Earlier quoted context omitted.
Am I correct in thinking that attic space doesn't count as square footage? There are hardly any attics in Seattle, they've all been converted to cramped living space and everybody stores their crap in the garage. You can put a lot of people in 2500 square feet if you design it well instead of just slapping walls together.
I guess the corollary is that 2500 square feet can be eaten up very quickly if you don't have a good floor plan, which is pretty common.
Another hallmark of these houses are complete lack of trim. They're just big boxes.
A more future-proof way to get around these building code limitations is 1) attic space, and 2) higher ceilings. You get a better feeling of space, and you can get more board-feet of storage in the same footprint.
Seattle is also full of illegal remodels, only some of which a lender will balk at (source: bought a quirky home, the owners had to remove features for us to buy it).