A local experiment in urban housing -- creating residential artists' lofts to revitalize a downtown Santa Ana neighborhood of taco shops, street vendors and check-cashing operations -- has generated unexpected interest and is spawning similar projects nearby.
The popularity of the lofts is evident in their escalating values. They were originally priced in the upper $200,000s in the summer of 2002, but some are selling at nearly $600,000.
"Who would have thunk it?" said Allan Baldwin, an affordable housing advocate. "It does make you wonder where will just regular working people live if people are paying a half-million dollars to live in the middle of stores."
City officials hope the fledgling downtown development, known as Artists Village, will create an upscale ambience in a downtown once stigmatized by vacant buildings, loiterers and crime, and that the lofts will be followed by late-night bistros and other more diversified businesses.
A small group of Latino merchants has complained about the city's support of Artists Village, saying it amounts to a gentrification that will ultimately lead to their demise.
Indeed, at the Artists Walk Lofts on Main Street, it's anything but a typical immigrant's life. A painter works on a large canvas, a photographer shoots an advertisement and a sculptor sells pottery.
"It's a wonderful creative community where ideas are flowing," said Michael Maas, a painter who bought his loft before it was completed. "It's a place where people are excited, not only because the value has gone up but because there's a flavor here you can't find [elsewhere] in Orange County."
Affordable housing advocates say they regret that more has not been done to provide housing for many immigrant families who squeeze into small apartments in the city.
But they say they understand the city's strategy to improve its downtown the same way San Diego transformed its urban Gaslamp Quarter into a chic residential and entertainment district.
The rising price tag for the lofts has stunned city officials, residents and even the Seal Beach developer, the Olson Co., especially given their proximity to the vibrant immigrant businesses that prompt many visitors to liken downtown Santa Ana to a little Mexico. Most of the existing residences are small bungalows and crowded apartments.
"When we first started, we were asking in the high 200s, and we thought we would be pushing it," said Alex Hernandez, Olson senior vice president.
"The product was so unique that it attracted buyers."
To entice Olson to build, the city's redevelopment agency bought three blocks between Main, Bush, Sycamore and 2nd streets -- for $2.1 million and then sold Olson the parcel for $900,000.
The investment is paying off, city officials say. "Our dream for the downtown is really coming true," Councilman Jose Solorio said.
"We're seeing in terms of media attention, retail sales and skyrocketing home prices."
Encouraged by the Olson project, three other loft complexes have been proposed by Urban + West + Strategies, a Santa Ana company.
The Olson project "was an affirmation of my decision to come here," Urban President David DiRienzo said. "Their success in attracting high-quality buyers to a downtown that needs revitalization was extremely encouraging."
His company plans to build the 108-loft Santa Ana Transit Village across the street from the Santa Ana Regional Transportation Center at Civic Center Drive and Santa Ana Boulevard.
The Courthouse Lofts will have 76 units on 4th Street across from the Ronald Reagan Federal Courthouse, and at 1st and Bush streets, the company will build 38 loft-style townhomes.
Thirty of the 86 Artists Walk Lofts have been completed, and only 20 in the project remain unsold, Hernandez said. The first units sold for as little as $256,000, but the least expensive unit available now is priced at $511,990.
The median home price in the downtown area was $352,000 in September.
The two-level lofts, with industrial, black-metal staircases, are designed as open space, leaving to the residents' imagination how to partition their own spaces.
The downstairs work areas have large windows, allowing pedestrians along Main Street to look into an interior decorating studio, a ceramics shop and an office, among other uses.
Brian Konoske, a 25-year-old commercial photographer who grew up in Los Alamitos, said he paid $322,000 for his 2,019-square-foot loft last year.
A similar unit has an asking price of $572,990.
"People told me I was crazy when I said I was buying in Santa Ana," he said. "But I wanted a big open space with a lot of light and something interesting in Orange County."