December 13th, 2006
Kurt Galitski featured in Daily Pilot cover story!
By Amanda Pennington/Daily Pilot


~Housing crops up in Newport-Mesa~
Despite a sluggish real estate market, Costa Mesa has been attracting more new home developments, with some ready to sell and others due.

Developers of new homes in Costa Mesa don't seem fazed by weak sales reports, but some have had to lower prices as it has become a buyer's market.

Aside from speculative buyers who will purchase property, tear it down and rebuild several homes on large lots that are typical of older properties in the city, there are relatively few new developments in Costa Mesa. Newport Beach, on the other hand, is full of new properties, as is evident by the bluffs overlooking the Pacific Ocean that continue to be built.

The city also has many condo-conversion proposals, which just fall short of a new development. Generally, condo-conversion developers tear down homes to the studs and rebuild and refurbish the older homes.

Three new developments that stand out are Richmond American's Bungalows at Bay Street and its Cornerstone property on Fair Drive and Harbor Boulevard, and Shea Homes' Half Moon Lane on Orange Avenue.

Richmond American and Shea Homes representatives would only comment via e-mail. They said the homes were selling.

A Shea representative said in an e-mail that the homes were for sale for "about" $1 million.

Richmond American spokeswoman Alison Schuller said in an e-mail that the developer's new properties have shown steady sales since they've opened. Prices at both its Costa Mesa properties start in the low $800,000s, she said.

Two-thirds of the Bay Street homes have been sold, and construction has started on all but five.

Schuller did not say how many, if any, of the Cornerstone properties have been sold.

Kurt Galitski, vice president of Weichman Associates-Realtors in Costa Mesa, said Richmond American solicited the help of local Realtors by adding their projects to the Multiple Listing Service that Realtors use.

"This is how you can tell things are turning on builders, is when they start agreeing to pay us and other realtors in the area a commission," Galitski said.

Costa Mesa developer Tim O'Brien has not had his final plans for a high rise, the Californian at Town Center, approved by the City Council, but he's confident that the two years it'll take to build the high-rise will carry him into a stronger market.

Council members recently decided to temporarily override a report issued by John Wayne Airport's Airport Land Use Commission so they can examine the issue more deeply. The council is expected to vote on the matter at its Jan. 16 meeting.

"Assuming the city grants any approvals, we wouldn't start construction till the summertime, and then we would not deliver for another two years thereafter, so we are always building into the next market," O'Brien said. "If the market is good right now, the fact that you're developing and delivering two years out may mean you're not delivering into a strong market."

Galitski echoed O'Brien's sentiment, saying that he expects next year's market to look great compared with this year's.

But what some call a sluggish market, Galitski would characterize as one that favors buyers.

"The buyer can still afford to be as picky as they want to be, and what we're really seeing right now is that they are being very, very fussy buyers," Galitski said.

And the amenities and the lack of a homeowner's association can determine whether they buy a new home.

Most older homes in Costa Mesa do not have an association. The new developments do, though, and the charges can be anywhere from the low-$100s to more than $300 a month, depending on what services the community offers, Galitski said.

"You really have to put yourself in the buyer's point of view," Galitski said. "That is, do I want a brand new house with a small yard, or do I want an older home with a bigger yard?"

The compromise, Galitski said, would be a home that has been extensively rehabbed or remodeled, which he said is common.

But although the market seems sluggish, the bottom line is that Costa Mesa still demands a high price for its home, which continues to make it an attractive spot for new properties. New properties can be built reasonably, Galitski said, for about $200 per square foot.

"The average [selling price] right now for a three-bedroom, two-bathroom home … is $489 per square foot," Galitski said.