Vegas home builder bets $32.5 million spec mansion will smash a local record in Southern California

This newly built cliff-side mansion overlooking the Pacific Ocean in Southern California comes with an ambitious $32.5 million asking price. It’s one of the most expensive homes for sale in San Diego County, and that price tag puts it in the running to break a local record in the picturesque beach-side community of La Jolla.

Perhaps more interesting than its potentially record-breaking price is the fact that the home was designed and constructed by Las Vegas-based builder Blue Heron, which almost exclusively designs and builds luxury mansions in the Mojave desert.

“I would consider us the authority and the experts in luxury real estate in all of Las Vegas without a doubt,” said Blue Heron’s founder, Tyler Jones, a fourth-generation Vegas native.

Building on the ocean is more similar to building in the desert than you’d imagine, according to Jones. In both environments, Blue Heron’s design is focused on blurring the lines between indoor and outdoor living.

“The Mojave Desert is a great place to do that,” he said. “But arguably, you know, La Jolla, San Diego, is actually a much better place to do that.”

Over the past 18 years, Blue Heron has built several hundred homes — every one of them (except for two in La Jolla) in the Las Vegas area, according to the CEO. Today, the starting price for one of the firm’s more affordable desert homes is about a million bucks, but the average sale price for one of the company’s newly constructed desert mansions is about $8 million. Just last year, Blue Heron made headlines when one of its Sin City spec mansions broke a record when it sold for $25 million to billionaire LoanDepot founder Anthony Hsieh.

About 300 miles away from its core business in Vegas, Blue Heron’s new coastal spec mansion spans four levels with an expansive deck and infinity pool out back on the edge of the Pacific.

A glass bridge floats above a lower lounge area and delivers visitors to the home’s second floor. At nearly 8,900 square feet, the home includes five bedrooms, eight bathrooms and three kitchens.

The mansion, known as the Ora House, is the second residence Blue Heron has built outside of Vegas. The first one, also a spec house located in La Jolla, was on the market for about nine months before selling last year for $20 million. The median price of a single family home in La Jolla was $3.6 million in the second quarter this year, according to data provided by real estate brokerage firm Compass.

So why has a builder who’s been betting big on luxury real estate in Vegas turned his attention to shattering a local record on the edge of the Pacific?

Jones said he has a soft spot for La Jolla, and it’s filled with childhood memories of vacationing in the beachfront town with his family. That’s just one of the reasons he had his eye on the area in 2016, when he bought the $4.7 million oceanfront home at 5228 Chelsea Street. It was what developers call a “teardown.” Blue Heron was more interested in the site than the existing home that sat on it. The company tore down the old home and over six years developed a new $32.5 million spec house in its place.

That price puts the home at the very top of La Jolla’s ultra high-end market. Since 2018, the community has recorded 11 sales at $20 million or more, according to title records. One of the most publicized was back in 2018, when singer-songwriter Alicia Keys and her record-producing husband Swizz Beatz spent $20.8 million on the waterfront residence known as The Razor House.

But La Jolla’s top sale price was achieved in 2019, when the oceanfront mansion located at 8466 El Paseo Grande sold for $24.7 million, according to public records.

And while Blue Heron’s Ora House is the most expensive home for sale in La Jolla at $3,660 price per square feet, it’s actually a relative bargain compared to the over $4,000 per square foot price achieved on the El Paseo Grande sale.

“People love the San Diego lifestyle,” said real estate broker Brett Dickinson of Compass, who was involved in six of the neighborhood’s transactions of $20 million and more. Dickinson is co-listing agent on Ora House with Deborah Greenspan of Sotheby’s. Dickinson told CNBC the attraction to the area is fueled by a tech boom that’s migrating from the northern part of the state southward.

Jones told CNBC Ora House’s jumbo-sized price tag is partially a function of the cost of developing on the California coastline, which requires more time, more effort and a lot more money because development is complicated by heavy regulation.

“It’s not worth it for a smaller dollar project,” he said.

But a lot has changed since Blue Heron bought the site in 2016, and the company’s beachfront spec home is now facing a trifecta of headwinds: rising interest rates, diving equity markets and sky-rocketing inflation.

Dickinson told CNBC those are serious factors, but they are mitigated by La Jolla’s limited housing inventory. According to the broker, typically the number of homes available for sale in the neighborhood hovers around 150 to 200 units, but this month there are just 89 homes listed. The market is even tighter when you focus on the higher-end oceanfront inventory.

“Inventory is extremely low,” he said. “And to build a waterfront property is a six-to-eight-year process.”

That’s likely one of the reasons the Vegas-based developer remains confident the odds in La Jolla are stacked in his favor.

“We have a great deal of confidence that we can deliver that exceptional experience that’s going to speak to people,” Jones said. “And I believe we’re going to find high net worth individuals that are willing to pay for that.”

In Vegas they say the house always wins, but only time will tell if that holds true in La Jolla.