Million-dollar location, location, location

With more homes in the $1 million to $1.3 million range, high-end buyers go for bigger houses on larger, outlying lots

Thursday, March 30, 2006
RUTH MULLEN
The Oregonian

Brad and Lisa Graff are part of the Portland area's house-buying elite: They bought a home for just over $1 million last year.

But when the two Intel managers settled on a house befitting such a price tag, it wasn't in one of Portland's silk-stocking neighborhoods. It was a nearly 5,000-square-foot beauty on a secluded acre in Cedar Mill, an unincorporated area of Washington County.

Everyone knows that money doesn't buy what it used to in the Portland area's booming real estate market. But a comparison of home sales in the $1 million to $1.3 million range over five years shows, in fact, that it buys far less and that many properties are not in the traditional high-end areas.

Although these buyers make up only a sliver of the market -- less than 0.5 percent of 2005 sales in the four-county area -- a look at their home-buying patterns shows some overall trends and satisfies voyeuristic interests for those who can't afford a seven-figure house.

These facts emerge from property records in four counties -- Multnomah, Washington, Clackamas and Clark -- as well as data from First American Real Estate Solutions for houses sold to individuals in the $1 million to $1.3 million range:

From 2000 through 2005, the median house size in the four counties shrank by about 600 square feet, and lots went from nearly three-quarters of an acre to less than half an acre. Last year's buyers still got four bedrooms and three baths, the same as in 2000.

Multnomah County still had the largest number of such sales -- 56 homes and 16 condos -- in 2005. Clackamas County was a close second with 56 houses, and Clark County had 21 houses and one condo. Meanwhile, Washington County went from zero in 2000 to 14 sales in this range in 2005.

Buyers, on average, got more house for their money in Washington County in 2005. The median there was 5,437 square feet, with four baths on nearly half an acre. By contrast, Multnomah County buyers of a house -- not a condo -- got 3,946 square feet, 3.5 baths and one-third acre.

The Graffs, like most homebuyers, were looking for specific amenities, and they wanted to get the most value for their investment. They found what they wanted in Washington County.

"We're new-house people," says Lisa, who moved here with her husband from the San Francisco Bay Area. "We love high ceilings, big windows and land."

And like many buyers, they logged countless miles comparison-shopping. Most close-in Portland neighborhoods, they found, didn't meet their desire for ample square footage and a large, level lot.

And while there is no exodus of high-end buyers from the city, the Graffs are in good company.

"People get disenchanted with the old houses" in Portland, says Ann Spanish Manion, who works out of RE/MAX's Northeast Broadway office. "They want better schools, a little more land, a little more house for the money."

Change in Portland

Five years ago, a buyer could pick up a $1 million home in Portland's West Hills with all the amenities that such a price implies: a true estate property with stunning views, an impressive lot and generous square footage. It made news back then when the $1 million marker crossed to the east side of the Willamette with the sale of a grand old home in Irvington.

Not anymore. Today, neighborhoods on both sides of the river boast $1 million properties that could be described as very nice, but not luxurious.

Last year, 130 residential properties sold for $1 million or more in Multnomah County compared with 27 five years earlier, according to calculations by the Regional Multiple Listing Service. Of those, fewer than half were at the low end -- in the $1 million to $1.3 million range.

Today $1 million secures a spacious upper-floor condo in the Pearl with high-end finishes and parking, but it no longer guarantees the penthouse. Or, in venerable Portland Heights, it buys you a charming old Craftsman or Colonial Revival that may need some work. If you prefer new construction, Forest Heights still offers plenty of house for the money.

"In Forest Heights, you can ask for quite a bit for a million dollars," says Nathalie Kuehl of Coldwell Banker. "People expect the houses to be done. They want the granite, the bonus room, the master suite with the Jacuzzi tub and the two-headed shower."

Regardless, a close-in address with $1 million price tag still guarantees an exclusive neighborhood, along with community, culture and architecture with a capital A.

"But five years ago, you were able to get the big house on a double or triple lot," says agent Billy Grippo of Windermere. "Now we're seeing million-dollar houses on 50-by-100 lots."

Same story in suburbia

The suburbs are not immune from such trends.

Realtor Clint Currin of RE/MAX, who specializes in small acreage and estate properties, says land and pastoral views are driving $1 million sales near the high-tech center of Hillsboro.

