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March 30, 2010

Buying into Napa

Lush landscapes, a terrific climate, America's best wines—who wouldn't want to live in Napa Valley? But paradise, of course, comes at a price.

Sometime between the breakup of the Beatles and the beginning of the Roaring Eighties, the American Dream was reimagined by a certain caste of particularly industrious Baby Boomer. Rather than toil a lifetime before finding Arcadia, they decided they wanted Arcadia now. And so, armed with their work ethic and entrepreneurial instincts, they left the cities and retreated to "the land." This land—from Dutchess County, New York, to Door County, Wisconsin—was seldom more than an hour or two from big, cosmopolitan cities, which meant they would always be near the cultural and financial sustenance they'd just abandoned.

But of the many communities the Boomers discovered and remade into cultural and lifestyle havens, none better epitomizes their sensibilities and tastes than Napa Valley. A mere hour from San Francisco, cradled in the lush, low-rise Mayacamas Mountains, it boasts not only a handful of well-preserved small towns (including St. Helena, Yountville, and Calistoga) but a famously agreeable California climate and row upon row of trellises heavy with Sauvignon Blanc, Chardonnay, Zinfandel, Merlot, and Cabernet Sauvignon grapes. Nevertheless, for decades Napa, the seat of America's wine producers, was a well-kept secret; when Robin Williams and Francis Ford Coppola moved to the region in the 1970s most Americans hadn't even heard of this loamy valley.

No longer. Today Napa is hotter than it's ever been, admired as much for its peerless lifestyle as its luscious scenery. Indeed, the region has become something of a glorious oddity, a place where heiresses live alongside sixth-generation farmers and agriculturists. It's this unusual mix of glamour and grit that gives the area its unique and irresistible charm. Which means that, on any given afternoon, one of the five million annual visitors to the valley looks up from his pâté en croûte at French Laundry or his oxtail ragout at Tra Vigne, or pauses while swirling his glass of barrel-fermented Viognier, and wonders: What exactly would it be like to live here?

But before you pack up everything and start house hunting in St. Helena, the idyllic town at the valley's heart, remember: Your daydream was—and is—shared by thousands of others. The Boomer lifestyle pioneers of the seventies and eighties were followed by the nineties Silicon Valley stock-option set, whose cumulative effect on the housing market was predictable. And no one was immune to the market's febrile climb, not even longtime residents. Last December Coppola himself paid $31.5 million—a record $375,000 an acre—for the J.J. Cohn estate adjoining his Niebaum-Coppola winery and vineyards.

Such prices belie the fact that the valley is suffering from a set of conditions that would transform any other community into a buyer's market. Prices for California wines—which increased by 50 percent during the last decade and during the boom soared past $100 a bottle—are now under intense pressure from Australian and South American imports and wine made from cheaper grapes grown in California's Central Valley. Then there are the prices of the grapes themselves, which have plunged as much as 75 percent over the past two years. All of Napa's wineries have been affected by the bust, but the most vulnerable are the dozens of boutique wineries (many of them less than a decade old and financed by tech fortunes), whose extravagant bottle prices are meant to compensate for their minuscule output. "A lot of these guys put in vineyards or sourced grapes from established vineyards thinking they could sell a hundred-dollar bottle of wine at the drop of a hat," says Pam Starr, a respected winemaker and co-owner of Crocker Starr Wines who has worked and lived in the Napa Valley for 16 years. "Well, that time is gone."

But even though Napa's wine bubble has burst, the valley's appeal and allure remain as strong as ever; the valley is, after all, populated by its share of romantics. Though real estate prices have retreated somewhat from their Olympian heights and some prime properties are trickling onto the market, Napa's overall housing market hasn't faltered. "There's never been a bargain here," says Barbara Lai Allen, a St. Helena real estate agent, "even at a time like this."

Real estate in Napa has traditionally been divided into two categories: properties on the hillsides and those on the valley floor. Both can be found with and without working vineyards, "a big selling point," says Allen. Then there are the weekend houses, one of Napa real estate's largest subcategories. What every Napa hopeful covets, it seems, is a house in the heart of St. Helena, where everything you've dreamed of (including a glass of Sangiovese with your burger and fries at Taylor's Automatic Refresher, a gentrified drive-in favored by wine critic Robert Parker Jr.) is yours, as long as you understand that you'll probably have to commit significant capital to buy a house with less than ideal proportions and appointments, as well as some substantial aesthetic shortcomings—in other words, your dream house will have to be created, not discovered.

