In Altadena, foreign investors were bogeymen. Now some are hated

They watched in alarm as a developer known for building boxy duplexes in South Los Angeles began buying up lots on their block west of Altadena.

One in March, one in April, one in May. One in September.

For Michael and Crystal Nerone, who were weighing the pros and cons of rebuilding their house destroyed in the Eaton fire, the prospect of a two-story rental on their street tipped the scales.

The Nerones attended public meetings where outside investors – and especially those who bought their block – were attacked for holding lots at actual fire sale prices, likely to replace demolished bungalows and cottages with mansions and multi-family rentals.

While Ocean Development Inc. it buys a fifth, which is close to theirs, the Nerones may have been ready to destroy. But Crystal decided to give the company a chance to explain its intentions.

He made a phone call that changed his view of investors. To his surprise, Kip Cyprus, Ocean Development's general contractor, called right away.

“He said I can look at the house he has built,” he said. “He gave me the address and told me how to get in.

He drove to Highview Avenue and saw a house with interesting curb appeal, intricate landscaping and interior details like handmade cabinets that he would want in a home.

“He thought about how someone could use this house,” he said.

Housing appears to be nearing completion in Oak Grove, a 16-home development that will soon be the first street in Altadena to return to being 100% rebuilt after last year's fires.

Since then they have been in almost daily contact, and Ocean Development has become the main engine behind the acquisition of the Nerones block on Laurel Drive. The company has four moderate-sized single-family homes under construction and a fifth in phases. Only two others on the block are far away.

With 25 lots currently in its portfolio, four homes completed and two for sale, Ocean Development offers a counterpoint to the story that investors are sure to develop the character that makes Altadena so beloved.

“I think it's a myth,” said Realtor and Altadena booster Teresa Fuller of the idea that investors are an existential threat.

A sign is displayed in the front yard in Altadena.

“There are many developers who are trying hard to do what they believe is the right fit for Altadena,” he said. “Seems like only real dingbats don't listen.”

Milessa Michelson, founder and lead organizer of Altadena Not for Sale, said she is happy for the people on Laurel Drive but thinks Ocean Development's plans may not be universally accepted.

“I think the developer would show good faith in hosting a town hall to really include the community, be open to questions and concerns,” Michelson said. “That would be great.”

Overall, it is too early to judge the impact of foreign investors, he said.

“Everything is still in development mode.”

A worker carries lumber from the roof of a house under construction along Laurel Drive.

The second-largest investor, Edwin Castro, famously bought a $2.04 billion winning Powerball lottery ticket at an Altadena gas station in 2022.

Castro, who spent his first few years in Altadena, cites a similar, community-oriented goal in the 15 homes he's bought, but has been slow to move forward.

His company, Grass Roots, has two houses under construction but has yet to apply for other permits.

Grass Roots is working with local groups and organizations on “the best way to preserve the old Altadena they know and love,” said spokesman Terry Fahn.

Fahn said Castro is donating three properties to the Greenline Housing Foundation, a nonprofit that provides affordable and repair grants and financial education to “deserving people of color to help restore justice” for past housing discrimination.

He may also build houses for himself and his family, Fahn said.

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Finished yard of a house rebuilt by Ocean Development Inc. it is visible in front of the undeveloped mass behind it.

Although construction is visible throughout Altadena, it is not happening. Many blocks have more than one or two houses built, and many or more are still overgrown.

Capital and development knowledge brought by investors can accelerate the recovery.

Oak Grove, an area east of Altadena, has made a complete comeback. The Craftsman-style subdivision, built on the site of a former school, had just been completed and was selling well when the Eaton fire destroyed seven of its 16 homes and left the rest uninhabitable.

All have now been rebuilt or are being renovated, and the seven owners who chose to return will return by the end of May, said Rebecca Anbardan, president of the builder, Warmington Residential.

A quick and complete recovery was possible because the family Warmington did not go to new owners. In fact, it needed them. Warmington discussed others with the owners. One decided to repair the damaged house. Some agreed to let Warmington rebuild them. The compromise allowed Warmington to rebuild the entire area at once.

Homes appear to be nearing completion in Oak Grove, with the surrounding area intact after the Eaton fire.

Anbardan says that the investors' money works for the community as a whole and for those people who decide not to take responsibility for rebuilding.