Five years ago, Currin could sell a nice home on 30-plus acres in Helvetia for $1 million. Now that once-princely sum buys you a custom home of 4,000 to 6,000 square feet on five acres or less, he says.

"You'd think it would buy you a glitzy house and an absolutely pristine piece of property," he says. "And that's not the case anymore."

Data from First American Real Estate Solutions and county records show the same trend in Clackamas County. There, the buyer of the median-size house in the $1 million to $1.3 million range got 4,642 square feet in 2000, but had to settle for about 500 fewer square feet in 2005.

Almost all of the $1 milllion Clackamas County homes sold in 2000 were in the old-money enclaves of Lake Oswego and West Linn. But in 2005, some homes were sprinkled around more rural and less opulent addresses, from Oregon City to Damascus and in hot new ZIP codes around Happy Valley.

When empty-nesters Eva and Michael Leech of Happy Valley decided to upsize from their 3,200-square-foot house, they checked out more than 100 properties, including several in Lake Oswego and West Linn.

But they ultimately found their dream house back home in Happy Valley: a 5,000-plus-square-foot custom-built home with an open floor plan and floor-to-ceiling windows that capture a breathtaking view of snow-capped Mount Hood.

"It's the last home we're going to buy before we scale down sizewise," says Eva Leech. "If we stay in shape, we can probably live here another 10 years."

In Clark County, the buyer of that median $1 million house got nearly 1,500 fewer square feet in 2005. Collectively, more of the buyers settled in smaller communities -- Battle Ground, Camas, Ridgefield and Washougal -- than in Vancouver.

But medians -- or the middle of the pack, as opposed to the average -- don't tell the whole story, particularly when the number of sales in this range -- 21 houses and one condo in Clark County -- is relatively small.

Consider Kurt and Debbie Kujovich.

In 2005, the Vancouver couple and their two children moved into a 6,300-square-foot custom-built manse, which includes a guesthouse, a heated outdoor pool and an indoor regulation racquetball court. There's also a hilltop view of Mount Hood and the Columbia River, not to mention a professionally designed landscape with several ponds, oodles of rockwork and a cascading waterfall.

The cost: A cool million.

"We were looking for something where people would walk in and say, 'Wow,' " says Kurt, who works for Oracle, a software giant based near San Francisco. "There's nothing more I could want in a house."

By living in Washington, he keeps his wages free of Oregon's income tax, and he has an airport just six minutes away. Those advantages -- plus what they consider a superior school system -- made it easy for the couple to justify traveling a few minutes to restaurants and night life in Portland.

"This house has characteristics you'll only find in a handful of houses in Vancouver," says Kurt. "It's an investment, and we're going to get it back."

Where it all starts

Driving it all, of course, are soaring prices at ground zero -- Portland.

For couples like Kelly Tweeden, 36, and Michael Shea, 45, a charming old house in the heart of the city is exactly what they want -- even if it means a commute to their jobs at Nike in Beaverton.

Last year, they snared a historic home in Irvington on six city lots for $1.3 million. The impressive, mature landscape anchored by a 100-year-old grape arbor drove up the price considerably, and it gives this early 1900s home the feel of a country manor. But as with many vintage homes, the kitchen needs work.

"We love it as is," says Tweeden. "It's really a special place. I feel like I own something that is part of Portland history."

Across town, the Pearl District also is seeing some downsizing.

Of the 17 condos in Multnomah County that sold for $1 million to $1.3 million last year, 12 were in the Pearl District. The midrange condo cost $1.1 million and had 2,326 square feet, according to county tax records.

"For that price, you'll get outdoor space, but it won't have that oversized terrace where you can host an outdoor party for 20 guests or more," says agent Erin Livengood of Windermere.

"Down here the square footage drives the price quite a bit," adds Realtor Maxine Cracraft of John L. Scott Real Estate. "If you need three bedrooms and two baths, you're going to pay a lot of money."

So, while many can envy what the buyer gets for $1 million, some say that's not real luxury anymore -- whether it's in the Pearl or in the suburbs.

"Almost every home we're doing in the next two years is in the $2 million to $5 million dollar range," says Jeff Haggart of Haggart Luxury Homes, which won the People's Choice Best of Show award with a $4.1 million house in the Northwest Natural Gas Street of Dreams in 2005. "The whole market just shifted up a level."

