For sale: New two-bedroom downtown condominium. Next to the 101, in an industrial area. Price: $650,000 to $800,000.
Condos like the one described above are among several new projects moving into downtown neighborhoods, settling in among modest bungalows on quiet streets and bringing new life to once neglected commercial and industrial areas.
Like the new kid on the block, the condos are attracting attention not only because they look different from the neighborhoods' longtime residents. The near million-dollar price tags attached to them are also raising eyebrows and resentment.
Some grumbling is inevitable when any neighborhood faces changes. But the luxury condo appears to be fueling a concern that is uniting various segments of the community. At the heart of the matter is why downtown needs more million-dollar dwellings when young families and working class people continue to be pushed out of the area by the lack of moderate priced homes.
In 2001, the median price for an existing single family home in the city of Santa Barbara was $540,000. This price does not include new homes debuting on the market. Median is the point where half the homes on the market sell for less and half sell for more. For existing condos, the median price was $396,000 on the Eastside and $358,000 on the Westside.
The majority of the condos being built in downtown are double the median price and even reach beyond the $1 million mark.
Why, people ask in wonder or indignation, do new condos that have higher densities than their preceding dwellings, have to cost so much?
City officials said they have noticed the trend and it concerns them.
"This is a phenomenon that nobody expected," said Rob Pearson, executive director of the city of Santa Barbara's Housing Authority. "Nobody ever thought people would be spending this kind of money for a condo in downtown Santa Barbara."
Yet there isn't much the city can do about it if projects are being built to current standards and zoning and pass the approval process, he added.
"Housing is a free market enterprise," said Mr. Pearson. "And Santa Barbara is very desirable for downtown living."
A Housing Action Task Force was formed last year to address Santa Barbara's housing crisis, especially the lack of moderate priced homes. The group is actively working on finding solutions, city officials said.
The desire to live within walking distance of downtown's restaurants, coffee houses, shopping and the waterfront is creating heightened demand for homes at the city's core. That demand, however, is also driving up prices for the few homes that become available.
The number of homes for sale in Santa Barbara has remained fairly steady over the past eight years. From 1994 to 2001, homes on the market have fluctuated between 700 and 800 units per year.
Homes in the downtown are just a portion of that amount.
Few homes for sale in an area with high demand leads to escalating real estate prices. This simple fact has given birth to the million-dollar condo, said builders and developers.
When older homes or buildings come up for sale, the Buyers of the property more often than not choose to demolish or remove the existing structures and replace them with new dwellings -- ones that will command a price to cover the costs incurred by developers.
"These projects have to pay for themselves. The market rent on building apartments won't pay for the construction," said Santa Barbara architect Karl Eberhard, who is designing a condominium project at Bath Street and Yanonali.
Two modest duplexes were removed from the 14,000 square-foot property to make way for the five, three-story condos, which are expected to sell for $2 million each, said Mr. Eberhard.
While the price tag is steep, it's consistent with the unique character of what the condos will offer, he said, despite being in an area filled with apartment buildings. The beach is only two blocks away, and from the new third story, residents will have an ocean view, he said.
Mr. Eberhard acknowledged, however, that Santa Barbara has no shortage of million-dollar homes with ocean views.
"What Santa Barbara needs is more homes for the regular blue-collar working people," he said. "The crux of the problem is how can we make the prices affordable so that builders and developers can cover their costs?"
"You're paying $100 or more per square foot just for the dirt. So right there you already have this huge cost before you've even done anything," he said.
Building homes priced for the middle class market is "a real quandary, and no doubt the biggest problem facing the city," said Peter Lewis.
Mr. Lewis and Debra KealKahn are the developers behind the new luxury condos on Rinconada, a little-known street hidden behind Santa Barbara High School's football field, swimming pool and baseball field.
"But the reality is, for the price you pay for the land, then the risks you take going through the city's planning process and the other costs, all these things push the prices up there," Mr. Lewis said.
The eight condos on Rinconada, designed in a Mediterranean village style, came up for sale last week with prices ranging from $950,000 to $1.5 million. Prior to its reincarnation, the property of three lots was occupied by a modest house, similar to the other older homes on the street.
Although there are plenty of homes in the same price range located in the Riviera and Montecito, the developers believe they have a product that targets a growing group of Buyers.
"There's a whole demographic shift. People want a more pedestrian lifestyle. They want to walk to the restaurants, the bookstore and coffee shops," said Mr. Lewis.
He said the Rinconada condos will attract empty nesters, young professionals, and those from outside the area looking for a second home in Santa Barbara.
It took the developers five years to ready their project for sale, and while the process was lengthy, it went smoothly enough, with no opposition from the neighbors, said Ms. KealKahn.
Victor Bartolome, who has lived on Rinconada Street with his wife since 1946, said he didn't object to the project, even though it represented a drastic change from the tiny home that used to be on the property.
"What can you do about it?" he said. "I'm a great believer in that if you own property you should be able to do what you want with it, as long as it doesn't cause harm to your neighbors."
His wife Isabel, who has lived in Santa Barbara since 1933, agreed that the developers were considerate of the neighbors.
"The condos are very gorgeous. And (the developers) were very good to us by bringing us the plans to look at," she said. "Then again we never dreamed (construction) would go on for so long."
