Edwin Castro has avoided the spotlight since he won a $2.04 billion Powerball jackpot from a ticket he bought at an Altadena gas station 2 ½ years ago.
In recent months, however, the largest lottery winner in history plowed some of those winnings back into Altadena, paying $8.9 million to buy up at least a dozen burned-out homesites in the beleaguered community.
That makes Black Lion Properties LLC, the company Castro and brother Jesse formed last year, the largest land investor in the Los Angeles County fire zones.
In a recent statement, the Castro brothers said they want to give back to the community where they grew up.
“They love and care about the Altadena community and saw an opportunity to invest in it,” a publicist’s statement said. They also hope to help Altadena “retain its character and charm,” the statement said.
“Many people who were affected by the fires in Altadena cannot or do not want to rebuild and aspire to move on and start over elsewhere,” said the statement. “These purchases will help some of them, while keeping ownership of the property local.”
The Castro brothers are among 145 buyers of at least 221 homesites in the Palisades and Eaton fire zones, data compiled by local real estate agents and the Southern California News Group show.
An additional 364 lots either are in escrow or up for sale in Altadena and Pacific Palisades.
While those 585 lots represent only 6% of all the houses that burned down in the fires, they could be the vanguard of a growing wave of land sales caused by the January firestorms.
Many of the homeowners said they sold because they didn’t want to deal with the time, expense and hassles of rebuilding, or their insurance won’t cover the full cost of reconstruction.
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Early sellers typically got multiple, all-cash offers, with some saying they rushed to sell before a glut of lots hits the market.
Agents say sellers typically are seniors who don’t want to spend the next three to five years dealing with architects and contractors. Or they’re parents who don’t want to relocate young children already adapting to new schools. Busy two-income households and landlords also are taking their money out and investing elsewhere.
“People who are 75-plus are sort of thinking if this takes four years, is this what I want to do with these four years? Probably not,” said longtime Altadena agent Teresa Fuller, who was displaced herself by smoke damage to her home.
On the other side of the transactions are investors, land speculators, single-lot homebuilders as well as people who want to build a house to live in themselves, agents and sellers said.
One buyer plans to increase density by adding accessory dwelling units (ADUs) to his lots and converting two houses into apartments or condos. An agent said he has a client who wants to do lot splits, permissible under Senate Bill 9, and put up to six units on a former single-family home site.
The sales are occurring even as Altadena residents organize to keep outside investors out, wearing T-shirts and posting signs declaring “Altadena is Not for Sale.”
Local agents note, however, that many lots are for sale and demand for them so far has been brisk.
“Suddenly, this is the most number of flat, buildable lots in Southern California probably in the last 50 years,” said Brock Harris, a Los Angeles broker active in Los Feliz and Altadena. “It feels like a bit of a land rush. But frankly, the number of developers who can come in and buy lots is a tiny drop in the bucket of the houses that need to get rebuilt.”
Throwing in the towel
Many displaced homeowners are ready to throw in the towel and put the fires behind them.
At 69 and 75, Altadena homeowners John and Susan Horny were reluctant to spend the next five years replacing the three-bedroom house that burned down on their half-acre lot. A lot that big would require a large house just when the couple was thinking about downsizing. The artist and his wife lost all their possessions, including his artwork and the artwork of several different artists.
“We knew the property was valuable because we were on a cul-de-sac, and it’s a very lovely area, very quiet and peaceful. And we just thought best thing for us to do is to sell it,” he said.
They put it on the market on March 7, and were under contract with Black Lion Properties a week later.
“They came in over asking (price), no contingencies, no hang-ups, no hiccups, and so the sale went through very quickly,” Horny said. “We were trying to get ourselves out of a position that was very horrible for us.”
For Brooke Covington, selling her lot meant giving up her Pacific Palisades home of 28 years on a street with ocean views just a six-minute walk from the Palisades Village. She raised her two daughters there.
But she lost her insurance just before the fires, and her policy under California’s FAIR Plan would cover only about half the cost of rebuilding her demolished house, she said.
On top of that, she expected future insurance costs and property taxes to skyrocket once she did rebuild. Then, she heard that a neighbor’s lot sold with multiple offers.
She did the math, and it didn’t make sense to pay the costs of rebuilding for years to come.
“It’s going to take five years to rebuild and five to 10 to really get that community back where it was,” Covington said. “You’ll be living in a construction site for at least two or three years. … It’s a war zone. Like there’s nothing left.”
Her lot sold in six days at full asking price.
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Richard Korngute visits the site of his former home that was lost in the Palisades Fire. Korngute is one of at least 221 homeowners in Altadena and Pacific Palisades who have sold the land on which their homes stood before the fires.(Photo by Andy Holzman, Contributing Photographer)
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Richard Korngute visits the site of his former home that was lost in the Palisades Fire. Korngute is one of at least 221 homeowners in Altadena and Pacific Palisades who have sold the land on which their homes stood before the fires.(Photo by Andy Holzman, Contributing Photographer)
Richard Korngute, who lived next door, put his lot up for sale two days after Covington’s property hit the market. The same buyer picked up his lot, too.
