4S Ranch - (3000+sq/ft update) Pienza / Evergreen / Maybeck

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Submitted by 4Sbuyer2002 on April 22, 2007 - 4:29pm

EVERGREEN: All phases sold out. Had two confirmed buyers drop out last week. Both were immediately sold: No homes available. Development, including model homes, sold out. Prices of last units sold (Phase 6):

Model 3,002 (sq/ft)
lot 849 (lot size 5,488sq/ft): $718,990
lot 850 (lot size 5,727sq/ft): $725,990

Model 3,342 (sq/ft)
lot 847 (lot size 6,372sq/ft): $796,990
lot 673 (lot size 6,190sq/ft): $830,990
lot 676 (lot size 6,100sq/ft): $828,990
lot 677 (lot size 6,249sq/ft): $831,990

Developer Models (upgraded)
Model 3,342 (sq/ft)
lot 680 (lot size 6,645sq/ft): $872,990
Model 3,550 (sq/ft)
lot 679 (lot size 6,120sq/ft): $1,031,990

PIENZA: Had phase 6 of 7 release on Saturday with 7 homes available. By 3:00pm on Saturday 6 of the 7 had sold (75% of Pienza homes now sold). Prices of 6 homes sold on Saturday: Note: lot sizes unavailable but in general size of Evergreen (i.e. very small at 5500 to 6500sq ft). 1 home available until next phase release. Prices of most recently sold units:

Model 2901 (sq/ft)
lot 761: $752,990
lot 825: $721,390

Model 3212 (sq/ft)
lot 759: $787,490

Model 3365 (sq/ft)
lot 760: $783,990
lot 828: $751,990

MAYBECK: Phase 3 of 7 release last week. One home available all others sold. NOTE: These 3000+ sq/ft home have NO BACKYARD. Instead they are in rows with garages in back facing each other. Each home has "large courtyard." I believe this is a first a 3000+ sq/ft home which is essentially a supersized condo with no yard. Hard to call something a "single family home" if it has no backyard. 1 home available until next phase release. Prices of most recently sold units:

Model "Plan 1 w/suite (i.e. full bed w/bath on ground floor) " 3,172 (sq/ft)
lot ??: $766,500

Modle "Plan 2 w/suite" 3,438 (sq/ft)
lot ??: $764,990

Model "Plan 3 no suite" 3,252 (sq/ft)
lot ??: $731,500

Model "Plan 3 w/suite" 3,700 (sq/ft)
lot ??: $779,900

AVERAGES OF COSTS RECENTLY SOLD NEW HOMES (Models and Maybeck "super condos" not included):

Price per sqaure foot: $243,000
Cost of average hypothetical 3100 sq/ft new home in 4S Ranch $753,283 with an average lot size of just less than 1/8 acre (i.e. very small).

What does this mean??? New homes are selling with little to no problem. People aren't climbing over the top of each other to buy but builders are having no problems moving the inventor.

The bigger question is . . . where will these prices be one year from now?

a grateful owner . . .

Submitted by 4Sbuyer2002 on April 22, 2007 - 4:32pm.

Correction: Price per square foot: $243

grateful owner . . . .

Submitted by Critter on April 22, 2007 - 5:21pm.

These homes still have to go through the escrow process, yes? I'm asking because I've heard that some escrows are dropping out due to the inability of the buyer to secure solid financing.

I would be interested to know if this is a problem mainly with resale homes, new homes, or both. Anyone have any first-hand info?

Submitted by Borat on April 22, 2007 - 5:21pm.

If those prices remain at that level, I'll be a renter until my income doubles. Fine by me.

Submitted by sdrealtor on April 22, 2007 - 6:21pm.

nice

Submitted by PerryChase on April 22, 2007 - 9:30pm.

Builders are usually the first ones to lower prices just enough to move inventory.
Is Fieldstone competitive with other builders and resales in $4S? I don't follow that neighborhood, but I have a feeling that resellers are still high (pun intended).