Touring St. Helena real estate means, in some parts of town, a drive down residential blocks lined with the sorts of small, unremarkable houses on tiny lots that can be found in small, unremarkable towns across America. But because this is St. Helena, these early-20th-century cottages and bungalows and flat-out fifties-style ranches—which in other towns would be listed under euphemisms like "handyman special!"—start at $600,000.

Often these homes are torn down by their new owners and rebuilt from scratch, at a cost that can exceed the purchase price. "This house sold for $700,000," says St. Helena real estate agent Barry Berkowitz, pointing at yet another period-perfect brown bungalow with gingerbread trim. We are puttering through St. Helena in his SUV. "The guy totally redid everything and added on. It sold for $1.9 million a few months ago."

St. Helena houses that have already had their facelifts start in the low seven figures. "If you want something nice in St. Helena, it's going to cost at least $1.8 million," Berkowitz says. "I sold one for $1.85 million. It doesn't look like a lot of house, but it's a three-bedroom, three-point-five bath, has a swimming pool, gated, all redone." At the end of a leafy street sits the sort of rambling, pseudo-contemporary affair found by the bushel in the lesser suburbs of Connecticut. "This is on the market for $2,450,000," Berkowitz says, leading the way into the backyard. "It's a little high. It should sell for $1.9 million."

The general rule of Napa Valley real estate is that prices, and desirability, rise as you travel "upvalley" from the city of Napa on the famously traffic-clogged Route 29 through the towns of Yountville, Oakville (which is more of a crossroads than actual town), and Rutherford toward St. Helena. Prices are sometimes gentler in Calistoga, a less gentrified town north of St. Helena known for its mineral baths, although one property outside the town on a piece of choice land—a six-bedroom, five-bath, 6,000-square-foot estate on seven acres with swimming pool and guesthouse—was listed at $4,450,000. (In addition, Calistoga Ranch, an Auberge resort just south of Calistoga that will open early next year, is selling shares in residential properties.)

Yountville, one of Napa's southernmost towns and wine appellations, is home to Bistro Jeanty, Bouchon, and French Laundry. The notion of living within walking distance of three destination restaurants is compelling, although as in St. Helena not all of the houses fulfill the Napa fantasy. "Yountville was built as a farm laborer's camp," says Cindy Sparks, a broker for Coldwell Banker in Napa. "You're talking tiny houses on lots as small as four thousand square feet." (A 1,250-square-foot, three-bedroom, two-bath cottage was recently listed at $795,000, reduced from $810,000.) Heading north from Yountville are the Oakville and Rutherford appellations, home to, respectively, the Robert Mondavi and Coppola wineries and some of the valley's most fetching vineyards. Homes on the valley floor, Sparks points out, often cost more not only because they may be situated on hundreds of acres—a result of zoning laws that prohibit subdividing existing farmland for housing—but because the valley can be quieter than the hills, where traffic noise drifting up from the Silverado Trail can reach the loftiest of trophy houses. A 3,000-square-foot valley-floor house north of St. Helena with a swimming pool and vineyard on 35 acres recently sold for $6.3 million.

When house hunting in Napa, it's also useful to remember that buying a property with a vineyard means committing to a certain level of engagement with the region's rules and agricultural realities. Homeowners with small vineyards typically entrust the maintenance of their grapes to a freelance manager, who will harvest the fruit and sell it to the wineries; this is usually a break-even proposition.

Buying on the hillsides, which offer views of the vineyards and distant peaks, presents a different sort of challenge. In 2001, after a few years of frantic hillside development, Napa County's board of supervisors passed an ordinance that essentially made it impossible to build large hillside houses visible from any of the valley's major roads. A subsequent ordinance requires special permits to plant vineyards on slopes of more than five percent. "If you're buying an existing home in the hills, you will probably have few problems," Berkowitz says. "But if you're buying land and want to build, you've got to know before you close on a piece of property that you can do what you want with it."

