Times Shaky, Land Not Moving : Development: With $1-million-an-acre days rare, major deals have been too. Those with land to sell are just holding on to their parcels, and that means fewer homes are being built.

IRVINE —  Back in 1988, when people were buying houses as fast as builders could knock them together, the price of an acre in some parts of Irvine and Tustin hit $1 million or more. The land was so expensive because a developer could built a lot of condominiums on it.

Now a landowner would have a tough time fetching such a price. And even if he did find a home builder willing to buy, the builder would have a hard time borrowing the money.

Very few large chunks of property have changed hands in Orange County in the last few years. And there hasn’t been a really big private transaction in South Orange County--involving tens of millions of dollars--since May, 1989.

What has sold sometimes goes for as much as 25% less than it might have three years ago.

Those with land to sell, like home builder Barratt American Inc. in Irvine, are choosing to hold onto their parcels rather than sell at today’s prices, President Mark L. Frazier said.

All this means, of course, that fewer new houses will probably be built in the near future. Without land--and unable to borrow money to buy it--some of the county’s smaller home builders have already started dying on the vine, according to industry sources.

Others are being forced to sell. There already have been several good-size foreclosures this year, according to county records. The most recent: 100 lots in South Orange County scheduled to go on the block soon for a minimum $23 million.

Land for commercial buildings such as offices and shopping centers is hardly selling either, brokers said. With the county’s office market glutted with excess space, sites that might have commanded premium prices are bringing less today, according to commercial real estate brokers.

“Every time we have one of these downturns, people try to steal property at bargain prices,” said John Bodenburg, president of brokerage Lee & Associates in Newport Beach. “But nobody’s selling, so prices don’t go down much. They just stay flat.”

About a dozen developers with sites already approved for office towers are waiting for the office glut and credit crunch to ease. But that’s not likely to happen for the next year or so.

“We haven’t sold an office site in quite awhile,” says Russell P. Johnson, senior vice president and district manager of the Grubb & Ellis brokerage office in Anaheim. “An owner wouldn’t sell these days at the price a developer’s willing to pay, so you have a standoff.”

In fact, the only biggie who’s publicly in the market for much land in Orange County is Walt Disney Co., which has plans to expand Disneyland in Anaheim.

The only people buying large parcels in South Orange County, according to CB Commercial broker David M. Salazar, are the government--the U.S. Postal Service is buying land in Mission Viejo--and churches, which are growing to serve a burgeoning population there.

The situation is a big problem for South County’s handful of major landowners, who among them control most of the open land in the southern half of the county.

Santa Margarita Co., which manages the wealthy O’Neill family’s 40,000 acres, blamed slow land sales when it laid off 21 people in the fall.

A few days before, the Irvine Co., which owns one-sixth of the land in the county, also blamed lagging land sales in laying off 40 employees.

Both companies depend in part on land sales to home builders and developers to generate cash for their own development projects.

Irvine Co. executives are considering hiring real estate brokers for the first time to market large sites at the company’s giant Irvine Spectrum industrial park. The issue has sparked some debate in the company.

“We’re deciding now whether to hire brokers or continue to market the land from in-house, which is what we’ve traditionally done,” says Robert E. Williams Jr., president of the company’s industrial subsidiary.

And the company seems to be in a “let’s make a deal” mode: “If the customer’s out there, we’re willing to negotiate,” Williams said.

After perking up briefly earlier this spring, the market for new houses is back in the doldrums, so it could be a while before land sales pick up again.

Still, home sales are expected to quicken before the commercial land business picks up.

“Residential land buyers and sellers have an easier time,” says Les F. Whittlesey, a vice president at the Hoffman Co. in Irvine, a land broker. “The inventory of unsold homes usually gets used up more quickly than unused space in commercial buildings.”

All this is a far cry from the boom days of a few years ago, when builders bought almost anything they could get their hands on, fearing that they would be shut out of the lucrative Orange County market where, as the saying goes, “they aren’t making any more land.”

Builders passed on the cost of this high-priced land in the form of steeper and steeper home prices.

In fact, home prices got so high that for a while in the late 1980s Orange County had the highest home prices in the nation.

Those prices knocked most people out of the market. When the recession and the Gulf War hit last year, even the market for affordable housing dried up.

Now it’s the rare home builder who’s buying big chunks of land. But Akins Communities recently did: The Irvine home builder purchased 180 lots in Rancho Santa Margarita for a sum it won’t disclose.

But what’s most interesting about the purchase is that Akins brought in a joint-venture partner in order to swing it: Seyen Trabuco Inc., part of an Indonesian conglomerate that wants to invest in the United States. More builders are doing these joint ventures, said president Bruce Akins, as it gets harder to borrow money from a bank or savings and loan.

In fact, GlenFed Development, Akins’ former joint-venture partner and the thrift’s home-building subsidiary, is out of that game. That’s where the Indonesians come in. And Japanese investors are also said to be scouting deals with home builders.

The other big change this deal illustrates? Originally the Santa Margarita Co. planned this 47-acre site for houses costing between $300,000 and $400,000.

“But that’s not where the market’s headed,” Akins said. “We had no interest in building in that price range, and nobody would’ve lent us the money to do it anyway.

“So about a year ago we sat down with them and worked something else out.”

What they came up with was smaller houses that fit on more lots and would sell for between $200,000 and $225,000.

Akins has already started grading and putting in sewers.

Five Largest Recent Land Sales in Orange County Sales of major properties stopped after May, 1989, as the county’s home-building market slowed. One exception was Laguna Laurel, which was sold not to a developer but to the city of Laguna Beach at what the Irvine Co. described as a steep discount after protests persuaded the company to sell rather than develop the land. A. Laguna Laurel, Laguna Beach (In escrow) 2,150 acres Seller: The Irvine Co. Buyer: City of Laguna Beach $78 million B. Foothill Ranch. May 12, 1988. 310 acres Seller: Foothill Ranch Co. Buyer: Lyon Communities $58 million C. Mission Viejo. April 15, 1988. 416 acres Seller: Mission Viejo Co. Buyer: Home Capital Corp., Barratt American Inc. $57.5 million D. Forster Ranch, San Clemente. March 31, 1989. 1,077 acres Seller: Estrella Properties Ltd. Buyer: Centex Development Co. $50.2 million E. Talega Valley, San Clemente. May 10, 1989. 3,510 acres Seller: Talega Valley Partnership Buyer: Arvide Talega Limited Partnership $86 million Source: Gary L. Vogt and Associates, Laguna Niguel, appraiser; Los Angeles Times