For me, one of the most enjoyable aspects of selling residential real estate in the Northwest has always been the appealing architecture of our home grown traditional styling. The large-ish local builders have taken pains over the years to build homes that exuded classic styling without being absurdly ostentatious, and were a bit above “affordable”, at least in the late ’80’s and the 1990’s. These builders are John Buchan, Bill Buchan, Fred Burnstead and his sons Rick and Steve, along with Herb Chaffey, Bill Bender, Bill Conner, etc. Many small to medium size builders did a fine job of emulating many of the characteristics of these stalwarts of the local industry: Parkwood Homes, RKK, Pilkington, Albright, Harcus, Steven Smith, Smulski, and a passel of related Hansens. There are far too many to name here, but the small builders were an important part of the development of the variations of what has come to know as “Northwest Traditional” that is found largely on the Eastside.
Something that Eastsiders will come to know is what Seattlites learned long ago. The existing housing stock on the Eastside, particularly the suburban stock of Northwest Traditionals, has been played out i.e., what we have is about all we are going to get. The advent of rezoning undeveloped residential property into high density clusters precludes the ability to build such homes any longer, at least with the same panache they’ve long-held when sited on 15,000 to 40,000sf lots. In King County the development of such lots was largely disallowed beginning in the late 1990’s. A combination of many factors contributed to this sea change in Eastside new home construction, but the primary reasons were raw land costs as the supply shrunk, the severely escalated costs of land development and County permitting requirements, and the long-term realization that the County could no longer afford to maintain miles of roads and infrastructure to serve low density housing. Game over for suburban half acre-plus lots, and the same for the graceful homes that adorn such lots.
As the headlines blared in yesterday’s Seattle Times, new home construction is now surging in the Seattle area. But different from years past, these builders are largely national entities new to the local turf and tastes. Toll Brothers has taken over Camwest, Henley Properties bought Bennett Homes. Pulte bought out Centex in 2009. (Centex, a Texas-based home builder never could seem to get it right, and as hard as they tried, never did fit in with the Eastside market. Maybe Pulte will do a little bit better.)
The interest of national builders speaks highly of the potential housing market in the Greater Seattle area. They wouldn’t be here if there wasn’t money to be made, but the timing can also be attributed to other factors:
- The “Don’s” of the local building industry are aging and in few cases are the offspring interested in continuing what their respective founders started;
- Many “fast-track” land development projects in Snohomish and Pierce Counties, along with a few significant projects in King County, were trapped in the downturn of 2008. With their respective credit lines suddenly chopped by nervous banks, developers got stuck between the proverbial rock and hard place. The banks had loaned the money to buy the land, commence permitting, engineering and construction, but with the Feds breathing down their neck wouldn’t lend them enough to finish the lots, never mind build houses. Factually, there would be no buyers for the finished lots anyway, as the initial land cost basis was too high to support market conditions, and builders were no better at securing construction loans in that climate than they were development loans. So the banks ended up owning lots and lots of lots, and no buyers…at least until recently.
- In steps the well-funded, publicly traded national builders. They don’t need construction loans, they use their own money, and so they’ve gained a significant foothold in the Northwest market by virtue of economic strength, not design or desirability.
In the past national builders such as US Homes and Standard Pacific visited long enough to burn through some of the best real estate in the State e.g., Education Hill in Redmond and much of East Bellevue, building volumes of cheap housing when the land was inexpensive in the late 60’s and 70’s. Did they arrive at the end of a local downturn? Yes. Did they leave when the economy healed and building became competitive? Yes.
This is not to say that Toll, Pulte, D.R. Horton and the rest will do the same. (Centex tried like heck to get in the swing ever since it absorbed the assets of Hillis Homes in the early 80’s. But as hard as they tried, and with substantial economic horsepower, they never effectively penetrated the Eastside market. Their land acquisition timing was very poor, and their house plans weren’t much better, ill-suited to the tastes of the local market with cheap looking low-pitched roofs and little respect for decent interior finishes and landscaping.) The founder of CamWest, Eric Campbell, remains the guiding hand for Toll Brothers locally and quality remains good. D.R. Horton and Pulte have taken up the approach of Quadrant homes, our locally grown specialist in crap shacks.
You are wondering just what is the point of this article? If you want a new home, regardless of size or price, you are now stuck with postage stamp lots. It doesn’t matter if you are willing to go to Snoqualmie Ridge, Monroe, South Snohomish, or even wait for the new mega development in Black Diamond, the lots are going to be small. And with the small lots, new Northwest Traditional homes are no more. So if you own one, take very good care of it, as it’s value is going to rise significantly relative to the rest of the Eastside housing stock. You are not going to compete with new construction because new construction will always be inferior in the eyes of buyers that appreciate good architecture and a little elbow room. If you are desirous of a quality Northwest Traditional style home on a decent sized lot, at least big enough you can’t hear the neighbor’s toilet flush or smell what they’re having for dinner, buy sooner than later because those values are going to steadily increase to the point you may find that they are out of your price range, causing you to settle for a small lot which will never appreciate at the same rate, regardless of how new it is and how fancy the house and finishes are.
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