Submitted by 4Sbuyer2002 on April 22, 2007 - 9:55pm.

My impression was that the builders were squeezing "all that the market will bear" in terms of pricing the inventory just competitive enough to move it fairly quickly. At least in a neighborhood such as 4S Ranch the prices depicted above are what the market (demand) currently supports in an area such as 4S Ranch. One note on this new inventory vs. resale (in other parts of 4S Ranch); with the current new homes available builders have reached a new low in terms of cramming as many homes into as small an area as possible. Other same square footage homes elsewhere in 4S have on average bigger yards than the current inventory. Now "bigger" is a relative term. The new homes are on postage stamp sized 5500 to 6500 sq/ft lots. Most homes elsewhere in 4S ranch have average lot sizes from 8000 to 10000 sq/ft lots. Still quite small when you consider a 1/4 lot is 12,000+/- sq/ft. Anecdotal evidence from some realtors (take it for what its worth . . . not much) indicate that this is actually helping move some of the resale inventory. Interested buyers come to view the selection of new homes because they like the area/community, are turned off by how small the lots are and discover resale homes in same community generally offer more in terms of lot and yard size. Again I heard this from 2 different realtors. Fact or fiction??? But it makes sense.

grateful owner . . . .

Submitted by gn on April 22, 2007 - 11:18pm.

4Sbuyer2002,

In today's market, where many resellers have problems selling. For every home sold by the builders, there is one home NOT being sold by a reseller. The builders are simply stealing sales away from the resale market. Every new home being built just add more the the supply side of the equation, making things worse for the market.

What's going on is NOT a reflection of the market's strength. It's a reflection of the builders' pricing strategies.

If you only look at new home sales, you see a rosy picture. But if you look at the entire market, you'll see the opposite. :-)

Submitted by cashman on April 22, 2007 - 11:34pm.

Excuse my ignorance, but these sales figures sure don't suggest a collapsing market, at least in that neighborhood. Whether sales are new or resale, nonetheless a sale has been made. And strong pricing for the new homes will support, if only temporarily, resale pricing. I was out in Irvine this weekend and looked at several new tracts in Portola Springs neighborhood. Same story. Sales are strong and the parking lots were full. Guess most of the public doesn't have the same perception that us Pigginton bloggers have.

Submitted by masayako on April 23, 2007 - 12:28am.

I agree with Borat. If those prices remain at that level, I'll continue to rent until the 'price to own' make fundamental sense to me. If it means never, then so be it.

I would rather save the money in my investment account and work on my net worth. R.E. is definitely a bad investment if you buy during this bubble period. Stupid move.

Masayako

Submitted by JJGittes on April 23, 2007 - 7:45am.

Maybe we should stop betting on when the real crash will arrive, and instead place some wagers on when this website and other bearish RE sites simply degenerate into a few dozen people posting over and over "...but, but, but, it's just not fairrrr...."

Hey, I've been reading this site and others for a long time now, and I've seen prices come down some, but in the good areas, ie the areas I want to (and do) live in, like coastal n. county, and scripps ranch, and a few others in good school districts, things are chugging along quite well. I noted on another site that I personnaly saw a LOT of interest at Trieste, a new development in La Costa Greens. I got mocked, like I am a liar or something. Well, I am not a liar or an RE chearleader.

Hey, predict doom all you want, but if a 'crash' happens in the areas I mentioned, its going to happen in slowwww motion through flat prices and inflation. I base this on seeing what is actually selling right now, and how little is currently coming on the market in these good areas.

Submitted by MANmom on April 23, 2007 - 8:22am.

MANmom

I remember the same thing happening back in 1995 when my husband and I bought during the last bust. We looked at several established homes and could not get anything near what we got from the new home builder...we bought new because we got a much better deal. There was plenty of inventory out there, but again, the sellers wanted incredible amounts of money for their little peice of crap with no yard. Our agent pretty much told us that we should buy the new home, he couldn't offer anything like that in the resale market (one of those rare honest agents). We went with a new home because it was fresh and clean and about $60,000 cheaper than resale homes. I am seeing the same thing now, but the only thing keeping us from jumping in to a new home is the huge tax burden...mello-roos has become unbelievable high. Why spend an additional $1,000 a month or more for a new home? They would have to give me a huge price break for us to go with a new home today.

