury home communities.

Calabasas was the hot spot during April, according to Vitacco, accounting for 22 of the 32 million-dollar homes that either sold or went into escrow. Calabasas has at least seven or eight developments in the million-dollar range. Vitacco said the average time on the market for a million-dollar home is 30 days or less.

“There are more buyers out there than inventory, even in this price range,” she said. But the houses still have to be priced right, Vitacco added.

“These buyers are smart,” she said. “They are not usually first-time home buyers.”

Added Pascucci: “People with money are still prudent. They shop like anyone else and look at a number of homes before they make their decision. I just sold a home for $1.3 million to some buyers who probably looked at 30 houses. That’s not that unusual.”

The question for the luxury home market now, as for the rest of the market, is how high prices will go before they level out or start to slide. Real estate runs in cycles, economists and analysts point out, so a leveling-off sooner or later is inevitable. Vitacco said some properties she was selling for as much as $1.3 million in the late 1980s dropped to $600,000 or $700,000 during the recession.

“Now those same properties are back up in value,” she said.

Don’t have $1 million to spend on a house? Not to worry. The million-dollar market is still a fraction of the Valley housing market.

For example, the 20 homes sold in April at or above the $1-million mark make up just 1.7% of the 1,208 homes that sold here that month.

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Million-Dollar Homes

In the San Fernando Valley sales of homes for $1 million or more have risen sharply in the last year.

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Estate brokers say their clients demand more effort--and patience. B6

* Adding the right touches can push home’s selling price over $1 million. B6