Two Carmel developers reflect on decades in the industry.

To get her first mortgage, Gail Lehman didn’t fill out any application paperwork. Instead, she walked into Carmel Savings and Loan, and spoke to lender Barney Segal about the house she liked, one with turrets at the top of Ocean Avenue.

“He came up to the house and we had tea and he said, ‘OK, you can come down and sign the papers,’” Lehman recalls. “That was the mortgage process. He could read people.”

That was in 1969, the first of dozens of homes that Lehman, an abstract expressionist painter, would flip. She couldn’t find a way to make a living in Carmel then and support her two young kids, so she moved with her family to Los Angeles and worked in commercial design, mapping out hospital remodels and law offices. (“I did a million and a half square feet in six years,” she says, and 2.5 million in total.)

Even before Lehman got into the business, Mitzi Dallas was establishing herself as a successful Carmel housing developer. After her father died, she helped her mom run the family motel in Pacific Grove, where she developed a work ethic – and a vision. “I hated the motel business, it was so confining,” she says. But designing a house, she thought, might be freeing. She bought her first house in P.G. and flipped it, doing lots of labor herself. “I said, ‘Oh this is simple!’” Then came a four-plex in New Monterey, 10 homes at Quail Lodge, three in Pebble Beach – she’s remodeled or built more than 100 homes all over the Monterey Peninsula, though she hasn’t kept count.

Dallas and Lehman sat down with the Weekly in Lehman’s living room to talk about their experience in the industry.

Weekly: This is a really beautiful spot.

Lehman: This is my 36th house, but I haven’t lived in all of them. I’ve only lived in maybe 18 or so. We’ve had a dozen houses in this quadrant of town, close to Mission Trail. It’s a great location.

Dallas: For some reason, I never found a good buy here. It’s because you got them all before I had the chance!

Lehman: You’ve had your share.

Tell me about how you got into designing homes in Carmel.

Lehman: We’d buy a house and fix it up. In L.A., I had a formula: I would paint all the walls stark white and stain all the floors as dark as possible, so the house would look fresh.

I moved back to Carmel in ’76, and three weeks later, I was hired for my first project, the bank building in Salinas [201 Main], then the law firm Hudson Martin Ferrante in Monterey. Attorneys are great clients because they’re image-conscious.

I was doing houses in Carmel, just to accumulate some money, because when you’re raising kids the money goes out very quickly. We’d buy a house and fix it up. I was trying to get old linoleum off a floor, and every day before school I’d say to my son, “Just do this one square, then you can go to school.”

Dallas: They learn they have to work.

Lehman: We both have hard-working sons. That’s the best thing we did, really.

Dallas: Young people who have parents who have been in business have a much better ability to become good business people, because they see what they struggled with. When my son Steve [Dallas, the mayor-elect of Carmel] was born, I stayed home until he went to school, which was difficult for me.

Why?

Dallas: Because I always wanted to be doing something, creating something. It isn’t so much the monetary thing you get out of it, it’s the creativity.

You’ve both been through multiple economic ups and downs, not just the Great Recession. Was that really worse than the others?

Dallas: There was nothing like it, in all my years. In other years, I sold; I never sat [on a house]. Things have changed since 2008. A lot of good people are retired or gone into different professions. You have a very difficult time now to get good [subcontractors].

Lehman: A lot of guys moved to Nevada or Oregon. We had subs who used to be paid $30 an hour, and started asking for $60 or $70 an hour.

Mitzi, you told me you think women bring a different design sensibility to this work. What does that mean?

Dallas: I went into a house the other day and thought, who designed this, holy mackerel!

It just wasn’t designed for a woman. It had wasted space; it didn’t flow.

[A friend and neighbor] once said, “I don’t know why your houses sell right away, and I have to hassle.” I said, “Let’s go take a look.” He stepped downfrom the kitchen to the dining room, and I said, “You can’t do that! A woman will fall.” Men don’t think that out because they’re not in the house. You have to see what the woman wants.

Have you ever had challenges in a male-dominated industry?

Dallas: I never had trouble. [Early on] I learned my lesson: I’m going to run my own subs. A lot of contractors don’t want you to do that. But if you have control, you have quality, and I want quality. Contractors created my success.

It sounds like you both got into Monterey Peninsula housing at the right time. Is it too late for young people to get into the business?

Lehman: One place you can pick up houses is Carmel Valley. They lost more than 50 percent of their value. You’ve got a lot of small houses that are old, in poor condition. And I like Seaside because of the university.

Dallas: But Gail, remember: There’s huge housing development going in at Fort Ord. You’ve got to be careful.

Lehman: But they’ll be new, they’ll be big, and they’ll be much more expensive.

Dallas: But they do it much cheaper than we do.

How much are booming real estate prices here due to water constraints?

Lehman: If desal comes at all, it’s 10 years down the road.

Dallas: When I built at Quail Lodge, we paid all kinds of water fees out there.

Lehman: [The Monterey Peninsula Water Management District] said, if the dam isn’t built, we’ll refund your fees. That was in the ’70s.

Dallas: I didn’t want to say anything, I don’t want to get involved in politics –

Lehman: Your son is mayor of Carmel!

Dallas: Well, I just don’t like politics.

What’s the future of the housing market on the Monterey Peninsula?

Dallas: Always pick Carmel, always.

Lehman: If you can get into Carmel, you’ll be in great shape.

Dallas: Go all over the world and you can’t duplicate Carmel. How can you lose?