Local builders having to get creative to build luxury homes on increasingly small plots of land

Mark Costello, owner of Costello Design, recently finished work on a 1,500-square-foot spec home built on a plot of land that allowed for a maximum building width of only 15 feet. By adding a second story and making creative use of the space, Costello said the home is a good investment, and at a sale price of $369,000, is already drawing interest.

   As Bellingham continues to grow and buildable land becomes scarce, homebuidlers such as Mark Costello are forced to become more creative.
   His company, Costello Design, recently completed construction on a spec home off of South Lake Samish Way, overlooking Fairhaven and Bellingham Bay.
   The plot of land on the hill was so small that the house is only 15 feet wide, but Costello was able to generate 1,500 square feet of space for the home by adding a second story, which greatly enhanced the views for the future homeowner.
   By going upward, Costello was able to have two bedrooms, two bathrooms and several areas that could be used for an office or study.
   The home was completed in May. With a sale price of $369,000, the home has already generated some interest from homebuyers, and it has turned into a worthwhile investment.
   “This home is a nice alternative to condo living,” Costello said. “There isn’t much room for a yard, but the entire building is yours.”
   Well-built multi-story homes that maximize space are becoming more common in Bellingham, and while that is helping create the urban density the city is looking for, it is not slowing the big rise in housing prices.
   The problem, as Costello sees it, is it is cost-prohibitive these days to build a new home that most first-time homebuyers can afford.
   “The lower-income new homes just don’t exist around here any more, because you can’t justify the costs to build them,” Costello said. “If you are paying $150,000 for an empty lot, which is the going rate in Bellingham these days, combined with the recent price hikes in permit fees, how can you build an affordable home? You can’t do it for under $200,000.”
   While Costello can certainly stay busy building higher-end new homes (his company averages around eight new homes a year), it concerns him that Bellingham is suddenly becoming off-limits for first-time homebuyers.
   “The market has gone so high that affordable housing really no longer exists,” Costello said. “It won’t exist until prices come down, and it is hard to see how that will happen soon.”
   Costello said the market for a custom-built home has also changed. A few years ago, the majority of his clients were local people. Today, about half of his clients are people moving into the area.
   “It’s impressive how many different places people are coming from,” Costello said. “You see more people coming from California and Nevada, but you also get people from all over the United States.”
   While costs for new homes continue to rise, at least it has resulted in better planning because developers can’t afford to waste valuable empty space, said Fred Wagner, an architect at Grinstad &Wagner.
   “We are seeing more people coming in with the intention to master plan an entire site, instead of doing things piecemeal,” Wagner said. “Even so, almost all of the new homes we are being asked to design are two-story buildings, because lots are much smaller now.”
   Smaller lots haven’t slowed down the average prospective home buyer, however.
“With so many new people moving into the community, they aren’t bothered by high-density planning,” Wagner said. “After all, they most likely saw it from the community they moved from.”
   Wagner said he suspects higher densities are something everyone will need to get used to.
   “Single-family home subdivisions are going to become much more difficult to do, because city policies don’t encourage that right now,” Wagner said. “However, people still want the single-family subdivisions, so I suspect we’ll continue to see those projects built out in the county. In the city, I think you’ll continue to see more multi-story homes, along with concepts such as townhouses, even replacing some existing single-family homes.”

Big-home construction isn’t slowing down
   While smaller high-end homes are becoming more common inside the city limits, large homes are still beign built quite often in the county.
   “Homebuilders are often being approached to build 4,000-square-foot homes,” Costello said. “For most of my buyers, this is their second or third home, and the children are getting out of the house. The ironic thing is the house is getting bigger as their family gets smaller. Many of these families sold their home in a city for a large profit and can afford to buy a bigger home, even though the kids are out on their own.”
   Whatever the size of the lot in the city or in the county, many are trying to maximize the size of the building.
   “With the cost of infrastructure rising, whether it’s for things such as stormwater or permit fees, it puts more pressure to try and get the most bang for your buck,” Costello said.
   These homes are being built with all the bells and whistles as well, he said.
“We are certainly designing and building nicer homes than in the 1970s and 1980s,” Wagner said. “It’s creating nice, but very expensive homes, which isn’t a problem because there is always a buyer if the home is being sold. It just isn’t good for the first-time homebuyers.”



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