Oregon Vineyards Draw Out-of-State Buyers

The drought in California and affordable acreage are prompting explosive growth in the market for Oregon vineyards. Home buyers here opt for homes that blend into the landscape.

By NANCY KEATES
Oct. 15, 2015 9:51 a.m. ET

From a single-wide trailer to a 3,000-square-foot contemporary home overlooking more than 60 acres of vineyards, Jim Bernau and his Oregon winery have come a long way over three decades.

Mr. Bernau, owner of one of the state’s top-producing wineries, Willamette Valley Vineyards , spent about $750,000 in 2013 to build a custom home in the Salem Hills area of Oregon. The home has walls of glass, an enormous master suite and two guest suites.

“Our dreams have gotten bigger,” says Mr. Bernau, 62, who shares the home with his fiancée, Jan Green. In the past month they have raised more than $4 million in private funding and plan to open two new wineries.

Since starting out in 1983, Mr. Bernau has witnessed the explosive growth of winemaking in the state. Oregon ranks No. 3 among U.S. wineries, behind California and Washington, according to the National Association of American Wineries, a trade group.

Seventy-one wineries opened in Oregon in 2014, bringing the total to 676—an all-time high and a 12% increase over 2013. The drought in California and rising prices for Pinot Noir grapes are attracting out-of-state buyers to Oregon, where the land is seen as more affordable and rain is more plentiful. Prime acreage for Pinot Noir vineyards in Oregon runs about $45,000 to $65,000 per acre, compared with Sonoma County, where it can cost up to $125,000 an acre, according to Bacchus Capital Management, a San Francisco-based private-equity fund.

As recently as five years ago, a typical visit to Oregon’s Pinot Noir region would entail greeting the owner of a top-rated winery in front of an old ranch house and heading to the basement or garage for a tasting. That still happens. But now there are about 275 tasting rooms, some that rival the sophisticated offerings in California’s Napa Valley. And stylish vineyard homes are increasingly popping up in former farmland.

“English cottage” was how neighbors referred to the house that came with the vineyards on property that Donna Morris and Bill Sweat bought in 2006 for $1.2 million, according to public records. That description was “way too cute” for what was a rundown 1930s farmhouse in Dundee, says Ms. Morris.

Ms. Morris, 56, and Mr. Sweat, 57, left careers in finance in Boston and chose to make Pinot Noir in Oregon because of its climate, artisanal spirit and a collaborative wine community. First they spent $2 million building a contemporary tasting room for their Winderlea winery that overlooks the Willamette Valley and has a stellar view of Mount Hood.

Then in 2010, they tore down the farm house and built a 2,400-square-foot, three-bedroom home that includes a large wine cellar. The contemporary home, which cost $600,000, is a better fit for their silk- and linen-covered sofas, daybeds and chairs custom made for their loft in Boston by noted interior designer Frank Roop.

The median price of a home in Dundee, Ore., the most sought-after area for Oregon wineries, is $251,300, up 6% over the past year, according to real-estate website Zillow. There hasn’t been much new home construction since 2008, says Peter Bouman of Dundee, Ore.-based Oregon Vineyard Properties, who adds that most of the properties are bought for the existing vineyards rather than the house. Much of the interest in the past year has been coming from buyers outside Oregon, most notably California.

Now that their winery gets over 10,000 visitors a year, the house has become a full-time tasting room. And the cabins, each about 500 square feet, are now used exclusively for private tasting parties. The couple is currently building a 2,500-square-foot, two-bedroom house that is expected to be finished by May. Construction costs should total about $750,000, contractors estimate.

All of the buildings are designed with open spaces and lots of windows and sliding glass doors; yet the exteriors blend into the landscape of old barns. “We didn’t want anything ostentatious,” says Mr. Soter, 62 years old.

Bill Stoller, who turned his family’s old turkey farm into one of Oregon’s top wine producers, is a traditionalist when it comes to architecture: The 6,000-square-foot stucco-and-tile house he built in 1999 has lots of columns and sash windows. Three years ago, after a rapid growth in the number of visitors to his Stoller Family Estate winery in Dayton, Mr. Stoller built a new tasting room that has a “radically different” style. “It’s more out of ‘Star Wars’ than Oregon,” he says. The flat roof, which overhangs the glassy front of the building, is angled toward the sky and covered in solar panels.

He initially wanted more like what’s typically found in Oregon, but heeded the urging of his staff. The building’s sustainable elements—reclaimed materials and energy efficiency—convinced him. “It’s good for what’s happening now,” Mr. Stoller says.

And what’s good for wineries is good for related businesses. Last year, Scott and Keri Davis went wine tasting about a half-hour from their home in the Lake Oswego suburb of Portland, Ore., and noticed that there weren’t many luxury-lodging options, aside from the Allison Inn, where rates range from $380 to $1,200 a night. In September, they and another couple paid about $500,000 for a 4-acre vineyard property with a ranch house that has a walkout basement. Mr. Davis, a 46-year-old mortgage banker, and Mrs. Davis, a 44-year-old interior designer, are planning to invest a few hundred-thousand dollars to renovate it into high-end accommodations that rent for $600 to $800 a night.

Sustaining the booming wine economy means building more elaborate tasting facilities for visitors. “You’ve got to put the fannies in the seats,” says Peter Kaufman, a co-founder and managing partner of Bacchus Capital Management. The firm bought Oregon’s Panther Creek Cellars in 2013 and built a new tasting room in Dundee last year.

Some long-timers worry that the Willamette Valley is going to become a commercialized tourist destination, overrun with massive Tuscan-style villas. Yet despite the shifting landscape, there are still plenty of dilapidated barns and ranch houses. And the vast majority of Oregon winemakers still run small- or medium-size businesses and market themselves as artisanal producers.

“It’s all about the quality of the wine,” says Evan Roberts, an owner of Crowley Wines.

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