Submitted by PerryChase on April 23, 2007 - 8:40am.

MANmom, 1995 was a different time. I remember well. At that time you had to rely on the Realtor to drive you to houses from print-outs with no pictures. Today you can just review the MLS listings yourself (for example on ziprealty).

I think it's going to be a slow ride down (6 to 7 years). In the mean time, review all the listings in a neighborhoods that you like. You can set it to receive an email when new listings pop up -- there aren't too many.

Over time, you'll get a good idea of the homes that come on and off the market. You'll also get very familiar with the neighborhoods where you wish to live. When the time is right, you'll know it. If you've got a nice comfortable place to live right now, you can watch the market slowly evolve. Take the emotion out of buying and you'll know it when you have a great buy. Patience is key.

Submitted by 4plexowner on April 23, 2007 - 10:03am.

Excellent advice from PerryChase on becoming familiar with the areas you are interested in

When I was shopping for property I had driven the streets so many times that when I was sitting at my computer and received a new listing on Fulton (for example), I didn't have to drive by it because I already knew that Fulton was a narrow street with cars lining both sides

Developing this level of familiarity with your areas of interest will also help you develop a gut feel for prices/values - you will be able to tell whether something is really a deal or just a pig-with-lipstick parading as a deal

Submitted by MANmom on April 23, 2007 - 10:41am.

MANmom

Yes, Perry that is true, and I have been viewing all listings the past two or three years. But the scenario is the same...what this thread is talking about is big discounts and quick sales on newly built homes. The builders cannot just sit and wait it out like most homeowners. Yes, there are foreclosures, but in general the emotion is in the eye of the seller. They cannot accept that home prices are riduculous right now but are coming down; they want the same price for their home that the neighbor down the street got a year or two ago, and that ain't gonna happen, at least not from me. I know my neighborhood well, have lived here many years. I am not asking for much, just a house big enough for my kids (three) with a bit of a yard and taxes that are reasonable. I am not looking to make big bucks in a few years, I don't even care if it is a fixer. I have watched the market dilligently over the last two years. I know we have another few years to reach bottom, but I am not trying to time the bottom of the market. I am simply pointing out that 1995 was similar to today, new homes with discounts are selling, but with the tax bite, I am not buying.

Submitted by no_such_reality on April 23, 2007 - 11:10am.

Those prices are about level with last fall are they not?

Overall the price is off about 15-20% from peak correct?

How is the price per/sq ft holding up? Granted, they're huge which drives the price/ft down, but $243 seems really low. Or maybe I've just been staring at condos in Irvine with $500/ft tags too long.

Submitted by PerryChase on April 23, 2007 - 11:31am.

I agree with you, MANmom. I'm not buying either.

Resellers can afford to hold on longer because they don't have quarterly earnings target to meet. It takes several years of a down market to wear-down existing homeowners.

There's also a good chance that builders will pay the Mello-Roos in new projects. See related thread:

http://piggington.com/pardee_homes_drops...

The LA market is stronger than San Diego's yet you're seeing this kind of change there. My feeling is that builders won't drop Mello Roos in existing developments. They'll close them out then start new projects next door that interestingly don't have Mello-Roos to avoid upsetting existing homeowners. Can't wait to see when that happens in San Diego.

Submitted by outtamojo on April 23, 2007 - 11:37am.

Are those prices the actual price the sale was consumated at(including any incentives)? How did you obtain that info? Or are those prices just from the most recent flyer?

Submitted by 4Sbuyer2002 on April 23, 2007 - 10:56pm.

The numbers I posted and used in the average calculations were all completed sales. A few had been sold twice (original buyer backed out) and resold. In the case of Pienza, they had a phase release on Saturday with 7 homes available. By 3:00pm 6 of the 7 were sold.

grateful owner . . . .

