The New Gold Coast
One Stretch of California
Defies Housing Slump;
Median Sale, $1 Million
By JONATHAN KARP
September 7, 2007; Page W1
CARPINTERIA, Calif. -- Other than an 18-foot-tall rooftop Santa Claus visible from the highway, this middle-class beach town used to be but a blur for wealthy vacationers speeding toward tony Montecito and Santa Barbara, about 10 miles up the road. Today, the statue is gone, and a clutch of the megarich have made Carpinteria an unlikely stop for buyers who can afford any ocean view in the world.
Public records show that New York billionaire hedge-fund manager Bruce Kovner spent $83.3 million this year to amass 15 bluff-top acres, including a luxury villa, near the end of a highway exit ramp. He also has agreed to buy part of Kevin Costner's field of dreams next door: Last year, the actor acquired 17 grassy acres dominated by a polo field for $28.5 million. Just down the road, a beachfront house on a mere quarter-acre is listed for sale at $24 million.
Carpinteria's arrival on the luxury-estate scene illustrates how California's gold coast is defying the downdraft in the national housing market. Eye-popping sales are spreading along a 40-mile stretch of southern Santa Barbara County, through sprawling ranch lands and past hillside homes, to the enclave of Carpinteria. In July, when existing-home sales slumped by 9.3% nationally and plummeted 23% in California compared with a year ago, sales along the county's southern coast soared nearly 28%, according to the California Association of Realtors. It also was the only region of California where the median sales price surpassed $1 million.
Estates in the exclusive Hope Ranch and Montecito communities set the standard in an area long prized by tycoons and Hollywood players for its mild climate, natural beauty and low-key sophistication. Indeed, at Oprah Winfrey's Montecito fund-raiser tomorrow for Democratic presidential candidate Sen. Barack Obama, more than her political firepower will be on display. Ms. Winfrey's 40-acre hillside estate, bought six years ago for around $50 million, has swelled in value to $84.7 million, according to public county-assessor records.
Santa Barbara's high-end housing market is set for its best year ever, according to Wendy Gragg, chief executive of the Distinctive Real Estate agency. Just counting properties with a value of at least $10 million, the area notched more than $195 million in sales so far this year, putting it on track to beat last year's local record of $219 million.
Those figures don't include a number of privately negotiated sales that bypassed the Multiple Listing Service.
Among the Montecito owners hoping to exploit the historic-level premiums is comedian John Cleese, who has listed his 16-acre equestrian and llama ranch for $28 million. Along the much-coveted shoreline, a 3.5-acre lot with a partially built 12,000-square-foot home and 300 feet of beachfront is on the market for $47 million. It will take some $10 million to complete the house, real-estate agents say, but at least the building permits -- notoriously hard to get in the Santa Barbara area -- are in hand. In addition to environmental concerns, gold coast residents don't want a repeat of the overbuilding that has plagued Malibu to the south. There, multimillionaires bemoan the lack of privacy, as manses line the beachfront cheek-by-jowl and the paparazzi are constantly on the prowl.
Santa Barbara County largely has escaped that fate, despite the area's vast wealth. Movie stars, industry titans and the polo-playing jet set circulate in Montecito's leafy lanes and Santa Barbara's upscale stores without attracting attention and without dressing up. The casualness of California is part of the allure.
Still, snob appeal is powerful. And that has made Carpinteria an outlier for the ultrarich -- until recently. The town of 14,000 straddles Highway 101. On the north side are rows upon rows of flower hothouses and tract homes, where many laborers live. On the south side lies the unassuming beach town whose quaint commercial street, Linden Avenue, looks head-on at an offshore oil rig and intersects train tracks near the beach.
A strong California economy has brought new condos and gourmet coffee shops, although it hasn't displaced local favorites like Austin's Home Center hardware store, The Palms cook-it-yourself steakhouse and Robitaille's Candies. A microbrewery has taken over a factory building on Linden Avenue, and a home converted into a bed-and-breakfast now commands more than $200 a night.
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A mansion and horse farm in Santa Barbara County, Calif., on the market for $35 million. |
On a recent evening, business was booming at Giannfranco's Trattoria, a new upscale Italian restaurant on Linden Avenue. Owner Franco Contreras says he hopes the recent stratospheric home sales won't spoil Carpinteria, which he still considers an "undiscovered gem." But his success depends on getting noticed, and he says that is increasingly happening, as more Montecito residents come in to eat and pay with their exclusive black American Express Centurion cards. "They are finding out," Mr. Contreras says, "that Carpinteria isn't as low as they thought."
Kathleen Winter, a longtime Santa Barbara real-estate agent who is with Prudential California Realty, describes the community as "very much a throwback. In a lot of people's minds, Carpinteria is what Montecito used to be before it was monied."
Still, the town's commercial center is disconnected from the areas where Mr. Kovner, the hedge-fund manager, and other economic elite have bought homes. "There's Carpinteria," Ms. Winter says, "and there's the Carpinteria beachfront."
Mr. Kovner bought on Padaro Lane, which is squeezed between a bustling highway and railroad tracks on one side and the ocean on the other, along Carpinteria's westernmost edge. Another enclave pulling in prices of more than $15 million is Lambert Road, an area that rises toward the mountains above the exclusive Santa Barbara Polo & Racquet Club and is dotted with manicured horse farms owned by equestrian aficionados.
