The Rise of the Multimillion-Dollar Spec Home in LA
A designer to the 1% explains why high-end real estate is moving away from custom builds
“People will look back on this period in L.A.’s architectural history like they do when thinking of Post and Beam and Neutra,” says Lars Hypko, speaking about the city’s current renaissance. “People are changing the way they look at homes.”
Hypko is an architect and interior designer. His company, MASS Beverly, works on many of the new homes in L.A.’s wealthiest neighborhoods, like those developed by Viewpoint Collection, who specialize in properties that sell for north of $50 million.
Asked to describe the prevailing trends in 2019, Hypko says he’s seeing more color, more texture and loads of natural elements. “We’re getting away from glass boxes; now living spaces flow seamlessly outside.” Things are leaning more tech-forward, too, with automation, low energy usage and solar panels on the top of many homeowner wishlist. “You come home and everything from the lights to the security to the fireplace to the music comes on at the touch of a button,” he says.
The key distinction, though, is that these aren’t custom homes — they’re built entirely on spec. These are the homes you’re seeing listed in the Wall Street Journal and mentioned in Forbes alongside historic chateaus in France. It used to be that a spec home was something cheap: a white box with bad bones and staged furniture. But there’s been a big shift in how wealthy people buy. It’s not just the lifestyle changes of the empty nesters, or the desires of young tech entrepreneurs who want to mic-drop on the Joneses.
Rather, it’s that people are busier than ever, and building a home — like planning a wedding — can be a huge headache.
“A lot of relationships are broken building a home,” says Lars. “It’s a big investment in money, but also in time, and if you’re a busy person micromanaging, this process can be complicated.” The solution is a turnkey home where everything — from the layout to the furniture and art collection — has already been thoroughly considered by the developer and the designer.
This shift coincided with the previous seller’s market, in which there wasn’t enough supply in the luxury market to meet demand. Great properties tended to sell within three months as foreign investors and private-equity concerns started looking to L.A. because it was (and still is) less expensive than London or New York. Developers couldn’t build homes fast enough, and thus realized that margins are higher doing more luxurious properties on spec.
“They realized that if they cut costs by $100K, they’d make $1M less,” says Hypko. The message was clear: aim for quality to maximize profits. You’ve gotta spend money to make money.
As for what that quality actually looks like? Italian furniture and finishes are still the norm at the top of the market, for one. MASS is a go-to for this, working with 150 various lines and producers, like stonework outfitters Henge. “They work with rare stones, using a jet and acid wash that’s resistant to acids from lemons and oranges,” he says. “There’s a return to nature because it’s timeless. We can really connect with the warmth of wood, the sophistication of stone and the base of metal.”
This return to natural elements can be found in the increased use of swamp wood, an old-growth strain found by divers in rivers, where wood harvested during the old lumber days would sometimes end up in transit. The mud penetrates it, giving the grains a greyish hue. Using rare stones and wood means beautiful patterns that give each property a unique quality, even though they’re not custom-built. And if they don’t like it? “They live it for a while and make tweaks after,” says Hypko.
The key here is never compromising on materials. A home made from rare materials tends to maintain its value, because those materials are inherently timeless. To this end, Viewpoint Collection has been a good partner for MASS. “They’re very professional, and they offer a wide selection of homes, from modern to historic.” That variety is also vital to success in the high-end market: some buyers respond to vintage, others contemporary, still others a mix of both. By making a range of different homes rather than focusing on a single aesthetic, a developer maximizes their potential market.
“It’s been a challenging market in many ways,” says Hypko. “But we’ve [MASS] grown to over 50 employees now, and we are doing projects outside of L.A.” His 181 Fremont in San Francisco is a mixed-use building housing Facebook, Salesforce and luxury penthouse condos starting at $4.8M.
“We’ve been really lucky,” he says. “We have faith that a desire for quality will hold up.”