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<< Previous   of   Next >> Gary Friedman / Los Angeles Times  (click to enlarge) Larry Igarashi’s Coto de Caza, Calif., estate got a high bid of $6.6 million. He once expected to sell it for $10 million. (click to enlarge) A supersized home in the Coto de Caza community of Orange County, Calif., lies vacant. Unable to sell at their asking price, some owners of deluxe homes are cutting their losses.   ADVERTISEMENT   Related Stories • What's a guy to do with an unwanted megahouse? 10/11/09   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Sunday, October 11, 2009 Lavish spec homes languish on the market Los Angeles Times COTO DE CAZA, Calif. — Two years ago, Larry Igarashi bet he could build a sprawling house in Orange County’s foothills that would sell for at least $10 million. These days, you can easily guess how that turned out. A couple weeks ago, he put the eight-bedroom house in a gated community on the auction block and received a high bid of $6.6 million — less than he was willing to accept. Igarashi had gone all-out when he built the “Santa Barbara ranch” house: The master bedroom suite alone is 3,200 square feet, a bit smaller than the 10-car, climate-controlled garage, which measures 4,000 square feet. The driveway is long enough for a firetruck to turn around, and there’s a wine storage enclave with room for 1,400 bottles. The 16,500-square-foot hilltop house — in the community that was the setting for “The Real Housewives of Orange County” television show — is just one of dozens of unsold mega-mansions conceived during the real estate bubble, when builders waged an ill-timed arms race to ever-increasing extravagance. Comparably deluxe houses now lie vacant in droves along the coasts and hillsides of Southern California. Their owners could afford to keep them on the market for months, sometimes years, hoping to find buyers who would pay their asking prices. That holding pattern has kept the most expensive segment of the home market from posting the kinds of sharp price drops seen just about everywhere else. But it’s now clear that there are too many palatial properties and too few princely buyers. As more sellers like Igarashi decide to cut their losses and move on — or are compelled to do so by their lenders — the most expensive homes could slip from their perch at the top rung of the market. “Sellers there now have to unload, and in order to do so, they must reduce their prices,” Chapman University economist Esmael Adibi said. But even at cut-rate prices, few multimillion-dollar homes are selling. With so many to choose from, even those with enough money are taking their time. “There’s no sense of urgency among buyers,” Igarashi said. He had hoped that the prospect of snaring a good deal through Saturday’s auction would motivate those who have been delaying a purchase to get off the fence. But it turned out to be a double disappointment. Igarashi had two houses at auction. The other was a six-bedroom Tuscan-style house he had once listed for $5.75 million. He finished the 10,500-square-foot house in 2007; it sat unsold as the even grander second house was built. It drew a top bid of $3.1 million, below Igarashi’s undisclosed minimum. After the auction, Igarashi began negotiating with the high bidder on each property and was still talking with them at the end of the day. Near his houses, another six-bedroom home is being auctioned later this month with a starting bid of $3.9 million. It had failed to sell when listed at $9 million. Auctions can backfire. In December, five new homes in Manhattan Beach were auctioned with opening bids of more than $1 million — none were sold. Buyers eventually will emerge as prices fall, Adibi said. Still, it’s hard to know how much real demand there is for supersized homes, even among the very wealthy. Spec home builders were motivated to ramp up square footage to justify higher prices on their projects. But buyers who are more likely be looking for a long-term home than a place to flip might not want the trouble of maintaining such large houses. A bigger question also remains: What if the giant spec homes just never sell? Stefanos Polyzoides, a Pasadena architect who is an advocate of more dense, compact residences, said economies sometimes change in ways that make the original uses of buildings obsolete. The mansions of Newport, R.I., for example, have been converted to condominium buildings or inns, he notes. Polyzoides doubts such reinventions could work for many of the latest spec mansions. “Some of these are huge albatrosses in exurbia surrounded by nothing. Many of these could face a very hard ending,” he said. Igarashi acknowledged that he miscalculated the market. As he walked around his Coto de Caza project — a tile-roofed building measuring 218 feet across — Igarashi said it was easy to do in the go-go years. Although he made a fortune as a titanium golf club manufacturer, Igarashi had been building spec homes as a kind of working hobby since 1980 — turning profits on all six homes he built in Orange County before his two latest. “I just didn’t expect this would happen,” Igarashi said of the housing crash. “I don’t think Wall Street or even the president of the United States believed this could happen.” He now hopes to get what he can for the houses and move on. He would like to pick up land at today’s fire-sale prices and build more homes. But Igarashi said he’ll take a different approach next time. He plans to build apartments. READER COMMENTS Be the first to comment. You must be a registered user and verify your e-mail address to post comments to blogs or articles on HeraldNet. 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