The endangered western home - Special Report

Sunset, May, 1993 by Peter Fish, Daniel Gregory

The most publicized destinations for ex-Californians were the cities of the Pacific Northwest. Indeed, if you believed some reports, every Seattle coffee bar was being overrun by tanned and sunglasses-wearing barbarians from the south. In fact, that view is a tad oversimplified. "Certainly Californians contributed to the rise," says Dick Conway, a Seattle-based economist. "But not to the extent that anecdotal evidence would suggest. In the immediate Seattle area, Boeing's adding 50,000 jobs probably accounted for one-third of our growth." Regardless of the reasons, the rises in population and price were nearly as stunning as they were in California. Between 1980 and 1990, King County's population rose 19 percent, while housing prices doubled.

Just as striking was the rapid growth of cities and some small towns in the interior West. "There was a ripple effect," notes John Tuccillo, chief economist for the National Association of Realtors, "a spillover from California to Phoenix, to Las Vegas, up the spine of the Rockies." Some of these ripples came from city folk cashing in high-priced homes to finance a more relaxed life amid spectacular scenery; that's one reason the population in Montana counties nearest Glacier and Yellowstone national parks grew by 14 to 18 percent, while Montana's statewide growth was but 1.6 percent. Meanwhile, many first-time home buyers flocked to inland cities with low housing costs and reasonable job opportunities: Las Vegas grew from 164,674 in 1980 to 258,295 in 1990; Fresno, California, from 218,202 to 354,202; and Austin, Texas, from 379,560 to 465,622. This rush from the coast continues--in last quarter of 1992, two of the hottest housing markets in the nation were Richland-Kennewick-Pasco and Spokane, both in eastern Washington.

The boom years also changed the house itself. High land prices meant that new homes stood on smaller lots. But the houses grew larger--nationwide, in fact, the average new home is almost 40 percent larger than the new home of 1970. And luxury became paramount. Recalls developer Larry Riggs, of Warmington Homes in Costa Mesa, California, "As we went through the '80s, we became extravagant. You could add any amenity, the buyer would pay. More was better. It was 'Build it, and they will come.'"

And there was another change--in the psychology of the homeowner. Sure, we continued to see our home as a refuge, a haven, our castle. But with prices spiraling up all around us, we also came to see it as a potential gold mine. Buy, sell six months later, buy again: any tyro could become tycoon. In the era of dress for success, this was address for success.

Well, that era's over. Throughout much of the West--and especially in California--the real estate boom seems as passe as a four-year-old power tie. "Normally, declines are gradual," says economist Tuccillo. "But there's been a combination of factors--defense cutbacks, the Japanese recession that stopped the influx of capital from Japan--that have caused California prices to come down quickly." According to the Real Estate Research Council of Southern California, home prices in Los Angeles County have dipped 10 percent since their peak in April 1990; in Palmdale-Lancaster, they've dropped as much as 18 percent. The Northwest has been affected, too: Seattle home prices have flattened out, and cutbacks in the aerospace industry are fueling speculation of further declines.