Arcadia High-End Home Sales Decrease in Early-2015

Photo by Terry Miller

BY JOE TAGLIERI

Sales of multimillion-dollar homes in Arcadia have declined significantly through the start of 2015, local real estate data shows.

Although January posted 31 sales of homes that cost more than $1 million, representing a modest increase from the same month in the previous three years, February and March 2015 each recorded 20 sales compared with a respective average of 32 and 40 in the same months for the last three years.

Data from the California Regional Multiple Listing Service also reports that while sales of homes over $1 million peaked in 2013 for the period 2010-2014, homes over $1.5 million reached a zenith of 210 last year, up by 33 from 2013.

A number of Arcadia community members — both real estate professionals and residents — noted the slow-down in high-end home sales at the outset of this year and shared their perspectives on what may be causing the recent sales decline.

“A million-dollar house in Arcadia today is a lot less than a million-dollar house was two years ago,” said Andy Bencosme, a real estate broker based in Sierra Madre who provided the MLS data. “Prices have recovered to the point where it’s not necessarily a bargain anymore in people’s eyes, and we just aren’t seeing as many cash buyers. The percentage of cash buyers has dropped from what it was a couple years ago.”

Several of Bencosme’s local colleagues as well as a broad swath of Arcadia residents concurred.

“If you look at property values in the San Gabriel Valley and Arcadia in particular and you compare it to other areas, the percentage of property value increase has far surpassed other areas,” said Andrew Cooper, CEO of the Arcadia Association of Realtors. “We’ve seen a slowdown for multimillion dollar homes, but your traditional first-time-buyer home sales are strong. The slowdown is on higher-priced homes. I can recall eight months ago they were selling a lot faster.”

Jie Li, a real estate developer based in the San Gabriel Valley who has built numerous multimillion-dollar properties in Arcadia, said the market is “slowing a lot” because too many upscale properties have been developed simultaneously within the last several years.

High-end houses are not selling as quickly as in the recent past “because last year [there were] too many houses on market, too many developments at the same time, and that is making it harder to sell because not enough buyers” have surfaced to balance out the supply, he said.

“The economy is recovering, but it’s still slowly recovering, and I think prices have come up to the point where it’s not as desirable as it was in the last few years because prices had dropped so much,” Bencosme said. “I think it’s kind of at a crossroads, kind of caught up to itself. Interest rates — everyone thinks they’re going to go up — we’re seeing less of the cash buyers and investors buying, and I think it’s just because of price appreciation. It’s not as attractive as it’s been the last three years.”

Li added, “Right now a lot of people want to buy 6,000-8,000-square-foot houses because when the Chinese people come to Arcadia, there are two parents with two or three children, then maybe their parents might come and they need more room.”

Bencosme indicated that Chinese investors are “probably the biggest segment of cash buyers” in Arcadia.

Longtime Arcadia residents spoke on what might be causing the slow-down in high-end home sales.

“The bottom line is … these mansions that they’re building are not selling in a timely manner at all,” said south Arcadia resident Brett Mitulski. “Sometimes they even take the signs down and just keep them listed online. They are to the point where they’re just really fishing, they’re basically saying ‘oh, maybe somebody will buy it eventually’ and they’re just holding onto it.

“My best guess is that five years from now we’ll probably be looking back at it saying this was a complete waste,” Mitulski continued. “We’re stuck with huge houses that we can’t sell, and you’re probably going to start seeing them converted into boarding homes and multifamily [housing].”

Another community member from south Arcadia lamented the increasing lack of lush open space that once characterized the city.

“This used to be just farmland, … it was so green and serene,” Mildred Zielinski said. “The word ‘Arcadia’ means serene and quiet. That has gone away.”

In recent months controversy over high-end development projects has raged in north Arcadia’s Highlands neighborhood, which traditionally features ranch-style, one-story homes averaging about 2,000 square feet on sprawling hillside lots. Increasingly, and especially within the last five years, building projects totaling 5,000 and 6,000 square feet have become commonplace.

