San Diego Union-Tribune (Sunday)
NEW, DETACHED HOMES RARE New homes are found mainly in pre-existing masterplan communities as building shifts toward density.
Despite feverish demand, new homes are mainly in pre-existing masterplan communities as building shifts toward density
To buy any house in San Diego is an expensive exercise compared to much of the nation. But, the purchase of a new one is on another level. The region is expected to produce around 3,000 new single-family homes by the end of 2021, considered a small number by some experts for a population of 3.3 million. The scarcity means it is common for homes to reach $1 million, and much more than that closer to major job centers.
New homes are expected mainly at two masterplan communities that took decades of planning: Otay Ranch in Chula Vista and Pacific Highlands Ranch in northern San Diego. Much of the other homes coming out are far from job centers in Fallbrook and Valley Center.
Location makes a big difference in price. Pacific Highlands Ranch homes start around $1.5 million; Otay Ranch at roughly $700,000; and around $500,000 to $600,000 in Valley Center and Fallbrook.
Considering the price of a resale single-family home in San Diego County went up by 13 percent in 2020, it might be expected the construction industry would be in a feverish rush to build. Developers said they were limited by the usual issues: Lack of land designated for housing, community opposition to new projects and the specter of regulations.
A positive way to look at it: The industry still managed to build 3,160 homes in 2020 in the middle of a global pandemic, which actually was 117 more than the previous year. It might not meet demand, but it is a lot better than if building stopped completely.
Jimmy Ayala, division president of Tri Pointe Homes, said the company was able to somewhat keep up with demand this year because the company has an advantage other developers don’t — 65 years in San Diego County.
Tri Pointe owns a lot of land in San Diego County that often takes decades to get approvals and begin construction. All of its roughly 464 homes opening this year are in long-term projects in Fallbrook and Pacific Highlands Ranch.
Ayala said his company plans to keep producing single-family projects, including efforts to develop a new community in Otay Mesa. But, he said the writing is on the wall that the single-family home is probably going to become even more difficult to find in San Diego’s future.
“We’re not going to see a lot more single-family detached,” he said. “It is going to be a rare commodity soon.”
There is a practical reason why building is shifting to denser developments, such as condos, townhouses and apartments. The statecertified housing plan, called the housing element, requires communities to build a certain amount of homes each year. So, it is a lot easier to meet housing goals with a large multifamily building than a few houses.
San Diego County’s population is still growing, although much slower in recent years, so denser development can sometimes get new residents closer to jobs in
“We’re not going to see a lot more single-family detached. It is going to be a rare commodity soon.”
Jimmy Ayala • Tri Pointe Homes
stead of living farther and farther east. For instance, a 10-unit apartment building recently finished construction on Georgia Street in University Heights in what was a lot for one dilapidated, roughly 100-year-old singlefamily house.
It is common for San Diego buyers to get a condo first and then move up to single-family — but that step is often being skipped now because of low mortgage rates, said Mauricio “Mo” Perez, a Chula Vista real estate agent and member of the board on the National Association of Hispanic Real Estate Professionals.
“When a buyer sees a 30year interest rate in 2 and change percent, it’s a big incentive to lock something in forever,” he said. “They say, ‘Maybe we go up in price to get that single-family home and won’t have to move up in three to five years.’”
Perez argues there are advantages to a condo or townhouse, despite many buyers’ aversion to homeowner association fees. He says some HOAS are better than others and can take care of maintenance issues, include water bills and amenities like gyms or pools.
Yet he said the ultimate goal for many buyers is still to get into a single-family, traditional home. Perez said they express a desire to actually own land, have the freedom to make changes or put a granny flat in the backyard.
While homes in Fallbrook and Valley Center might be cheaper and work well for a stay-at-home worker, it is no guarantee workers will not be called back to offices when the population is more vaccinated.
Perez said he sees “both ends of the spectrum” from stay-at-home workers. Some are taking an educated guess that they will be at home long-term while others anticipate a return to commuting. He said some are much more willing to buy homes farther away because they aren’t commuting right now, but the main factor seems to be more tied to affordability. He has worked with buyers who decided to move to Riverside County — an even farther commute than many new San Diego communities — because they are priced out here.
Côta Vera
Otay Ranch has been a beacon for new homes as the last major masterplan community approved in the region. It is nearly the size of San Francisco at 25,000 acres and still has space for roughly 16,000 more homes.
It is now set to open a sort of masterplan-within-amasterplan called Côta Vera that would be one of the biggest new communities in San Diego if it was not already part of another large masterplan. Côta Vera is around 400 acres with space for 2,300 homes. It is located at the end of La Media Road in an undeveloped area around Rock Mountain west of state Route 125.
