Luxury market takes off while estate-worthy land lags behind

Nearly 5,000 new and existing homes sold in the Tri-Cities in 2021.

While most would be considered midrange, a small but growing number carried seven-figure price tags.

The top tier of the housing market tends to get overlooked in an economy where midrange homes – currently considered those in the $300,000-$500,000-plus range – sell in days. About 2,800 of the homes sold last year fell into this category.

But a growing number sold for $1 million or more, according to the Tri-City Association of Realtors, which recorded 35 such sales in 2021.

Within that group, the median price was $1.14 million. The most expensive home closed for about $3 million in 2021, more than twice the highest price paid five years earlier, $1.2 million.

“It wasn’t that long ago that a $1 million home in the Tri-Cities was unheard of,” said Ron Almberg, president of the Realtors association and managing broker for Keller Williams Realty. “Now it’s ordinary.”

Strong demand means more homes will hit the million-dollar range, joining a growing number of custom-built homes that start north of $1 million. It’s a market that is here to stay, brokers say.

A luxury market focus

Coldwell Banker Tomlinson serving Eastern Washington, Idaho and Montana is creating a luxury division to focus on it, said Travis Davis, branch manager. Davis will succeed Almberg as president of the Realtors association.

Davis said the luxury team will include 10 certified specialists. The program includes a 30-day process to ensure luxury properties are properly staged and presented to qualified buyers.

“I believe in it so much and it’s unserved,” Davis said. “If you list with us, we’re going to set up staging, the right photographer and video before marketing. It is a whole different way of promoting.”

While $1 million-plus homes are on the increase, the price tag doesn’t automatically mean “luxury.” Tri-City home prices have appreciated at a rate of 18% to 20% a year. A home worth $700,000 in 2019 topped $1 million in 2021 through appreciation alone.

Davis and Almberg say the luxury homes have extra touches, such as “9-foot doors and 16-foot ceilings.” They command at least $1.5 million and come with a list of amenities, starting with a view.

“Everyone wants a view,” Almberg said.

Almberg said the top end is fueled in part by buyers who sold homes in more expensive cities.

“We have a lot of people coming in with cash,” he said.

While rising prices are pushing more properties into the higher range, Tri-City buyers with big budgets face limits. At the end of March, 101 homes were priced at $650,000, 40 were priced at $750,000 or more and 10 were priced at $1 million or more.

Almberg and Davis say demand isn’t the only challenge.

Available land

Finding a place to build is increasingly difficult in a market constrained by Washington’s Growth Management Act and various regulations around access to wells. The act drew lines around urban areas that work to limit land available for development and drive up prices.

“A few years ago, you could buy a city block for $85,000. Now it’s $135,000 for a postage-sized lot,” Davis said. And larger lots for luxury homes – typically half an acre or more – cost $225,000 or more. Land usually represents 25% of the final cost.

Builders pulled permits for 1,647 single-family homes in 2021, representing about a third of the total market, according to the Home Builders Association of Tri-Cities.

Doug Brown, a custom homebuilder who has won the Parade of Homes show three times, suspects few were for custom homes.

He blames the urban growth boundary for squeezing out custom builders. Production builders snap up land for subdivisions catering to midlevel buyers.

Brown, who normally has eight to 10 custom homes in development at a time, said he has five and the phones have been quieter in the past three years.

When he gets a call, it’s typically to ask if he has “estate” quality land. Prospective customers are often waiting out the current market before deciding to go ahead with a new home project.

“It’s kind of a scary deal actually,” Brown said. “It literally is just a perfect storm in the Tri-Cities.”

Hilltop dream homes

Rosemary Giacci and her husband Fred bucked the trend when they bought 30 acres on a ridge above the Yakima River in south Richland. The property is subdivided into about 50 home sites, with smaller lots to the west and large ones ranging up to an acre-plus to the east.

Badger Mountain is to the south, the Yakima River to the north.

The couple are developers and builders who formed Devoted Builders in 2005 and turned it over to their son, Justin Carroll, two years later.

They were wrapping up a luxury townhome project and looking for their next project – and a place to build their dream home – when Carroll had an idea.

He’d built a home at Sundance Ridge on the same south Richland hilltop. He walked his dog on the undeveloped acres between Sundance and Richland’s Top of the World Park.

The Giaccis were intrigued by the property – centrally located with sweeping views and easy access to retail restaurants and transportation. They contacted the owner and bought it in two parcels.

They’re developing it as Sundance Estates. Devoted Builders is the primary builder. Only a handful of lots are unsold.

Buyers are doctors, business owners and Hanford professionals – “just people who have invested and have sound savings,” Giacci said. One thing they have in common: Most pay cash.

The Giaccis and Devoted Builders constructed Shockley Road and crushed thousands of pounds of boulders on the site into gravel, which they’ve used on site or sold to others. There is no shortage of boulders, but Giacci said it is worth the trouble.

Three homes are under construction on the larger lots, including the Giaccis’ dream home, which she said will be the couple’s last. To her, “dream home” means a well-appointed kitchen and comfortable outdoor living areas.

“I’m a cook,” she said. “I have a working pantry. My pantry will be my prep area. I only will be cooking out in the great room area.” Other touches include his-and-her offices, an exercise room and an outdoor living space with a fireplace.

The dream home market isn’t going anywhere, she said.

“We never thought we’d be in a position that we’re in. We have just been very fortunate and blessed,” she said.

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