Central to the furor is the Highlands homeowner association’s contingent of vocal opponents of large houses and the Arcadia city government, which has tended to green-light developers’ proposals for projects that feature a lot of square footage and often two-story home designs. Earlier this month Highlands residents filed a lawsuit against the City Council in an attempt to block two contentious projects approved in February.

“I don’t pay for the square footage even though the prices are higher than the southern part [of the city] at the time I bought the house here, I paid for the atmosphere, I paid for the neighborhood,” said Highlands resident Grace Lee. “Right now I see those big houses being built around my neighborhood. It’s big, it’s huge, but they don’t have the backyard, it’s a very, very tiny backyard. The houses are so big, and I don’t know how many people are going to live inside.”

Charlie Wang said he moved to the Highlands from south Arcadia for the neighborhood’s rustic, mountainous environment.

“I don’t like a lot of huge mansions in the Highlands,” he said.

Wang expressed concern that the trend toward larger structures will inevitably mean less natural elements such as trees and shrubs. He recounted his next-door neighbor’s recent construction project that resulted in a larger new house and the removal of trees, including an oak for which officials granted an exception to Arcadia’s oak tree protection ordinance.

“Four trees to the Highlands is not much, but if every house cuts four trees on their land, the whole Highlands little by little will change,” Wang said.

“I hope people can respect the area, not only thinking about their asset because eventually if the environment goes away, the value goes down,” he added.

Robert Stover, president of the Arcadia Highlands Homeowners Association, said the city needs more stringent restrictions on building size.

“No matter what the city says, the city really doesn’t have the wherewithal to come up with some building size restrictions on lot and have a [floor-area ratio], have a percentage minimum,” Stover said.

He pointed to nearby Pasadena and San Marino as examples of communities that have maintained high property values while also keeping building size in check.

“In Pasadena … you can’t build larger than the average sized home in [a] 500-foot radius and [a] 1,000-foot diameter,” Stover said. “That keeps homes consistent, and it keeps property values consistent. San Marino doesn’t seem to have a problem keeping their property values up, and they don’t allow these huge homes.”

Ralph Bicker, who stepped down in 2013 after more than 30 years as chairman of the Highlands Homeowners Association Architectural Review Board, acknowledged that the push to develop mansions throughout the city has caused the real estate market to become somewhat overvalued and potentially volatile.

“Two and a half years ago [developers] were coming in and paying anything they could for a piece of property, so it was overpriced by $200,000 or $300,000,” Bicker said. “That’s better than putting money in a CD at 1 percent, or the stock market or anything else. … Those kinds [of investors] have backed off completely, so it has affected the market.”

Bicker also noted the apparent slow-down in Chinese investment that reached a fevered pitch in the last two years.

“That’s affecting the market, and the money’s not coming in and they’re getting opposition from the homeowners,” he said. “It’s affected the prices, and I’m sure that the prices have probably dropped. Where they’ve probably picked up 30 percent or more in two or three years, they probably are at least a little further back right now. … Anything that goes up too fast can come down.”

Highlands resident Jim McKellar said the proposition of vacant, unsold mansions is more of a risk for Arcadia’s southern communities than for the Highlands area.

“I think the notice has been served on the building department and on the City Council — ‘we don’t want it,'” he said. “I think they’ve heard this message now, and I think it will be stopped. I’m confident that they get it.”

McKellar also criticized critics of larger home designs for creating a tense, adversarial atmosphere that jeopardizes community relations as well as the stability of Arcadia’s real estate market.

“They are causing a division in the community with their righteousness,” McKellar said. “What architectural school did they go to to get their training to tell us what’s accepted and what’s not accepted?”

He called for greater focus on compromise: “You’ve got to give and take, there has to be a compromise. They’ve got to realize that it’s not going to continue the way it did continue for the ‘McMansions’ that were built in Arcadia, and the city has to realize that maybe they’ve got to give a little bit on this too.”

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