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Close-up -- Paul Barnes

Continued focus on quality gives Shea Homes competitive edge in changing market

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In the highly competitive new homes market of San Diego, Shea Homes is determined to stick to its core strategy: quality.

Photo: J. Kat Woronowicz In the highly competitive new homes market of San Diego, Shea Homes is determined to stick to its core strategy: quality

Shea Homes is a significant national homebuilder but emphasizes the "caring" family nature, rather than national reach of the company. And for San Diego division head Paul Barnes the private, family-owned nature of the company is more than just a marketing pitch.

Sitting relaxed in his Mira Mesa office, Barnes argues that the philosophy of enhancing peoples' lives "permeates through the whole organization."

Shea Homes' speciality is in single-family attached and detached homes in the core markets of San Diego County. To date they have not followed the competition east to Imperial County or downtown to work with urban infill.

Barnes says they are "constantly looking at opportunities" in the urban core but adds, "We want to make sure it is the right opportunity, we don't want to do it just to do it."

However, Shea Homes is not planning a move into Imperial County.

"Our strengths are, we may have a little higher amenity level, a little bit more focus on design and our construction costs maybe a little higher than the next person's," Barnes said. "I don't think that is necessarily the most successful business model for Imperial County where it is very, very cost driven.

"You have got thin margins and if you are not good on your costs, you are going to suffer the consequences."

Construction costs have risen "astronomically" in the past few years due to a combination of rising land prices, labor shortages and the rising cost of basic building materials such as cement and wood.

"Usually when a price or cost of an item goes up it doesn't come down," Barnes noted.

At the same time, the runaway housing market has begun to show its first signs of slowing. The consequences? "Obviously, it is margin compression," Barnes said. "When costs go up and your pricing can't sustain that, it is a compression on margins."

But Barnes is sanguine, saying, "Obviously the market has softened but I think it is healthy. Before what we saw was an aberration. It was unsustainable, unhealthy and ultimately was probably not a benefit to society at large.

"A real estate market where people move because their job requires it, (because) their family grows ... that is more of a normal market. And I think that is probably where we are and I think we will do very well in that market."

Despite the high costs associated with San Diego County and the increasing affordability gap, Barnes is confident about the real estate market here. He predicts the population will continue to grow due to the "interrelation of economic prosperity, climate and liveability. If you add all three of those things together San Diego is probably the foremost anywhere in the world."

Barnes is confident that the company's commitment to quality - both in the house itself and in the customer service that accompanies it - is reason enough why homebuyers will choose a slightly more expensive Shea Homes residence even during a softening market.

"We spend a lot time on the design of our homes and we make sure we give value for what people are buying," he said. "In our high-end communities we may have granite as a standard feature, very nice appliances, all the attributes you would attribute to a semi-custom home."

San Diego is an area where politics is never very far away. Barnes has spoken frequently to different media outlets about his frustrations with the permit issuance process - something that the new mayor Jerry Sanders pledged to reform as part of his election campaign.

Barnes said that Sanders is "saying all the right things" and "genuinely wants to fix what has become a broken system," but warns that leadership is needed both politically and within the department.

"The time is frustrating. But what really frustrates me as a citizen of San Diego is knowing what a tremendous burden the lack of available housing is for people," Barnes said. "The people in the city are good people who mean well, but we have created this morass of rules and lack of accountability where no one wants to take a risk to improve something, or if they do, they have to get consensus, on consensus on consensus.

"It's not public safety, people are not going to get injured, so let's move on to the next realm."

In its 125th year, Shea Homes and Barnes are clearly looking to the long term. Barnes rejects criticism of the modern homebuilding industry and the claims that it turns out sterile, soulless properties.

"If you look at some great old history books and pictures of La Jolla before all the landscaping matured, before they really got the fabric of society, they looked pretty desolate as well," he said. "So our homes should be there 100, 200 years from now and really part of well-respected, beautiful communities."

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