The community will be a mix of apartments, condos and townhouses, subsidized housing and single-family homes. Plans call for new parks, schools, transit hubs, pools and hiking trails.
Shea Homes is planning two single-family projects. It plans to sell around 40 homes, at 2,535 to 2,831 square feet, at Lucca this year from the low $700,000s. It also has larger homes at Savona, also selling about 40 houses this year, for the mid$700,000s for 3,157 to 3,577 square feet. Lennar has around 35 homes coming out in its Whitmore development with 1,950 to 2,143 square feet starting at the low $600,000s. Prices are estimates right now, and could change closer to opening.
Right now, Côta Vera is mostly dirt with hundreds of workers preparing the land for the first housing units to start going up. The first apartments should start construction in the next few weeks.
“It’s a community that will come out of the ground all at once,” said Kent Aden, president of Homefed Communities.
Homefed, the landowner of the Côta Vera site, spent roughly $400 million to develop the land. Aden said it has owned the land for 25 years.
Unlike a lot of Otay Ranch that is dominated by the Spanish mission-style homes, Aden said the new community will take inspiration from Europe that includes cobblestone pavers and other design elements.
The price for new homes in Côta Vera is near the median price for a resale home in San Diego County, $710,000 in January, said Corelogic. However, Otay Ranch properties come with homeowner association fees and additional Mello-roos taxes.
Aden said it will be a place that will be highly sought after because it is a community with so many amenities and different benefits.
There will be trails leading all around Otay Ranch’s open space, an urban core with retail, an amphitheater and an art walk. In short, homeowners won’t have to leave the community for services.
The community was designed for the San Diego trolley system to go through but was later changed by county planners to a rapidbus system. It is possible the space could be switched easily to the trolley in the future if there is more support for a project.
Pacific Highlands Ranch
Homes at Pacific Highlands Ranch, a masterplan community north of Carmel Valley, have the most expensive new homes for sale — and with good reason.
The homes are located near some of the highestpaid jobs in life sciences and technology. In fact, Tri Pointe Homes director of community experience, April Gringas, said a lot of their buyers are engineers at Qualcomm, which is about a 10- to 15-minute drive from many of the homes.
Tri Pointe is building three communities in the development with about 116 new homes for sale. The least expensive is the Sendero Collection, which ranges from $1.5 million to $1.9 million.
The 3,007- to 3,455square-feet homes come with a host of amenities, including smart home devices, 1,300 acres of walkable native habitat and functional floorplans that take advantage of the Southern California climate with many openings to the outside air.
Ayala said Pacific Highlands Ranch is so expensive because of its location closer to the ocean, it has coastal breezes, is near high-quality schools and has a host of amenities that come with living in a masterplan community.
Gringas said Sendero Collection had 280 prequalified buyers when the first four homes went for sale. “The biggest frustration is not getting homes soon enough,” she said.
Tri Pointe’s other projects in Pacific Highlands Ranch are more expensive. The five homes for sale this year at the Carmel project range from $2 million to $3 million and are 3,716 to 4,691 square feet. The 4,138- to 5,051-square-feet homes at The Highlands range from $2 million to $2.5 million.
The roughly 30 homes for sale in the gated community of The Highlands this year feature options like chef kitchens, two- to four-car garages, a pool, smart home devices, expansive views of mountains and golf courses, and guest bedrooms called Gensmart Suites. The extra rooms can have seperate entrances for guests — or could even be used as a big office for a stay-at-home worker.
Tri Pointe isn’t selling all multimillion dollar homes. It has homes in Fallbrook that are below median home prices but can be an hour, or more, trip by car to downtown San Diego. It would probably be best for workers in Oceanside or Carlsbad who would face a 30- to 40minute commute.
Its least expensive project in Fallbrook, called Castello, has single-family homes from 1,691 to 2,209 square feet in the $500,000 range. It is likely one of the most affordable places for a single-family home this year, with basic things that homeowners might be looking for — starting at three bedrooms, 21⁄2 bathrooms and a two-car garage.
“That is the exact type of home we need,” said Nathan Moeder, principal with real estate analysts London Moeder Advisors, of Castello.
Moeder has long argued more single-family homes are needed because that is what young families want, rejecting the notion that millennials want to live in city centers. He said he understands why developers are focused on multifamily because it is increasingly difficult to find buildable land in the county.
He said there has been an effort across California to zone more space for multifamily housing. So, where it might have been a tad easier to buy a lot for a single-family home a decade ago, the same lot may now be zoned for multifamily like an apartment building or duplex. Moeder said buying a multifamily lot and putting a single-family home there will be difficult.
“It is a political no-no,” he said. “Everyone is going to point to the politicians and say, ‘You approved this project and single-family homes are not (environmentally friendly) and we’re not maximizing the units there.’”