Technology entrepreneur and former polo player Robert Fell knows both areas well. He lived for seven years on Padaro Lane, which he treasures for its "extraordinarily beautiful beach" and safe, village-like feel -- a place where neighbors know each other. There is very little parking at the one public entrance to the beach, and few sunbathers make the long trek there from the beaches in Carpinteria proper or in Summerland, the next town up the road. Despite its proximity to the railroad track and the highway, unevenly veiled by a curtain of trees, Padaro Lane offers tranquility, Mr. Fell says.
"You get used to the rhythms of the train," he says. "But I do recall having a house guest who woke up in the middle of the night as a train passed and yelled: 'Earthquake!' "
Mr. Fell built a French-style mansion and a horse farm on a roughly 18.5-acre parcel of land near Lambert Road that he bought in 1995. (It's just outside the Carpinteria border, in Summerland.) With sweeping ocean and mountain views plus a guest house, a pool house and an 18-stall barn, the estate, called Tuscany Oaks Farm, is now on the market for $35 million. The home and guest house comprise more than 14,000 square feet of living space, Mr. Fell says, adding that a buyer could convert the 10,000-square-foot barn into a private office space for a hedge fund.
A fellow polo player from the Middle East recently came for a look. Mr. Fell says he's in no rush to sell, because he is still building his next home in Montecito.
For years, Padaro Lane consisted mainly of relatively modest second homes, many of them owned by residents of the Los Angeles suburb of Pasadena and the central valley city of Bakersfield. Today, the more than 100 homes range from shingle-covered Cape Cods to modern manors with floor-to-ceiling windows. Along the two-mile stretch of road, the lots generally become larger as one travels west toward Santa Barbara. The terrain rises from beach level to bluffs and the homes recede behind walls and colorfully landscaped driveways.
Near a house that rents for $60,000 a month and would blend in easily on Nantucket sits an estate that makes real-estate agent Suzanne Perkins wistful. Back in the 1980s, she considered buying the four-acre parcel for a then-pricey $450,000 but passed. It just sold for $16.5 million, she says, "and nothing had been done to it for years!"
Ms. Perkins, of Sotheby's International Realty, has done much to raise Carpinteria's profile, and its prices. She was the listing agent for two of the five $20-million-plus sales on Padaro Lane since 2006 -- the polo field purchased by Mr. Costner, and the luxury villa bought by Mr. Kovner. She also represents the street's current $24-million-home seller.
Recently, Padaro Lane was alive with contractors and renovation work. A Bobcat tractor was parked on a private tennis court inside one compound, and another home was stripped to reveal its insulation. At the western end of the road, workmen were all over one of Mr. Kovner's two new houses. It was bought unfinished and is visible from a highway exit ramp that sweeps alongside his new compound. A forklift ferried building supplies from the street through a tall aquamarine gate.
Mr. Kovner is the founder and chairman of Caxton Associates LLC, which manages hedge funds with more than $14 billion in assets. Mr. Kovner, through a spokeswoman, declined to comment.
The centerpiece of his properties is a newly built 8,000-square-foot Tuscan-style farmhouse on three acres, for which he paid $33.75 million, according to a deed transfer filed with Santa Barbara County. The five-bedroom house is made of centuries-old stone, brick and French oak beams, and features artifacts reclaimed from cathedrals, monasteries and villas, according to the sales brochure. The grounds boast a guest house, 10 fountains, a fire pit ringed with stone-carved seating and a marble-tiled pool overlooking the ocean, not to mention a sandy beach built on the blufftop.
Mr. Kovner quietly began buying the four lots from two sellers in February under the corporate name Calprop, Santa Barbara County records show. In a single day, Calprop entities purchased three lots, totaling 12 acres, for $68.3 million. In July, Calprop bought the fourth lot, of three acres, for $15 million, according to records which list Mr. Kovner under the buyer's contact information. What's more, in May, Mr. Kovner agreed to buy seven of Mr. Costner's 17 acres next door, according to a memorandum filed with the county. No price was disclosed. Mr. Costner, who owns a residence elsewhere in Carpinteria, declined to comment through a spokesman.
Together, the Kovner and Costner properties have more than a quarter-mile of ocean frontage, though neither has stairs down the high bluff to the beach. Access to the shore -- called Loon Point Beach -- is by public path only.
Some property agents wonder if the latest deals are flukes or signal a trend in the area. Ms. Gragg of Distinctive Real Estate has no doubts that prices will continue to rise. Indeed, supply is so limited that two vacant fields -- a 51-acre lot in Carpinteria and land in Montecito -- listed by Sotheby's Ms. Perkins at $15 million or above entered escrow within days of each other this summer.
"We're now at the level of selling dirt to the tune of $15 million," Ms. Gragg says. Compared with the Hamptons, she says, prices are still relative bargains in terms of property acreage, housing square footage or intangibles like the weather. "I don't think Santa Barbara has even seen what the possibilities are," she says.
--Christina S.N. Lewis and Jon Weinbach contributed to this article.
Write to Jonathan Karp at jonathan.karp@wsj.com
For more analysis on the Santa Barbara luxury real estate market, contact Wendy Elizabeth Gragg, President, Distinctive Real Estate 805.565.0246 or WGragg@DistinctiveRealEstateOnline.com www.DistinctiveRealEstateOnline.com