Submitted by nestingcouple on April 23, 2007 - 11:00pm.

I think the sale price does not reflect the $20K or $15K lender mortgage incentives (depending on which house you buy).

Submitted by outtamojo on April 24, 2007 - 1:25am.

Yeah, I would love to find out the ACTUAL price they sold for, not the prices listed on a flyer. Here in Monterey County, a neighbor had his home listed for 740K on a flyer but the actual sold price was 630K (After trying to sell for 2 years).

Submitted by 4Sbuyer2002 on April 24, 2007 - 10:54am.

These are the "actual sale" prices of what had sold as of 3:00pm on Saturday when I went to each office and spoke in person with the rep in the office. I asked "are these the actual sale prices?" She/he said yes. Could she have lied? Of course. No I didn't see the signed contract. However, these are NOT the flyer for what is currently available. They also indicated that they had no problem selling the units at the prices she quoted me. This explains why 6 of 7 homes sold in 6 hours from the time the phase was released in the case of Pienza.

They are actual sale prices. I did not ask re incentives. I should have. In the case of Pienza I know that they had a $40k incentive at the end of last year and cut it to $20k early this year. Whether it is still $20k, back to $40k, or zero . . . don't know.

grateful owner . . . .

Submitted by 5yearwaiter on April 25, 2007 - 1:18pm.

5yearswaiter

I doubt those are actual prices, those are same as listed prices. I know one person who signed at 4S Ranch with other builder almost 100K less price to the listings, but that is perhaps with Sheliac homes (something like that). Also when I went to visit Evergreen month back the Old Lady mermerig there is some outstanding deal on the clude Sac Plot .... also this is something Paper bookings not yet fully confirmed and passed through the Escrow and all. Just wait how many come out of this loop and see them as OPEN houses before the Constrction .. starts.

Note :- Each phase Lender finance just 6 houses or 10.

Submitted by wantobuy on April 25, 2007 - 8:53pm.

Both Pienza and Maybeck said they would have price increase in next release (Maybeck says $10K increase). With so much news coverage on subprime problems/declining sales, I believe recent buyers are well educated on the market condition and will have no problem riding out the down market, I think we'll see less and less falling out of new home contracts because the builders ask for bigger deposits. I asked the sales persons in both Pienza and Silhouette, the number of contingent buyers are small. I've somehow lost confidence in that we'd see a $80K-$100K price drop again like we saw in the last 6 months in 2006 in 4S ranch for 3000+ houses. Rent is not much cheaper than mortgage. Builders lead the price drop. It'll take a few years for the resale homes to be comparable to the new houses, by then who know what may happen, the inflation may catch up and the expected price drop may not have materialized.
Tied of checking out market news every day, guilt of wife pressure, will buy new soon, even if the price is going to drop $50K or $100K in the next a few years.

Submitted by Cow_tipping on April 26, 2007 - 6:53am.

If builders ask for a larger and larger deposits, say from the current 0% it goes to say 5%, the available pool of buyer will shrink to 10% of what it is now. Make it 10% on a 500K house and you're looking at 1% or less of the available current looky lou's. BTW a 10% drop will cut me out of the market, and I am a steadily employed software engineer who cleared close to 80K last year and dont have a 1000 expensive worthless toys I wasted my $$ on. essentially I dont have debt at all except my house which cost 150K brand new in 03 and its financed at 5% fixed on a 15 year fully amortising mortgage which I always paid atleast 10% more each month.
Tighten credit standards, same result. Even a small amount will rapidly shrink the pool of eligible buyers.
Cool.
Cow_tipping.

Submitted by no_such_reality on April 26, 2007 - 8:46am.

I asked the sales persons

Why would you believe what the sales person says is happening? They only get paid if you buy. There are many articles where buyers are protesting saying the sales people said the next phase would be X and it isn't. Or sales people said the builder would never, and they are.

