Last Days of Eichler Homes

A great building machine hits rock bottom—when Eichler's urban high-rise gamble toppled his company

joe eichler 1963 Joe Eichler's fierce independence and dedication to principle, even to the point of defending design more strongly than his architects, were traits that made his homes distinctive. The company and its product were outgrowths of Eichler's expansive and uncompromising personality, and his success depended in large part on his deep personal involvement in the details of the everyday business.

What made Eichler Homes unusual—the devotion to design, and the insistence that product innovations should come from within the company and from the architects, rather than from his industry's more typical combination of company consensus and market research—were the qualities that made the company a leader in the field. But, ironically, those same traits would eventually cause Eichler Homes' downfall.

The end came as Eichler was branching out beyond the suburban formulae that had brought him such rich rewards in his first ten years. Anxious for new challenges, Eichler was perhaps complacent with an operation that by 1960 was a well-developed system producing 900 homes per year. His son Ned suggested he might have become even "bored" with the repetitive pattern of his suburban developments. Eichler's ambition to-explore-new prospects-drove him to enter several new markets in a relatively short period of time—all involving complex urban conditions in San Francisco—just as the local real estate market began to soften. The company became overextended and its decline came on with surprising quickness.

Eichler's entry into the urban market was typically enthusiastic. Motivated by his desire for new experiences, but also by his strong sense of social purpose, Eichler took on a remarkably diverse set of projects—from high-rise luxury apartments to subsidized housing. Beginning in the early 1960s, Eichler Homes developed the lower middle-class Laguna Heights complex, in the Western Addition redevelopment area; the Geneva Towers project and townhouses in Visitacion Valley; Central Towers, a twin-tower project in the city's notoriously down-and-out 'Tenderloin' district; and the 32-story Eichler Summit apartment building, arguably the most luxurious building of its day, at 999 Green Street, on prestigious Russian Hill.

Laguna Heights Unprepared for the complexity of San Francisco development, Eichler quickly found himself in financial trouble. The scale of these multi-unit buildings involved longer completion schedules, complex permitting processes, and considerably different construction methods from his suburban subdivisions. Most significant perhaps was the extended schedule for returns on investments. While the suburban developments could be sold house by house as each was finished, the large-scale urban projects were typically rental properties, and the multi-unit buildings needed to be finished in their entirety before a single unit could be rented.The rental market in San Francisco, in 1963 and 1964, when the first buildings were completed, was weak, and Eichler Homes found its income was falling short of expectations. Eichler had tried to balance his construction costs at the Laguna development by selling its low-rise apartments as co-ops while the high rise was being built, but the sales costs were insufficient to offset the continuing construction. Charles Slutzkin, whom Eichler had hired to assist on the urban projects, made a financial appraisal of the Laguna development, and found that even with full occupancy the rents were insufficient to break even. Fortunately, the Summit was soon completed, and its near-instant status as one of the best new properties in the city allowed Eichler to charge the highest rates in its class. However, the building had been an ambitious design, and construction costs ran over by some two million dollars, a huge sum for a company of Eichler's size. In addition, the rental market in all classes was slow and total incomes were not keeping up with costs. In 1966, the income from the building would help keep Eichler Homes afloat for several months, but only because the company was able to forestall their mortgage payments.