Big homes put squeeze on neighbors

Building of large houses stirs controversy citywide, but officials remain mum
By JESSIE KIRK, PAMPLIN MEDIA GROUP Issue date: Fri, Mar 17, 2006
The Tribune

For the last four years, Suzanne Van Fleet and her husband, Craig Marcussen, have lived in a home they enjoyed on Southwest Twombly Avenue, near Dosch Road in the Hillsdale area. In their backyard a white picket fence and leafy trees ensured their privacy.
But now, above those trees looms a 3,300-square-foot house being built on nearby Southwest Washouga Avenue.
“We had a lot of privacy because it was an empty lot,” Van Fleet said. “Now when you look out any window, all you see is this house.”
She said she knew a house would be built in the lot eventually but didn’t expect it to be so large.
The big house on the block is a common topic of discussion throughout the neighborhood. Some of the residents refer to the house as a “McMansion,” a term that implies a large generic home plopped down in any neighborhood. Others call it a hotel. One neighbor claims that it’s half the size of Timberline Lodge.
The message is clear — from eliminating privacy to eclipsing views, the neighbors say the house doesn’t fit in with the character of the neighborhood.
The home was built by Beacon Homes Northwest. It is listed at more than $1 million. Joelle Lewis of Re/Max, the real estate company selling the house, says demand for such homes is high.
“In our climate people tend to live inside their homes, and so they love the square footage,” she said.
Lewis said the house is high quality and will benefit the neighborhood by raising property values.
“As much as the neighbors like to complain about it not fitting in, it does tend to raise property values by at least 10 percent across the board,” she said.

Neighbors petition city

The issue is not isolated to Southwest Portland. Residents in other areas of the city are saying they don’t want to live next to a house three times the size of their own.
Last April, the members of the Mt. Tabor Neighborhood Association voted unanimously to formally request that the city, the Portland Planning Bureau and the Portland Planning Commission, which oversees the bureau, begin a process to prevent out-of-scale homes from being built in established residential areas of the city. The letter claimed that the houses were “grossly out of character with our neighborhood.”
According to the group’s land-use chairman, Dave Hilts, the city did not respond to the letter or the accompanying petition signed by about 50 neighbors. Hilts said he hoped the letter would get the city talking about changing the zoning codes, but so far nothing has come of it.
“They should either build out on a residential lot to the current maximum size or build out to maximum height, but not both,” he said. “There would be a trade-off.”
Plans for a denser, more compact Portland don’t look that good to some members of the Argay Neighborhood Association, either — at least when it comes to the 3200 block of Northeast 135th Avenue. At issue is a plan to subdivide a property there to include a second home toward the rear of the lot.
According to acting association Chairwoman Valerie Curry, some residents have concerns about losing their privacy and seeing property values decline. A number of neighbors also fear that where they once had views, they’ll soon only have a view of someone else’s bedroom, she added.

Residents hit boiling point

The controversy extends to nearby cities, too. For example, in Lake Oswego, housing size long has dominated public debate. Where land values in the built-out community now outstrip housing values, structures above the ground have become incidental and a target for bulldozers.
Though the city has one of the most stringent infill ordinances in the region, neighborhoods have stepped up to add particulars to those restrictions, shaping new housing to fit in with old, one district at a time. In some areas, building has outpaced the rules, and discord between neighbors has erupted.
In the town’s historic First Addition, where more than 10 percent of the original housing has been torn down, neighbors regularly spar over new construction, facing off at hearings over tree removal, for which the city’s strict tree protection ordinance offers a platform for debate. At the site of one home built last year, neighbors frustrated over its size made tongue-in-cheek calls to police about noise, stole tools and threw cigarette butts on the lawn.
On Oswego Lake, one home proposed to extend over the water prompted a public battle that lasted more than two years. The proposed home, which topped 12,000 square feet in some designs, became the subject of two state-level appeals and innumerable city hearings on tree removal. Opponents to construction held a garage sale that raised several thousand dollars for legal costs last summer. A final city hearing March 7 drew more than 100 people to testify, and police were asked to keep the peace.
After six months of negotiations, neighbors finally struck a deal with the home’s developer, Jeff Parker of West Linn. Parker agreed to reduce the size of one wing of the house and drop a defamation suit against some of the neighbors, in exchange for their withdrawing legal challenges to the house.

