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San Juan Islands: The Hottest Luxury-Home Market in the Country

The Wall Street Journal. logo The Wall Street Journal. 3 days ago Nancy Keates
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The remote archipelago off the coast of Washington State aims to preserve its simple, low-key character amid spiking home prices.

The San Juan Islands, an archipelago off the coast of Washington State long cherished for its remoteness and simplicity, is now the hottest luxury real-estate market in the country.

The priciest 10% of the area’s real-estate market rose faster last year than any other U.S. county, according to Realtor.com. The median home value in San Juan County is now $444,300, up from $377,600 in 2014, according to real estate marketplace Zillow. Right now there are four homes priced at $15 million or higher for sale, including one for $20 million.

Former Amazon executive Rick Ayre, the owner of the $20 million house, says the price reflects the property’s distinctiveness. Near San Juan Island’s main town of Friday Harbor, it is 8,000 square feet on 98 acres and features 765 feet of waterfront, a runway, three ponds and an indoor pool. Mr. Ayre bought the slightly curved house in 1999 for around $6.3 million and spent about $3.5 million renovating it. Even with minimal landscaping (“you can’t own the land,” is his philosophy) the garden alone cost about $1 million because of the fencing and irrigation.

Some locals worry that the low key San Juans could become overpriced, overdeveloped and overcrowded. The growth in demand has been fueled in recent years by an influx of high-tech companies to Seattle, where soaring home prices make the San Juans look like a bargain. A 2000 study commissioned by the county’s planning department concluded that, due to similarities in size, scale, access, environment and trends, the San Juans could well end up like Nantucket or Aspen, places where the report said wealthy purchasers of vacation homes have changed the character of the communities and placed substantial pressure on residents. “We’re trying to figure out how not to be like that,” says Rick Hughes, chair of San Juan County Council.

Others counter that because the Pacific Northwest lacks the density of the Northeast it won’t turn into another Nantucket. They say the islands’ economy has just started recovering and growth has been gradual. They characterize the mega-pricey listings as anomalies: The priciest sale in the San Juans since 2001 was a property on Orcas that sold for $11.1 million in 2002, according to Merri Ann Simonson, managing broker at Coldwell Banker San Juan Islands.

Representatives for the four listings say they’re priced to sell. “We haven’t seen sales go into the top realm yet, but this might be the year that changes,” says Moya Skillman, an agent with Team Foster at Avenue Properties who is the sales agent for a $19.98 million home.

The home, finished in 2007, took about three years and about $12 million to build. It’s currently for sale for $10 million.

The home, finished in 2007, took about three years and about $12 million to build. It’s currently for sale for $10 million.
© Wiqan Ang for The Wall Street Journal

Jennifer Johnsen Cameron, vice president of Brand Development Realogics Sotheby’s International Realty in Kirkland, is the listing agent for rock musician Steve Miller’s house, listed at $14.8 million; she says the replacement cost of his house is “significantly higher” than the price. Mr. Miller said he picked the island of San Juan because he travels a lot and it has the easiest access. His house has been on and off the market since 2014 for $20 million and $17.5 million before settling at its current asking price.

Mr. Miller, 73, bought the multiple parcels in 1996 for $4.35 million after many years of sailing by the island on his way to Alaska. The property that’s for sale has an 11,686-square-foot, stone-and-wood home on a total of about 40 acres. It also has a dock with deep-water moorage. “For a guy like me, who does 70 cities a year, I needed somewhere I could get in and out of,” he explains.

San Juan County is made up of some 175 islets between Washington state and Vancouver Island, Canada, and is known for its abundance of orca whales and eagles, hiking and kayaking and breathtaking scenery. 

Life on these islands—with a population of 16,339, according to the latest census—can seem like a throwback. Cellphone service is sketchy. There are no chain stores or traffic lights. Jet skis aren’t allowed. Almost every restaurant serves locally grown food. There are still farms that plow with horses and run their farm stands on the honor system. The ferry can get stormed out and the sole hospital has no birthing facility.

The lack of development is a reflection of the area’s remoteness. Only four of the islands are accessible by ferry: San Juan, the largest and most touristy, with the sole airport; Orcas, known for attracting artists and Californians; Lopez, which is flat and rural; and Shaw, which has no restaurants or hotels (and where Bill Gates owns property).

Hardie and Charles Cobbs bought a 1910 farmhouse earlier this year on Lopez Island as a getaway from their main home on Mercer Island. “Lopez is not trendy, it’s not precious. It’s authentic,” says Ms. Cobbs, an artist. She is redoing her house herself in part because she wasn’t able to find any available workers at the time she took ownership of the house.

Until two years ago the ferries didn’t take reservations, which meant people had to get to the dock hours ahead to ensure a place in line. When that changed, “it turned what was a nerve-racking experience into something easy,” says Mark Jenks, 56, an aerospace executive who lives in Kirkland.

As a result, in September Mr. Jenks and his wife Ducksoon Hwang, who had been going to Orcas Island for vacation for many years, bought a four-bedroom, 2,950-square-foot house on 1.9 acres on the water with a private cove for $1.1 million on Orcas. They picked the San Juans because they wanted somewhere “organic and authentic,” says Ms. Hwang.

Michael Carter, 74, an attorney and corporate executive, was living in Malibu when he vacationed on San Juan Island; he found it so beautiful he bought two parcels totaling 21 acres in 1999 for $550,000. In 2002 he built a 1,000-square-foot guesthouse where he lived while he embarked on a 10 year, around $19 million project to build a 15,000-square-foot house.

“I’m a perfectionist,” he explains. Though he built it as a spec house, with five bedroom suites and 4,000 square feet of terraces, Mr. Carter has been living there for the past four years. His house first listed in 2015 for $25 million, and last year was reduced to $19.98 million.

It took three years and about $12 million for Kathleen Dickinson and her late husband Ron McDowell to build their house, which was finished in 2007. On 41 acres on Orcas, it is filled with reclaimed wood and intricate architectural details. It first went on to the market in April, 2016 for $11.6 million, and was reduced last year to $10 million, a price she says is under the cost of construction.

As is usually the case with islands, building a home in the San Juans is expensive. Susan Stoltz and David Kau of Stoltz Kau Architects on Orcas say the cost of construction can be as high as 30% more than on the mainland and finding available full-time workers can be tough. One problem is the growing lack of affordable rentals for seasonal workers.

There is an effort under way to preserve land from development. The county’s Land Bank Tax, created in 1990, taxes 1% of real estate sales for buying up land to preserve the natural heritage, while nonprofits like the San Juan Preservation Trust raise funds to acquire and preserve land.

It’s still possible to build a house for under a million dollars: Peg O’Hara and her husband built a house for $600,000 in 2014 on Orcas on 9½ acres they bought for $400,000 in 2006. “We just kept it really simple,” she says of the 1,400-square-foot house.

Write to Nancy Keates at nancy.keates@wsj.com

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