While some may balk at the $150M HomeFed recently shelled out for 1,400 acres in Otay Ranch, company chairman Joe Steinberg is bullish on the investment, which will allow the land speculator to develop 7,000 homes (it picked up the site from State Street Corp this year). In a recent call with investors, Joe outlined why the company would spend so much on a competing site next to its 375-acre mixed-use project planned for the University and Innovation District.

1. Homefed now controls 13,000 entitled residential units and 2M SF of commercial, industrial and office space in Otay Ranch. “This represents the vast majority of the remaining developable homes within Otay Ranch,” Joe says.

2. Otay, along with Chula Vista, is the “sweet spot” in San Diego County on affordability for homes, where a median household income can reach $94k/year.

3. “The schools are good and are attracting families who value education,” Joe says. “Millennials may have delayed marriage and kids, but this will not be an indefinite delay and many still aspire to own a single-family home.”

4. Without competition, Homefed now controls product mix and rollout.

We first broke the story about Homefed's purchase here. Joe told investors these factors play against a backdrop of a “deficiency in the housing market,” especially for affordable homes. It doesn't help that student debt is keeping Millennials from buying homes. “Perhaps it's just insecurity, low income growth and pay, or perhaps mom and dad are coddlers, through necessity or not, and have yet to fully cut the financial umbilical cord,” Joe says. “Whatever the reason, young people are delaying settling down.” In fact, student loans have most likely killed more than 400,000 home sales a year, Joe says.