It was the view that was the selling point some 500 years ago to a group of Native Americans who stood atop Signal Hill to send smoke signals to their relatives on Catalina Island. Then, a hundred years ago it was the oil that interested people in the large mound that rises 365 feet above Long Beach.
And for most of the 1900s, people seemed to forget about the value of the view in the tiny city surrounded on all sides by Long Beach, and they seemed to look down on Signal Hill and its wide patches of dirt fields landscaped with oil drilling equipment instead of trees, bushes or grass.
Then, at the turn of the millennium, when the housing market was winding up for its phenomenal run, a few keen developers looked up and realized that the real gold in those hills wasn’t the black gold Signal Hill was known for, but the city’s most valuable asset was the 360-degree views of the ocean, Palos Verdes Peninsula, the Los Angeles Basin and Hollywood Hills (which can be seen on the rare clear day) that could be used to escalate selling prices even further amid the home buying madness.
At the start of the home-building rampage, builders quickly sold the houses for what were then considered astronomical prices; many lots were selling for around $400,000 at that time. Eventually many of those homes garnered prices in excess of $1 million, and often by people who bought the home only in hopes to flip the property for a-million-five. It looked for a time as if it would cost someone $2 million and up to get a nice home with a view.
There are about 4,500 dwelling units in the 2.2-square-mile city, of which about 3,000 are single-family homes. Roughly 300 of those homes have what could be characterized as a view.
My how things have changed. Of the 31 properties listed for sale in Signal Hill, more than one-third are under $400,000 (most are under $300,000, and are mostly condos), and there are only two active listings, both are pending sales, above $1 million, MLS listings show. And there are, as of today, only two pending sales for homes over $1 million for the entire year.
Here’s a look at $1 million home sales in Signal Hill broken down by year since the start of the millennium:
2008 — 3 sold
2007 — 6 sold
2006 — 13 sold
2005 — 16 sold
2004 — 1 sold
2003 — 0 sold
2002 —0 sold
2001 — 0 sold
2000 — 0 sold
Realtors familiar with the area say selling prices have fallen far below what they once were.
“For the most part, asking prices for the homes listed in Signal Hill are not much lower than a few years ago,” says Richard Daskam, with Keller Williams Realty. “But, the asking price of the homes that actually went into escrow is considerably lower. I’d say that asking prices of the successful sellers are 30% lower than the peak. Signal Hill has not had a large percentage of foreclosures, though there are a number of homes in pre-foreclosure.”
If you do the math, a 30% discount is a lot ($300,000), on a million dollar home.
Daskam qualifies as an expert on Signal Hill homes. He sold more than 120 properties on Signal Hill during a six-year rush in the city during which about 250 homes have been built and sold—roughly 10% of all of the city’s single-family homes were built between 2000 and 2007.
Among some of the more voluptuous developments that broke ground during the housing run-up was Villagio. Villagio, and the extravagance that the name construes, was apropos for what was to be an 11-home development on the last of the vacant residential lots with a Pacific Ocean view on Signal Hill.
The homes, on a 53,600-square-foot lot south of Willow Street between Orange and Walnut avenues, were priced between $1.15 million and $ 1.495 million. What made the homes so pricey, and what gave the developers the confidence they would sell at those values, was not so much their luxuriousness, but the biggest selling point was views of Catalina Island, Long Beach Harbor and the Palos Verdes Peninsula.
Five of the homes were completed and six went to foreclosure before completion, according to Daskam, who was familiar with the deal, though he was not the developer. “The five never sold, the developer put negative-amortization loans on them and now those loans have converted to full payments,” says Daskam. “They are now on the market as short sales for up to half of the original asking prices.”
What would the Puvuvitam Indians think? The Native American tribe used the hill to send smoke signals to their relations on Catalina Island, according to records that date back to the 1500s. Those natives were evidently also the first to discover value in oil. In the early 1540s, Spanish explorers noticed the natives using a naturally occurring tar obtained from steeps like Signal Hill to waterproof their canoes.
And when oil was discovered on Signal Hill around 1916 the liquid helped kick-start the population boom in Long Beach. It was only when the residential market took off after 2000 that a few pioneers realized that the expense of capping off and removing some of the unused oil pumping equipment would be easily offset by the profit from building and selling homes on the hill.
Now, if Daskam’s hunch is correct, Signal Hill could get another distinction—as one of the first areas in Southern California where million-dollar foreclosures become commonplace.
“Signal Hill is still a great place to live and buy,” Daskam says, adding, “there was a lot of activity in 2004, 2005 and 2006. Many of the buyers used unconventional loans (adjustable, negative amortization, zero-down) and many of these loans will be adjusting in the next 12 months. This could cause a lot of foreclosure activity over the next two years. For the most part, our region hasn’t had a lot of ‘million dollar homes’ go into foreclosure. That could change.”