When Scott and Tracey Lee, both of whom design high-end resorts and spas, decided to design their own home, there was little doubt that it would be an architectural masterpiece. What made it more difficult was the site they chose. Building on a small hillside plot with a steep incline, they faced constraints on allowable square footage as well as the challenge of topography.

The result, an ultra-vertical, four-story plan nestled beneath the site’s towering heritage oak tree, resembles a luxurious treehouse, and the similarities run deeper than appearances. While many a design focuses on how to separate its owners from the elements, the beauty of this one is how it unites them. While keeping conditioned space to a modest 2,116 square feet, the home lives much larger through a series of balconies, decks, and terraces that grace every level. And far from the standard parking space for lawn furniture, the home’s outdoor areas draw the family out with comfortable spaces and enticing amenities.

The kitchen, for example, starts inside and then extends out through a sliding glass door to a shaded patio offering seating space, a grill, refrigerator drawers, and a wine cooler. Radiant-heated floors and a fireplace keep things cozy when temperatures cool, and a recycled light fixture—crafted from an old buoy cut in half—provides a perfect conversation piece while emphasizing the home’s commitment to reuse, recycling, and sustainability.

In similar fashion, the master bedroom’s pared-down interior space flows out through a glass wall onto a covered balcony featuring an outdoor tub with automatic shades for privacy and heat lamps to keep bathers comfortable. In the master bath, the indoor shower is enclosed by an operable glass wall that also leads to the balcony tub. The children’s bedroom and guest room follow suit with shrunken footprints and private balconies.

More than just satisfying space limitations, the reined-in room sizes helped the Lees achieve other aims, such as encouraging family togetherness. “So many houses, where you can build as much as you want, just keep going and going,” says Scott. “You go from one living room to another living room, and then to the family room. Then you get to the bedrooms, which have their own sitting area. We talk about sustainability, and sustainability means building less. ... When we want to be together as a family, we are in the living room. The bedroom is really just for sleeping.”

Since the hillside site made it impossible to include a backyard, the top-level living room’s outdoor space—in which the other half of the cut buoy serves as the lighting fixture—features a roof-top play area of synthetic turf for the couple’s two young children.