Do Luxury Buyers Care About Alternative Building Methods?

There’s been chatter around alternative building materials in the fire rebuild, but do ultra-high-net-worth buyers care?

The audience for The Real Deal’s “Building Luxury” panel held Jan. 27 in Beverly Hills was keen to bat the idea around.

TRD hosted Coldwell Banker Realty’s Jade Mills, Redeavor’s Mike Leipart and Huntington Estate Properties’ Ramtin Ray Nosrati for a wide-ranging discussion, but the one topic that got most people talking? Alternatives to homes built with wood.

To date, the market has seen steel frame makers, panelized housing manufacturers and others using concrete enter the picture with pitches of more fire-resistant structures. About a week ago, press, local government officials and residents gathered to watch a pre-fab home get dropped onto an Altadena lot by crane.

Luxury home developer Ardie Tavangarian, whose Arya Group is focused on fire-resistant homes, told TRD earlier this week it’s not realistic “to continue constructing wood-frame houses the same way,” and the outstanding question is whether such elements add to a home’s value as much as, say, imported finishes from Milan or health and wellness amenities.

The consensus Tuesday was there is no consensus.

A big test may come in Malibu where Zuru Tech US is looking to test its prefab housing made in off-site factories at lots it bought in Malibu. Will the alternative building materials pique buyer interest, command a premium, or be an afterthought?

Measure ULA relief?

Not quite. And, for residential, not really.

That’s the short of it when it comes to a proposal to amend L.A.’s so-called mansion tax, which was introduced by City Councilmember Nithya Raman on Jan. 23. The fourth district representative on Tuesday sought to get her peers on the 15-member city council to fast-track a June ballot measure amending Measure United to House L.A. She proposed a 15-year exemption on new multifamily, commercial and mixed-use projects. The driver behind the proposal is to promote more multifamily construction — a major tenet of ULA, when voters agreed to pass the two-tier tax on real estate transactions to fund housing and homelessness prevention programs.

For L.A. ‘s single-family, residential market, properties impacted by a natural disaster would be eligible for a one-time, three-year carveout from ULA in Raman’s proposal. It’s a small bone tossed at the industry segment, with many residential agents saying for the nearly three years the tax has been around that it’s stalled deals and chilled interest among spec developers to want to buy land and build homes within the city. Some agents point to the argument that many property owners’ retirements are bound up in the value of their homes. Others argue $5.3 million — the floor triggering the 4 percent levy (its 5.5 percent on deals of $10.3 million or more) — doesn’t really buy a mansion in L.A.

As of December, the median sales price for a home in the city was a little over $1 million, up about 2 percent from the year-ago comparison, according to Redfin.

Numbers game

One more point on ULA. Both sides of the issue have weaponized data to prove their point.

That’s not noteworthy. What is notable is what Raman pointed out to her City Council peers on Tuesday in apologizing for “surprising” anyone with her proposal, which skipped over public discourse in any committee before she brought it to the floor of the body.

Raman said she was in conversation with housing groups, Measure ULA coalition members, labor, the business community. In some cases, she added, fellow elected officials were also involved in talks during the months leading up to her motion.

“But after many months, we weren’t even able to agree on what data was important to monitor or what people cared about,” she pointed out Tuesday.

While the possibility of getting the idea onto the June ballot is gone with the Jan. 28 deadline lapsed for the council to instruct the city attorney to formalize such a move, changes to the tax remain up for consideration in the Housing and Homelessness Committee and with the ULA Citizen Oversight Committee.

Still, if a baseline to gauge success can’t even be determined, any ULA changes would seem to face an uphill battle.

Bouncing back

In case you missed it, this week saw sellers creep back into the market. With holiday travels over and kids going back to school, agents expect a buying bounceback.

Ninety-nine properties listed in the Multiple Listing Service for at least $4 million were added to Los Angeles County’s inventory for the week ended Jan. 25, according to Douglas Elliman’s Eklund Gomes team. That brought the number of active listings to 1,131.

Among the new entrants is spec developer and The Agency principal Santiago Arana’s 401 North Tigertail Road in Brentwood. It’s listed for $65 million, or $3,250 per square foot, after the “Buying Beverly Hills” cast member spent four years on construction.

There’s also the historic Hollywood Hills home once owned by “The Price is Right” host Bob Barker. That property reappeared on the market last week with an asking price of $7.4 million, or $1,252 per square foot, for the home in the Outpost Estates neighborhood. The property’s got history with Los Angeles Times Publisher Harrison Gray Otis and later Hollywood developer Charles Toberman also calling 1851 Outpost Drive home at one time or another.

Listing agent Zac Mostame, of Carolwood Estates, said he’s optimistic with activity picking back up that Barker’s former home will trade before summer.