New restrictions aside, the hilltop prices are, not surprisingly, as lofty as the location; recently a 5,000-square-foot home on 39 acres on Auberge Road, above Auberge du Soleil—which itself has feudal views of the Rutherford appellation—was listed for $5.9 million. And it's also worth remembering that building from scratch in such a heavily regulated environment can be a lesson in perseverance—and patience. Vacant lots are scarce and still extraordinarily expensive. Sparks recommends instead finding an existing house that can be renovated or torn down. Such a property will have an existing well and septic field, among other conveniences, and be less susceptible to bureaucratic red tape. "The criteria are less stringent," she says.

So yes, it's still difficult to find a place in Napa. But the vicissitudes of real estate aside, it's important to understand something about Napa's culture and sociology before calling the real estate agent. Unlike many other lifestyle destinations, Napa is also an industry town, one in which wine dilettantes, enthusiasts, and tourists rub elbows with serious winemakers. And although all the groups manage, for the most part, to coexist in fairly uncontentious harmony, longtime residents remain circumspect about the flood of trophy houses and amateur vintners who, they fear, have already transformed the valley into something unrecognizable.

Cathy Corison, the founder of Corison Winery, moved to the Napa Valley 28 years ago. Dressed in a plaid shirt over black trousers, shod in boots that have carried her up and down the rows of her acclaimed Cabernet Sauvignon grapes, she seems the embodiment of what the French call terroir (meaning the character of a wine, or in this case the winemaker, is linked inexorably to the soil the grapes are grown in).

"I love it here," says Corison. "I'm a biologist and a naturalist, and just watching the bluebird out my window when I'm working . . ." She glances out the window of her office at the winery, which her husband designed to resemble a turn-of-the-century barn. "I think it's culturally and personally a very grounding thing."

Pam Starr has also been making wine for most of her adult life, most recently for a handful of small, prestigious Napa labels as well as her own Crocker-Starr, a joint venture with one of the heirs to California's Crocker bank fortune. Today she is steaming south on Highway 29 through endless vineyards, each row headed by a rosebush. Her destination: the Napa Wine Company in Oakville, next door to Napa's famed general store with its painstakingly preserved Coca-Cola sign. Here she checks up on several barrels of her Chardonnay, Cabernet Franc, and Cabernet Sauvignon. After decanting a sample of her Cabernet Franc from a barrel and appraising its notes of "chocolate" and "tobacco," Starr continues south on the Silverado Trail, the two-lane road that runs parallel to Highway 29 and is favored by locals.

She pulls off the road between Oakville and Yountville and parks beside an unprepossessing farmhouse owned by Paul and Suzie Frank, proprietors of Gemstone Vineyard. The Franks sell grapes from the vineyard bordering their farmhouse to some of the most prestigious labels in the valley; they also produce 400 cases a year of their proprietary wine. (Robert Parker Jr. characterized the '99 Gemstone as "power allied with elegance" and awarded it 93 points.)

The Franks are an inspirational—and exceptional—case study for would-be vintners. In 1992, the year they left Los Angeles (where Paul was in the jewelry business) and bought the farmhouse and vineyard, the market conditions for both wine and real estate in Napa were almost identical to today's. Shortly after closing on the house and vineyard, the Franks attended a seminar in San Francisco. "The keynote speaker," Paul recalls, "talked about the oceans of unsold wine that were in the pipeline—not unlike today—and he literally said that if you were a grower and you didn't have contracts for your grapes, which we didn't, then there was no market."Afterward the Franks sat at their banquet table, stunned and terrified. Then, Paul says, he was introduced to "some things that are unique to the Napa Valley, one of them being the way we were welcomed into the community."

A couple approached and asked what was wrong. Paul told them about the farmhouse, the vineyard, the life savings. "They said, 'That just means you bought your vineyard at the right time. We heard the same thing when we bought ours, and it was the best buy we ever made.' " When the Franks got back to the farmhouse there was a message from the couple, who turned out to be Tony and Jo Anne Truchard of Napa's acclaimed Truchard Vineyards, inviting them to dinner Saturday night. "They had invited all their best customers so we could meet them," Paul says, still marveling at the memory. "When we came home from that I said, 'Honey, we're going to be okay.' " (The Franks did more than okay: The wines from Gemstone are poured in prime restaurants like New York's Gotham Bar & Grill, and there's a waiting list to get a crack at the next vintage.)

