SAN DIEGO—Offering homes at a variety of price points and receiving high demand for each of them means that projects like Artesana make sense even for the San Diego market, Pardee Homes' San Diego-division president Jimmy Ayala tells GlobeSt.com. Pardee has launched a new phase of sales at its Artesana neighborhood, a collection of 56 luxury residences within the Pacific Highlands Ranch master-planned community in coastal North County San Diego.

The designs for Artesana were inspired by architect Lillian J. Rice, a San Diego native who specialized in California Spanish Colonial-style design and was the lead planner and designer of nearby upscale Rancho Santa Fe in the 1920s. In addition to Artesana, Pardee Homes is currently selling at other neighborhoods in the community including Casavia, Casabella and Casabella Collection and at future neighborhoods Almeria and Olvera opening in late April.

We spoke with Ayala about San Diego's luxury-home-development market and justifying luxury builds in such a low-affordability market as San Diego.

GlobeSt.com: How would you characterize the overall luxury-home-development sector in San Diego?

Ayala: I would describe it by describing San Diego: a very attractive place to live, so by nature the luxury market is going to be strong. We have buyers from a global level wanting to live here, whether owning a vacation home or a permanent residence. The university system, the healthcare and employment economy and its location on the Pacific Rim tends to lend San Diego to a higher price point and a higher lifestyle. Luxury homebuilding is doing well in San Diego because buyers' income is growing, and folks are looking for a lifestyle similar to what we offer in Pacific Highlands Ranch to live, work and play. We have the village center with a fitness center, Rite Aid, multiple restaurants and shops. Over the years, we've offered price points over $2 million. We've intended to be a premium-brand builder to offer this lifestyle that accommodates our buyers.

GlobeSt.com: Given that San Diego is in desperate need of affordable housing, as well as housing that's affordable, how do luxury projects like Artesana address that need?

Ayala: Our job to find the consumer wherever they may be. Our job is to provide luxury and move-up housing in $500,000-to-$700,000 level and also entry-level housing. We're currently building at a $300,000 price point in other projects, and we have a community coming up in Santee where we'll be in that middle range.

Our obligation to the consumer is to offer housing at a variety of types and entry and price points. At every one of those price points, there is strong demand for what we offer. You reconcile it by providing the consumer those options. We provide one of the larger affordable-restricted housing developments to 65%-of-median-income residents as well. We build housing that's adjacent to move-up or luxury housing, but as a community builder, we design it in a way where you could not tell the difference.

GlobeSt.com: What is being done overall by developers to build homes that people can afford in San Diego?

Ayala: It's a challenging industry, whether it's regulations—Southern California and California in general have a lot of regulations over development—litigation or community opposition (NIMBYism). But, there are also opportunities out there—opportunities and constraints. It's a highly regulated environment, and the barriers of entry make it difficult to buy land and get capital. If you are in the marketplace, because of those factors, there are opportunities as a result of the supply/demand imbalance. Those challenges create a shortage of supply that drives cost. We price to the market; the market dictates price. If someone is not buying it, we need to adjust the price. We also need to get through the regulations, litigation and NIMBYism. That's what's affecting the affordability—simply supply and demand. That price will be affected.

GlobeSt.com: What else should our readers know about this project?

Ayala: Artesana is a unique thing. We are a merchant builder, a premium-brand builder, but we started with a different approach. Artesana has an intentional design purpose; we had a vision of what exactly we wanted, and we were looking for a design partner to be our architect. We knew exactly what we were looking for; we were inspired by Lillian Wright, and we challenged our design team to do a modern version of Lillian Rice. We held a design competition and challenged the people we work with to break the status quo, where you can live indoors and outdoors. You might have a living room off a courtyard, patios that live differently. They executed it very well, and the consumer very receptive to it; it's selling well.

We spoke with Ayala about San Diego's luxury-home-development market and justifying luxury builds in such a low-affordability market as San Diego.

GlobeSt.com: How would you characterize the overall luxury-home-development sector in San Diego?

GlobeSt.com: Given that San Diego is in desperate need of affordable housing, as well as housing that's affordable, how do luxury projects like Artesana address that need?

GlobeSt.com: What is being done overall by developers to build homes that people can afford in San Diego?

GlobeSt.com: What else should our readers know about this project?

Instant Insights /

Justifying Luxury Builds in a Low-Affordability Market

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