WOODINVILLE, Wash.—Five years ago, Quadrant Homes churned out starter houses in the Seattle area with an average sales price of $269,000 and the marketing slogan, “More House, Less Money.”

But facing a debt-burdened middle class and rising land prices, Quadrant has since exchanged entry-level buyers for customers free of credit worries and ready to splurge. Its new slogan, “Built Your Way,” accompanies homes with vaulted ceilings and gourmet kitchens that last year sold for an average price of $420,000. “We used a lot of...