After having sampled some '99 Gemstone, Pam Starr is once again behind the wheel of her truck, charging up the rutted track leading to Frank and Kathy Dotzler's True Vineyard, near the top of the Howell Mountain appellation. She gets out of the truck and shields her eyes. The afternoon sun is low over the Mayacamas, turning everything—the trees, the chalky soil wine grapes so favor, the rusted iron stakes supporting tentative vines—a rich Tuscan red. It is, literally, a million-dollar view, one that every Napa resident, whether newcomer or fourth-generation, treasures. Living in Napa is, after all, an unparalleled privilege.

"It doesn't even matter what you have or don't in this valley," Starr says. "The valley brings so much to your life that you have what everybody else has. It could be a rainy, dismal day—and anywhere else in the world it would be a rainy, dismal day—but here, it's phenomenal."

The Price of Paradise

Napa Valley hopefuls tend to look for a house overlooking a vineyard, a house with a vineyard, or a house in town, close to the valley's best restaurants. Here are typical listings from each category.

IN THE HILLS $6,750,000
Located five minutes from St. Helena on six acres above the Silverado Trail, this 5,800-square-foot Tuscan-style estate has four bedrooms, 3.5 baths, a 4,800-bottle wine cellar, parking for nine cars, a swimming pool, two spas, and a 600-square-foot guesthouse. There are views to adjacent vineyards.

ON THE VALLEY FLOOR $4,290,000
Napa Valley's floor is scored with several roads that connect Route 29 to the Silverado Trail. This 5,000- square-foot, three-acre estate is located off one of these crossroads, just south of St. Helena. It features a swimming pool, guesthouse, vineyard, tennis court, olive trees, pond, and mature landscaping.

IN YOUNTVILLE $849,000
Located in relatively laid-back (and affordable) Yountville, this new 1,700-square-foot, three-bedroom, 2.5-bath Craftsman-style house on 0.16 of an acre has a fully outfitted kitchen with granite countertops and a deck, which offers a view of the picturesque creek that runs behind the property.

Sonoma Rising

Ten miles west of Napa Valley sits the once-sleepy SONOMA VALLEY, which was formerly known as much for its fine wine (the Arrowood, Jordan, and Chateau St. Jean wineries call Sonoma their home) as for its 4-H Club. Never mind that Sonoma predates Napa as a winemaking force, or that its hill-and-dale topography is every bit as aesthetically satisfying—Napa, with its crush of celebrities and vanity wineries, always got all the attention.

Not that this bothered Sonomans, who treasured their under-the-radar status. But today Sonoma is everyone's best-kept secret. Suddenly, hamlets like Kenwood and Healdsburg are playing host to thousands of lifestyle commandos once content to tie up traffic on the other sideof the Mayacamas. Now, Sonomans fear, their little patch of paradise is turning into—you guessed it—"another Napa Valley."

World-class hotels and spas have opened or are on the way, foodies carry on endlessly about the valley's artisan goat cheeses, and visitors who once had to bunk at bed and breakfasts and roll the dice for dinner can avail themselves of the HOTEL HEALDSBURG and its DRY CREEK KITCHEN (run by Charlie Palmer, chef of New York's Aureole) as well as Healdsburg's RAVENOUS (and its charming vest-pocket satellite, Ravenette) and BISTRO RALPH. Auberge Resorts, parent of Napa's Auberge du Soleil, is planning CAMPAGNA, a 50-room resort and winery outside Kenwood. THE KENWOOD INN AND SPA has also recently undergone a major renovation and upgrade.

Sonoma real estate prices are already Napa-like. According to Doug Del Fava, an agent with Frank Howard Allen Realtors in Kenwood, homes in the 900-to-1,500-square-foot range in Healdsburg (Sonoma's equivalent to Napa's St. Helena) start at around $350,000. A 1,350-square-foot house on a quarter-acre lot in Kenwood sold for $590,000. A 2,700-square-foot house with a guest cottage on 40 acres on West Dry Creek Road outside Healdsburg sold for $1.25 million.

Del Fava, who grew up in Healdsburg and can remember when the site of Hotel Healdsburg was home to a Rexall, says Sonoma Valley residents accept the inevitability of development and tourism but are determined to contain them. (A county referendum to widen the nearby 101 freeway was defeated by voters.)

"We know there's got to be growth," Del Fava says. "Our attitude is: Let's try to have it make sense and not dilute the quality of what's going on here."

Michael Walker covered preservationist architects Leo Marmol and Ron Radziner in the March/April issue.