The Where of Affordable Housing : Builder Finds Some Close-in Area Homes Not Easy to Sell

Builder Edwin W. Krenz has an unusual problem: it’s not building affordable houses but selling them!

Conventional wisdom has it that well-built houses priced within the buyers’ means will sell like the proverbial hot cakes, but Krenz’s experience indicates that this is not necessarily so.

He seems to have run up against some other considerations that are just as important. And, drawing on what he has learned, Krenz poses some questions about low-income infill housing that may have other developers and involved government officials scratching their heads.

Using an innovative foundation system of his own devising (Krenz’s professional background is engineering) and a combination of factory building with conventional on-site construction, he has put up two prototype houses on steep hillside lots in the Montecito Heights area of Los Angeles. They are finished and on the market.

Certainly, $139,500 isn’t a bad price for a two-story house with an interior garage, a family room or second living room with a wet bar, a bedroom and a full bath on the first floor; another living room with a fireplace, two bedrooms and two full baths, a dining room, a kitchen and a view balcony on the second. Total living area is 1,750 square feet.

“It’d be perfect for a young family,” Krenz said. “They could live in the upstairs and rent out the lower floor. The wet bar can easily be converted to a small kitchenette. When the family gets bigger, they can quit renting the lower floor and use it themselves.

“Or it would be perfect for in-laws--elderly parents, for example, who would have their own private quarters but still be nearby.”

Krenz’s foundation is designed around six caissons to hold the whole structure in place on the very steep hillside. The lower floor is conventional construction with a stucco exterior. The upper floor is a slightly modified, standard manufactured house from Silvercrest Homes, a longtime, major Orange County housing producer. When the lower part was completed, a crane lifted the two sections of the upper story into place and they were bolted down.

Other builders have used and are using composite construction, combining stick-building and factory-building, but none to an observer’s knowledge in quite that way. The whole idea--and the savings--in such composite construction is to build in the factory what can best be built there, and to build on site those portions that can best be done that way. Advantages include savings of both time and money and better construction in the factory-built portion.

The houses, at 590 and 604 Montecito Drive, are about “five minutes from downtown Los Angeles,” Krenz said. Appointments to see them can be made with the Ed Krenz Corp. at 1936 Huntington Drive, Suite 401, South Pasadena.

Loan qualification procedures are under way for prospective buyers of both houses, Krenz said, but the response has not been what he expected. In a conversation, he asked, “How do you get people to come look at something like this? Somehow, they just won’t believe there could be something this good this close in.

“In these close-in neighborhoods, most of the houses are junky. I think most of the houses in this neighborhood were built in 1900 . . . 1910 . . . 1920. To be honest, most of them aren’t very good.

“Maybe I overbuilt for the neighborhood. But what should you aim at? How much should you upgrade (the product)?”

Those weren’t rhetorical questions; Krenz was looking for answers. And perhaps he supplied part of the answer himself a little later in the conversation when he mentioned that “I’m having a lot of trouble qualifying them (prospective buyers).” Could it be that home seekers able to pay for a $140,000 house want a better neighborhood?

His listener got the impression that Krenz himself felt the answer was in that area when, at another point, Krenz said, “There are probably 2,000 to 3,000 vacant lots in the (hilly parts of) the city where, with good design, houses could be built for around $110,000 to $115,000. That’s the bracket I’m aiming at.”

His mention of “good design” undoubtedly referred to something else he mentioned, that he has re-engineered his foundations to perform as well and be as strong as the earlier design but to be less expensive.

And it apparently is the bracket he’s aiming at, for he is now formulating plans to begin a more extensive program of similar houses next fall. “I’m aiming at 50 to 60 houses a year,” he said. “They’ll be smaller, probably about 1,100 square feet, and they’ll sell for around $115,000. On scattered, infill lots.” The buyer may furnish his own lot or Krenz will sell him one.

Yet Krenz apparently doesn’t feel price alone is the ruling factor, or that the quality--original or present--of the houses in the neighborhood is all the answer. Another factor is the streets; he feels that those in most run-down, close-in neighborhoods are in appalling condition.

“That directly affects the quality of what we can build,” he said, “dingbats or good houses, because quality must be directly linked to what we can sell. There’s no point building palaces that no one will buy.

“Does the city want dingbats or does it want to upgrade such areas?

“Will the city consider fixing up--or working with developers to fix up--the roads in such neighborhoods? If not, they may never be revitalized.”

He mentioned several neighborhoods--Montecito Heights, City Terrace, El Sereno and parts of Highland Park--as areas “so close to downtown they really should be fixed up but, if the streets aren’t improved, probably never will be.”

Krenz is a medium-sized, active man with white hair and mustache, a registered mechanical engineer who began as a petroleum engineer. During his professional career he learned several engineering specialties while building “all sorts of things all over the world.” He has held high executive posts with Ralph E. Parsons Co. of Pasadena, Fluor Corp., Garrett and Rocketdyne.

He has retired from that field and is now well into his second career, building affordable houses in the Los Angeles area. Another project sharing his time is the Viceroy Homes Division of his Krenz Corp., also aimed at scattered-lot, infill building.

That project uses pre-cut homes from a Canadian firm, Viceroy, adapted to American codes and practices. The company offers 80 models, from very small to quite large. He plans to put them either on the buyer’s own lot or on the lot of the buyer’s selection from a running inventory of 20 to 30.