“I think the picture is always painted of big, bad investors, when in reality, they were the solution for somebody,” Anbardan said. “They wrote their home. They wanted to get out.”

Investors are “buying it up and providing new housing for those who don't want to deal with it,” he said.

The perceived decrease in foreign investment depends on two possible harms, in fact, the opposite – that a large percentage of parcels in Altadena will be bought and kept for long-term appreciation or quickly transformed by dream homes that are very large and of great value.

Both are difficult to measure because the identity of investors – and thus the ability to measure their goals – is often hidden by company registration.

But the evidence so far is that their effect is limited.

A Times analysis of data provided by Redfin and county permit records shows that outside investors accounted for only a small portion of the homes destroyed in the Eaton fire. According to Redfin, 287 vacant lots were sold in Altadena last year. Of those, just under half were purchased by investors.

That represents less than half of the nearly 6,000 homes that were destroyed.

Building permit records reviewed by The Times show that investors are less likely to delay rebuilding than other owners.

There is a lot where Crystal Nerone's home stood in Altadena.

By comparing permits to owner-investors, the Times found that plans are on file for two-thirds of their parcels, 50% more than Altadena's overall average. (Foreign developers also help many property owners by offering turnkey projects based on pre-designed housing portfolios that can quickly move through the permitting process.)

The top two investors held about 22% of the 171 vacant properties purchased by listed companies last year, according to a list compiled by Altadena Not for Sale. Another six had three or more parcels. All but nine of the rest had only one. (Altadena Not For Sale identified about 30 more investor sales than Redfin but didn't break down vacant spaces into single-family homes.)

The largest investor, Ocean Development, has pursued construction. It has already applied for permits for all but one of the 22 sites it had acquired by 2025.

Cyprus, who said Ocean Development's work in South LA is winding down, said he was drawn to Altadena because he loved the community and thought his experience as an infill architect — designing one project at a time to meet different conditions — would not only help restore the community's beloved character but make it stronger.

“The houses here were at the end of their lives,” Cyprus said. “They were 100 years old and older. 15 years from now, you would have to be a slave to the existing house.”

He designed five basic house types that reflect the community's distinct style: Craftsman, Tudor, Spanish, Mid-Century Modern and the replica Janes Cottage, a 1920s-style hilltop in the Janes Village neighborhood that burned down in a fire.

He's committed to building like-for-like — each new house the same size as the one it replaces — and building them individually with quality materials and no ADUs. Once done, each will be put on the market for sale, rather than rent.

Homeowners who were interviewed in several wards where Ocean Development is being built said they were happy with what they saw.

“If it's a builder and it's going to be a house, we're happy,” said Corinna Garza, who was visiting his construction site at Sagemont Place, which is next door to a house that Ocean Development had already completed and sold.

“We were hoping to have neighbors.”

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Despite the investor activity, the movement was slow. From a peak of more than 150 properties on the market last summer, the number has dropped to about 40 active listings on average, said Corey Vorzimer, director of real estate at Fuller's real estate office. Not all sellers.

This year, listings have remained at that level, but the recent spike in demand may signal a second wave as developers cash in on the completion of earlier projects, Vorzimer said.

According to Redfin, investors bought about half of the lots sold, a number that matches the Altadena Not for Sale listing.

Overwhelmingly, the recent selloff has been to investors, Vorzimer said, suggesting that investors may be playing a growing, albeit small, role in the ongoing recovery.

No matter how well their homes come together, any sale of a home in California's high-end real estate market, by investor or otherwise, can put pressure on the middle class and working class.

According to Zillow, the two Ocean Development sales were for $1.6 million and $1.95 million. New homes in Oak Grove are listed for just under $1.65 million for four bedrooms and $1.75 million for five bedrooms.

For the Nerones, who will have to dip into their retirement funds to cover their rebuilding costs, that is an inevitable change, whoever builds the houses.

“It's going to change the landscape,” Crystal Nerone said. “Nothing can be done about that. You are selling these houses for $1.6, $1.7 million. Our houses were worth $1.2, $1.3 before they burned down.

With her own children now living alone, she welcomes the change as a rebirth.

“I'm looking forward to people buying a house who may have children,” she said. “Our children grew up here, it will be nice for the children to play in the street again, I hope.