Why Porter Ranch real estate is selling despite the recent gas leak
Share Now on:
It’s been just 18 months since a gas well broke, causing tens of millions of pounds of natural gas to spew into the air in Porter Ranch, on the outskirts of Los Angeles. It ranks as the worst methane leak in U.S. history. The leak was capped, but residents continue to complain about getting sick from the gas field. But even with all this, the housing market there is booming, especially on the high end.
“I told my wife we were going to buy this house even if we had to wear a gas mask,” said Gabriel Barajas as the couple toured a 5,272 square-foot model home similar to the one they’ll move into this summer. “I always wanted to have a house up in the hills, and I finally bought it,” said Barajas, who grew up in the San Fernando Valley.
The Barajas’ home is one of more than 1,400 that Toll Brothers Inc. plans to build over the coming years as part of a planned community that sits about a mile from where the gas leak occurred, according to the company. When the project is complete, the development will feature 3,400 homes and condos.
- RELATED: Natural gas leaks make natural gas dirtier
- Life during the gas leak in Porter Ranch
- A natural gas leak with seemingly no end
“I know that they wouldn’t be building these homes if we were in danger,” Erica Barajas said.
Toll Brothers completed its takeover of the Porter Ranch development in 2014, more than a year before the gas leak.
“It was an inopportune time,” said Toll Brothers Division Vice President Frank Su. “Toll Brothers has a significant investment here in Porter Ranch.”
The four-month leak was finally capped in February 2016, and some Porter Ranch residents still complain about health effects from the Aliso Canyon gas storage field. But the episode seems to be of little concern to many people looking to buy Toll Brothers homes.
Toll Brothers said it has sold four houses this year for more than $2 million each in Porter Ranch and has four more that will close soon, all record-high prices for the area. The firm’s most basic houses go for just under $1 million. Most feature grand staircases, large walk-in closets and spacious kitchens.
The strength of the market seems to have surprised even Toll Brothers executives, who told investors in a conference call last year that the company didn’t have to offer discounts after the leak.
“We have made no downward adjustments in our pricing,” said Toll Brothers CEO Douglas C. Yearley Jr. “It should absolutely be business as usual with typical Southern California pricing power and great action.”
Longtime Porter Ranch real estate agent Ken Sampson said these days, he rarely gets questions from prospective buyers about the well.
“A year ago it was on everyone’s mind,” he said. “Maybe one out of 15 asks about it today. It was a shock to all of us that the facility was even there, but I believe as a whole, the public in general doesn’t really pay attention to it.”
Except for people like Laurie Carrigan, who last month moved her three dogs and six kids to a house farther away from the gas field. She said her family was still getting sick, even though the ruptured well has been capped for awhile.
“People that actually have experienced the grief and the doctor’s appointments and the constant rashes and nosebleeds are not willing to buy a house in Porter Ranch,” Carrigan said. “They’re willing to get as far away as possible.”
She’s not selling her old house yet because her home value has been slower to recover, something analysts say is common with houses closer to Aliso Canyon.
“We do see fewer sales the closer you get to the actual gas leak, but because those sales aren’t happening, they’re not affecting the prices,” said Daren Blomquist, vice-president of RealtyTrac.
Overall, home sales are up 18 percent in Porter Ranch over the past year, according to RealtyTrac.
“People are buying houses again,” said Carrigan, who is a realtor. But because she doesn’t want others to go through what she has, she recently found herself in the strange position of steering a client away from buying in the Toll Brothers development. “I told them, ‘Don’t buy until you know for sure. You have two small kids. Don’t do it.'”
She said it’s tough to convince clients to stay away, because they’re hearing from Toll Brothers that the leak is fixed.
“If it’s fixed you assume it’s OK,” said Carrigan, who said besides unanswered questions about what caused the blowout, “there are still elevated spikes” of natural gas emanating from Aliso Canyon.
Toll Brothers’ Su acknowledges he still has concerns about the storage field.
“The gas leak was not great, and we still have concerns about the future and safeness of the facility,” he said.
Toll Brothers agents emphasize to perspective buyers the level of regulatory oversight at Aliso Canyon, Su said.
“We tell them the leak has been capped, the facility has been there for 50-plus years, and it’s probably the most regulated facility in the entire country,” he said. “We feel like it’s going to be very safe in the future,” said Su, adding that for most potential buyers, “that’s enough for them.”
Su said he wouldn’t be recommending Porter Ranch if he didn’t happily live there with his family for the past three years.
“We were here during the leak and my kids weren’t affected,” said Su. “Porter Ranch is still a great place. It’s not a horrible place.”
It’s also the rare place in Los Angeles where there are top schools, low crime rates, and where people can customize a home with a view from the ground up — pluses that outweigh risks for many with the means to purchase a home here.
Recently, a California Senate committee approved an emergency bill that would keep the Aliso Canyon gas storage field closed until regulators complete a study into what caused the leak. Southern California Gas Company opposes the measure. It maintains the storage field can operate safely while the study is underway.
Marketplace is on a mission.
We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.
Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?