Tied of checking out market news every day, guilt of wife pressure, will buy new soon

Go forth an buy then, as you say, if you loose $100K it doesn't matter to you.

Submitted by SD Realtor on April 26, 2007 - 8:59am.

I agree with Manmon -

The builders are always much more aggressive in pricing nad always will be. They have the margin to do so and most important they are unattached emotionally to the home and unencumbered financially. This fact will never ever change. I also agree that the MR and HOA fees are a big turnoff. Not to mention the possibility of a new private transfer tax that I posted about earlier. The builders make money no matter what. Resellers pretty much do not get it until it is to late.

Regarding the sales prices I absolutely believe those to be true. The current incentives at most 4s Ranch releases are identical across the board, 20k incentives IF AND ONLY IF you use the in house lender. People don't believe that you can trade off the incentives for cash or reduced purchase price it does not happen. I am not saying you can't try to negotiate the price down, I am saying that incentives do not mark down the sales price. There is not even close to a dollar for dollar value on incentives.

As much as most people posting don't want to believe it, the builders will always scale back, slow down phasing, and price enough to sell. I do believe it will slow down in the summer and fall like last year.

SD Realtor

Submitted by 4Sbuyer2002 on April 26, 2007 - 10:15am.

Its true . . . anyone can lie about anything. However, as an attorney who has practiced RE law, I can tell you that if I spoke to an official representative of a builder and she told me "these are the sale prices" and that was an out and out lie, they could easily be sued for fraud should someone make a buying decision influenced by that statement. Most builders are very careful in this area. Especially in today's market. I doubt she lied when she said "these are the sale prices." The potential liability to the seller far outweighs any sort of percieved benefit of comforting perspective sellers that prices are stable.

grateful owner . . . .

Submitted by Bugs on April 26, 2007 - 10:25am.

As I watch these builders ratchet their prices down, I can't help but laugh a little.

Remember that one of the arguments our permabull friends used to make about the New Paradigm/Soft Landing/New Reality was that costs had gone up and the prices simply couldn't decline past costs? I do. Apparently these builders can reduce costs and stay in business, and the reason for that is because costs had almost nothing to do with the extent to which the prices increased. Everyone in the process, from the materials suppliers to the agents were pullling in outsized profits as result of the demand and the market psychology.

Yes, it costs more to build here than in most areas of the Midwest; but except for the government fees and possibly the workman's comp insurance the difference is only about 15%. Not 300% like the bulls would have us believe.

From the land to the selling agent's commission, there's gas all through the pipeline that can be purged to get us back to $300k tract houses if that's where the demand (and the mortgage interest rates) ends up.

Submitted by Bugs on April 26, 2007 - 10:32am.

One more thing - about the sales agents comments on sale prices, the final price of the sale may (or may not) come in as stated, but that doesn't mean that said sale price doesn't include options, upgrades, incentives, cash back or other card tricks that weren't going on 2 years ago.

I've seen how much a builder charges for upgrades and options when the market will bear it. That's how an advertised price of $700k for a model ended up going out the door for $900k by the time it was all done. Analyzing those sales always included me asking for the price breakdown from the sales staff so that I could see and adjust for the differences in options and upgrades among the sales.

I wouldn't interpret that agent's comments as being indicative of the entire story.

Submitted by recordsclerk on April 27, 2007 - 3:11pm.

Most of the new homes today come with stainless steel appliances and granite counter tops. A couple of years ago, it was an upgrade item. That's why in a lot of the re-sale homes from 2005 and before have white tile counter tops and white/black appliances. Also in some of the more high end homes (1 million plus) you get 60K in high end appliances/granite included. These options, lender incentives, closing cost, landscaping, 3% broker comission are all hidden in the sale price. Prices are down 10%, but add these hidden cost to the builder and prices are actually down more then 10%. Just 2 years ago all you would get is a dirt lot, cement driveway, some tile (nothing fancy), tile counters, carpet, 2 1/2in baseboards, no fridge, no incentives, no broker co-op, white paint.

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