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."