Mrs. Bartolome said it was unfortunate, however, that the condo project caused the removal of rental housing.
"The project took housing away from five UCSB students," she said.
That ripple effect hurts students and young people the most, said city college student Summer Smith, the Bartolomes' granddaughter.
"It drives up the rents for young people," said Ms. Smith, who lives in a cottage on her grandparents' property. "I know I would never be able to afford to live here when I get out of school."
While the Rinconada project passed through the city planning process without objection from the neighbors, a different scenario is brewing just four blocks away in a much more visible corner of downtown.
A 14-unit condo project proposed on Laguna Street at the corner of Micheltorena is drawing many complaints from residents in the area. The project would replace five bungalow-style structures.
The project, dubbed as Laguna Court, is being built by the Santa Barbara division of Capital Pacific Homes, which has its headquarters in Orange County.
Residents in the area surrounding the proposed project say the condos will drastically alter the character of their neighborhood, which is dominated by one-story bungalows and Victorians built in the early 1900s, with a sprinkling of modern-day apartment buildings.
Neighbors who spoke at a Planning Commission hearing held this week argued that the bungalows were part of Santa Barbara's history, and they represented a "simple way of life."
They said the proposed project would encourage a "condo invasion" of Orange County proportions in an otherwise low-key neighborhood.
"There's a historical and aesthetic benefit to having the small, single-family home neighborhoods," said Sayre Macneil, an attorney who lives in the area. "We think it's important to preserve that."
Last year, Mr. Macneil and a group of his neighbors formed the Bungalow Haven Neighborhood Association, a group dedicated to establishing a historic district that would protect the bungalow style homes from demolition or relocation.
Tearing down old homes reduces the amount of lower cost housing available, Mr. Macneil said.
"The affordability problem isn't solved when developers put up more expensive homes," he said. "Sure they might be able to sell the condos, but is that what we really want for our city, to tear down bungalows with history and to put in large million dollar condos instead?"
Jarrett Gorin, of Capital Pacific Homes, argues that the bungalows on the property are far from what could be considered affordable to many families.
"The quaint bungalows they say are affordable are priced around $700,000. And they're about 1,000 square feet, so you're paying $700 per square foot," he said. "And when you buy that quaint bungalow, the average family usually will have to spend an additional $100,000 to make it a liveable house for them."
The proposed condos, ranging from 1,600 to 2,100 square feet, will sell for about $800,000, which is in line with the market, Mr. Gorin said.
"We don't create the housing market," he said. "It's just like everywhere else. It's the law of supply and demand, and it also applies in Santa Barbara. There are more people who want to buy than there are houses available."
Real estate agents agree that there will likely be no shortage of Buyers in line for the $800,000 condos located in a prime downtown location.
"I think the older population will buy them -- couples who may be living in the Riviera, Mission Canyon, Goleta North, who have a five-bedroom, three-bath house who realize they don't need that much house anymore. They want to move to downtown," said Jeff Oien of Pitts & Bachmann.
Mr. Oien said he was saddened by the thought of tearing down old homes with historical architecture to make way for new projects. What's even sadder is that more downtown condos couldn't be built for the "real working people" of Santa Barbara, he added.
Despite the high land costs and current city zoning and requirements, a few developers -- through their own initiative -- have found ways to build new condo projects at the median price or below.
"I think affordability is the responsibility of the developer to provide," said architect Barry Berkus. "It shouldn't be a mandate but a moral issue. Housing is a problem we all face in this community."
Mr. Berkus and his development company Innovahouse designed the mixed use Chapala Lofts project on the corner of Gutierrez and Chapala. The three-story building -- with shops below and housing above -- is a stone's throw away from Highway 101, in an area with auto body shops, a tatoo parlor, and used car lots.
The 14 loft-style condos were offered for sale last year in the $500,000 to $600,000 range, and sold out in just three months. Three of the units were offered as affordable to people with qualifying low incomes. There are also three penthouses, priced at $1.2 million, which have not yet been sold.
"We've got affordable units, the $600,000 units and the $1.2 million penthouses all living in the same building," said Mr. Berkus.
More mixed use projects such as Chapala Lofts should be considered by the city, Mr. Berkus said, yet he acknowledged that the current zoning and regulations can make them problematic.
Mr. Berkus faced zoning problems and public controversy last year when his company purchased several properties on Equestrian Street, and demolished or donated the four run down bungalows that were situated there.
Three single family homes, not condos, will be build on Equestrian, with each priced at more than $1 million. Zoning wouldn't allow more than one unit to be built on each lot, thus the high cost of the homes, said Mr. Berkus.
"The mixed use product is still in its infancy," said Mark Edwards, of Parton-Edwards Construction. "There are no real codes that address how mixed use projects can be built."
Nevertheless, his company has been able to move forward steadily on a five-unit live-work condo project at 414 De la Vina St.
Unlike the rash of million-dollar condos, this project will be offered to the first-time home Buyer, said Mr. Edwards, with prices in the $400,000 range per unit.
"We think it's important to be able to offer something for the entry-level Buyer," he said. "We believe this project can work. And it's something our city really needs."
