Builders and Buyers Alike Have a Big Interest in Homes on Smaller Lots

Ron Michelstein and his fiancee Weny Wenten wanted a typical single-family home, but they couldn’t afford one in an area that they liked.

“We looked at condos and townhouses, but we weren’t happy with them. They felt too much like apartments,” Michelstein recalled.

The couple found a new type of single-family development that they could afford in Valencia. Their two-bedroom home stands alone, but it’s on a lot about half the size of typical 5,000-square-foot, single-family parcel. They share a courtyard with their neighbors instead of a private front yard, and the homes are relatively small: 870 to 1,251 square feet.

But by squeezing 14 homes onto an acre, the builder has been able to sell these mini-lot residences with a variety of interior extras at prices starting at $142,500. Many of the more traditional new homes in the same neighborhood are selling for twice the price of the development, called CourtHomes, which is being built by a company named RGC.

It may be too early to tell if the CourtHomes are the beginning of a trend, but more developers in Los Angeles and Ventura counties are looking seriously at single-family homes on smaller lots. This new type of housing seems to be particularly popular for singles, young families and empty-nesters who can’t afford a house but who prefer to stay away from a condo. Denser housing on smaller lots also offers the possibility of greater appreciation than the generally flat market for condo resales.

“Mini-lot homes are where the market is today,” said Robert Bray, managing director of the Meyers Group in Los Angeles, which follows housing sales and advises home builders. “It’s something that hasn’t really been tried before.”

While the Santa Clarita Valley suffered a 13.7% drop in new-home sales from July through September of this year, all the completed CourtHomes have basically sold out. “It’s been very well received,” Bray said.

“We are planning more dense housing,” said Marlee Lauffer, vice president of the Newhall Land & Farming Co., which is the master planner of Valencia. Home sales in Valencia, located about 30 miles north of Downtown Los Angeles, have fared better than most of the Antelope Valley because of a shift to more affordable housing.

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“We’re focusing more on entry-level housing now,” Lauffer noted. “It’s part of our plan to have a wider array of housing choices and commercial development for local employment.”

Griffin Industries Inc. is another builder offering mini-lot homes. In Thousand Oaks, the Calabasas-based builder has teamed up with the Prudential Homebuilding Advisors Group to build 244 homes with a density of up to 10 homes per acre.

Like RGC, Griffin is building clusters of homes around courtyards--and sales have been strong. All 65 homes in the first two phases of the project are sold. Another half of 35 recently completed units have also been sold.

Prices start at $216,000, making the mini-lot homes some of the most affordable new homes in Thousand Oaks. The residences are 1,410 to 2,190 square feet each and the lots are about 3,000 square feet.

In the city of Simi Valley, Griffin is planning another mini-lot development, with 415 homes on 44 acres. Prices at Griffin Simi Village are expected to start at $165,000.

“We believe this type of housing is a replacement for the condos and townhomes of the 1980s,” said Richard Niec, senior vice president at Griffin Industries.

“The buyers are usually very similar in profile to those who would be buying a townhome,” he said--first-time buyers, young singles, divorced and single parents and empty-nesters who no longer need a big yard. “It’s a matter of economics today,” Niec said. Sites that have been zoned for condos and townhouses may increasingly be converted to developments with mini-lot homes, he predicted, as developers find an alternative to building slow-selling condos.

“We’ve turned our focus to the growing number of non-traditional households,” said E. James Murar, CEO of Newport Beach-based RGC.

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The company built its first mini-lot home in Rancho Santa Margarita in Orange County before trying the idea in Valencia.

Murar is convinced that it’s a developing trend. Many condo and townhouse buyers are wary of having to share control with so many other property owners, he said. With a mini-lot home, there is a community association that maintains courtyards and other public spaces, but the property owners pretty much have control over their own homes and yards.