The buyer told Korngute he planned to build a house on one lot and possibly an art studio on the other.
For Korngute, 69, who had a horrible experience building another house elsewhere, it wasn’t worth the trouble to rebuild.
Like Covington, Korngute’s insurance wouldn’t cover the full cost of rebuilding. But that was just a small part of his family’s decision to sell.
“With the state of the Palisades and the total destruction up there, and the possible toxic land and air, we didn’t really want to be living anywhere near that for the rest of our days,” he said.
“It’s like Hiroshima. There’s nothing left. … You go to places where you walked with your dog or your child or your neighbor. There’s nothing there.”
A brand new city
Investor Alex Agazaryan said that’s a common feeling among many who are selling their land.
“It was just too devastating for them to stay,” he said.
But where survivors see devastation, the entrepreneur envisions a new, highly desirable community rising from the ashes.
“Give it time, and it’s going to be a brand new city,” said Agazaryan, who invested almost $3 million to buy four Altadena lots since late March.
“Literally, you’re talking about La Cañada. Same mountains. Same views. I don’t see why it couldn’t be similar to La Cañada,” he said. “Yes, at this moment, it’s a lot of burnt houses. But I believe it’s probably going to be one of the more sought-out areas in the future.”
Agazaryan said he plans to build houses with junior ADUs on two of the lots and apartments or condominiums on the other two.
Georgia-based Iron Rings Altadena LLC plans to use new California laws like SB 9, which allows up to four homes plus two ADUs to be built on a single-family lot, said the firm’s agent, Dan Beech.
A bill now pending in Sacramento would eliminate that law’s requirement that the owner live on the property for three years.
Another recent measure, 2023’s Assembly Bill 1033, would allow ADUs to be sold separately from a main residence like a condominium..
“Our goal is to try to strike a balance between the very charming neighborhood that was in Altadena before the fires … along with adding more density that is now allowed with all the different codes,” Beech said.
Iron Rings spent just over $2.5 million to acquire four parcels in Altadena.
By contrast, Huntington Beach homebuilder Ocean Development Inc., which spent almost $6.6 million to acquire 11 Altadena lots, is moving quickly to rebuild houses that were there before the fires, using the existing foundations if they pass inspection.
“They’re buying properties where the foundation wasn’t scraped, and they’re basically putting the old house back,” said L.A. broker Harris, who helped Ocean Development acquire some of its properties.
“So, if there was a Craftsman (on the lot), they’re putting up a Craftsman. If there was a Tutor, they’re putting up a Tutor. They really want to make sure they bring back the Altadena charm that made the area so appealing.”
Lottery winner Edwin Castro and his brother also plan to restore at least half the homes that were on the lots they bought.
In its statement about the sales, Black Lion said the Castro brothers expect to use pre-existing plans for half of the lots, with newly designed single-family homes on the remaining lots.
Altadena sales soar
Despite protests against land speculators, Altadena had more than twice as many lot sales than Pacific Palisades — 157 vs. 64, according to estimates by Teresa Fuller and longtime Pacific Palisades agent Dan Urbach.
The principal reason is Altadena land is more affordable.
The average sale price in Altadena so far has been just under $663,000 versus more than $2.5 million for homesites in Pacific Palisades, figures from Redfin show.
Fuller estimated that 30% of Altadena’s buyers want to build a home to live in. The rest are small investors.
“We don’t have giant developers coming in to buy 50 lots,” Fuller said.
“They’re mom-and-pop, single-lot homebuilders,” Harris added. “People talk about these developers like they’re these giant corporations. But the giant corporations build tract homes.”
Some buyers tell Fuller they’re just purchasing lots to hold them. “We don’t know what’s going to happen, but we believe they’ll be worth more later,” they told her.
Urbach believes about half of the lot buyers in Pacific Palisades are investors and half are “owner-users.”
Sales so far peaked in April, with agents and sellers saying bidding wars and sales above asking prices were common. But the pace of transactions slowed more recently as more properties hit the market.
“Sadly, as the inventories rise, we’re seeing downward-pressure on pricing,” said Urbach. “At this time, we’re selling lots at about 40% of their pre-fire … land market value.”
Harris predicted more homeowners will opt to sell as they realize how “massively complicated” and expensive the homebuilding process is.
“They’re not able to visit a job site every day for the next few years, monitoring contractors and inspectors and learning on the job,” he said. “A lot of them would much rather sell and buy a house in Sierra Madre and get on with their lives.”
Fuller said she spends half of her time talking homeowners through their options as they try to determine if they can rebuild. Most people, including herself, “are in that quagmire.”
“My guess,” Harris said, “is lots more are going to come on the market as people’s insurance money runs out and their one or two years of rental money runs out, and they suddenly have to carry two housing payments.
“ … It gets old real quick, and most people (when they) get even a small taste of the costs and hassles of dealing with a permitting process around the house, they’ll give up quickly. … I’d be shocked if 10% of the homeowners rebuild their homes and move back in.”