Infill is recurring topic

The issue of large houses towering over smaller homes is especially hot in Southwest, where many of the established neighborhoods comprise one-story ranch homes and craftsman bungalows on large lots. Again and again, Southwest residents have complained that the large houses don’t fit into the character of the neighborhood, obstruct their views and reduce their privacy.
A few years ago, signs appeared in the Corbett/Terwilliger/Lair Hill neighborhood saying, “No more Monstrosities.” For much of the past year, concerns about large infill houses have dominated the montly meetings of the Maplewood Neighborhood Assocation.
“Infill seems to be the No. 1 concern of the Maplewood neighborhood,” resident Kyle Lesko said. “Over half of our monthly meetings are spent discussing some aspect of infill since I’ve been attending.”

Trees have defenders

Among other things, the Maplewood residents complain that the homes and their driveways are bad for the environment.
“Developers seem to think that these mature trees get in the way of them building their enormous houses and would rather leave the minimum amount required by law,” Lesko said. “These trees add to the livability of the neighborhood, use water to decrease erosion and runoff, and provide habitat for animals.”
However, current city building rules allow large homes to be built in existing neighborhoods, said Matt Wickstrom, the city planner who approved the planning and zoning of the Washouga house. According to Wickstrom, the rules allow for new homes to be 30 feet tall and to sit 5 feet from neighboring homes on the side and rear, and 15 feet from the front.
If the Washouga house seems larger than what should be allowed, Wickstrom points to the fact that it resides on a slope. Because the house sits on a slanted grade, the city allows for an extra 10 feet from the lowest part of the structure, allowing the house to be up to 40 feet tall, Wickstrom said.
It isn’t just the size of the houses that people are complaining about, however. It is the sense that they don’t belong among the mix of ranch-style and craftsman houses that have been in the area for more than 40 or 50 years. Homes three times the size of neighboring homes darken lots and require the destruction of old trees, which help provide for drainage.
“It’s the typical McMansion,” Van Fleet said of the Twombly house. “It’s a house that takes up the entire lot, and that’s not how this neighborhood is.”
But according to Wickstrom, fitting in with the neighborhood is not a requirement of city codes.
“In this area there are no requirements in the zoning code for compatibility with adjacent development,” he said.
Jeff Eldredge, a representative from the Portland Bureau of Development Services, which inspects new homes, agreed that while many city agencies must approve the plans of new houses, it is rare that the neighboring houses are a point of consideration.
“Very seldom is the site looked at before the plan is approved,” he said.
And while the zoning codes say that developers should “work together to promote desirable residential areas by addressing aesthetically pleasing environments, safety, privacy, energy conservation and recreational opportunities,” according to Van Fleet, the city needs to take another look at zoning guidelines because the house built in her backyard is not aesthetically pleasing, nor does it promote privacy.
“I think the zoning laws are not restrictive enough in this area, and this is proof of it,” she said.

Density reduces sprawl

Density advocates say it is important to lure people closer to the central city, however, arguing that infill development uses the existing infrastructure, reduces sprawl and raises property values.
“Population density enables things most Portlanders value — mass transit, walkable clusters of local businesses and access to local town centers,” said Dan Eisenbeis of 1000 Friends of Oregon, an organization that promotes land-use planning. “Having a population base that can support local shops improves the neighborhood character.”
While not many say they enjoy living next to one of the large-scale homes, demand for them is high. Statistics show that home buyers are looking for more room these days. According to 1000 Friends of Oregon, the average home size in Portland has grown significantly in the last few decades. New single-family homes in the Portland region averaged about 1,500 square feet in the 1950s and 2,250 square feet in the 1990s.
At the same time, Eisenbeis said that infill developments should complement the character of an area.
“We should be striving for good design and development. A poor design element isn’t nice to live by,” he said.

Lee van der Voo of Pamplin Media Group contributed to this story.

Guide to green commercial real estate available

The first guide to green commercial real estate on the West Coast, Green Real Estate Guide 2006, has been released by Celilo Group Media.

Published as a supplement to Sustainable Industries Journal, the Green Real Estate Guide is a comprehensive resource for sustainable office space on the West Coast. The guide can be downloaded for free at www.sijournal.com/resources.

The Green Real Estate Guide 2006 contains information and resources for California, Oregon, Washington and British Columbia.

The guide was created in response to the rising demand for green office space along the West Coast and the mounting interest among property managers interested in greening their existing buildings.

The Green Real Estate Guide 2006 was sponsored by Coastwide Laboratories, makers of sustainable earth products.

Celilo Group Media Inc. is a media company with offices in Portland, Seattle and St. Paul, Minn.