NEED your input, About to buy a new Pienza home in 4S Ranch

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Submitted by buyorhold on June 9, 2007 - 11:53pm


We JUST put a $10K deposit down on a Pienza home in 4S ranch (2901). From what I have read, this same lot sold back in Apr this year for $721,390 without any upgrades, but the deal fell through. We are paying $765,110 - $30,000 incentive = $735,110 (total) but with upgrades such as granite, upgraded cabinets, jet tub, nicer master shower, french patio doors... I tried to negotiate a better price, but Fieldstone would not budge...

For those of you that know a little background on 4S, do you have any comments on the deal I'm about to make? We have a little baby and we make a decent living, just enough to cover mortgage and mello roos, and a tiny bit $ left to save for retirement...

I have read on this board that some builders are actually taking mello roos out of the picture (not 4S ranch)... I am just super worried that if they do not in 4S, I'll be stuck in this home for the next 30-35 years.


Submitted by temeculaguy on June 10, 2007 - 12:43am.

Price aside, what is the down payment and the loan specifics. If you are interest only, or anything other than 20% down with a fixed traditional, you won't survive the very real possibility that this is not the bottom, even if it goes flat you lose. It is totally normal for a young couple to be house poor for a few years. The stress of resetting payments is far greater than the stress you get from a young woman with a child and her instinct to "nest."

If you truly can afford it, 4-s is very nice for a young family and will always be. I think that because so many of the homes were purchased during the peak, it has room to fall and waiting until after the summer has passed will be worth it.

Submitted by Nancy_s soothsayer on June 10, 2007 - 10:59am.

Here's my other take: Those who are itching to buy now, despite having read many well-reasoned Piggington warnings, should go ahead and buy (cure that itch ASAP). Two or three years from now, when so many houses will be selling at huge discounts, I prefer that there will be less competition for me. May those with patience like me be rewarded and enjoy the "feast" of many juicy selections of houses and buy two or three at super discounts! So.... for you, go ahead, and buy that overpriced POS. (Reverse-psychology is fun, doh.)

A moment ago, this was what my ZipRealty searched as noted:
"There are 21,562 homes for sale in
San Diego, CA as of 9 minutes ago."

Two or three years from now this same day, what would be your quess???

Submitted by CAwireman on June 10, 2007 - 9:01am.

Buy or hold,

Please see this very recent post:


Submitted by buyorhold on June 10, 2007 - 9:32am.

Our loan person advised us to do 20% down, and then borrow the rest under a fixed, Interest Only loan since our plans are to stay in this home for at least 7-10 years. You guys are really scaring me. I now think that I should have probably listened to my husband...

Submitted by what_a_disasta on June 10, 2007 - 10:05am.


Did you know that 4S ranch has already earned the nickname '4closure ranch'?

IO for seven years without some hot investment for the unpaid principal is quite a risky play if you ask me. Factor in inflation and things could easily still be below today's prices in 7 years. They would have to go up by 25% just to stay even.

I dont like making $500k+ bets unless the deck is stacked in my favor.

Submitted by barnaby33 on June 10, 2007 - 10:05am.

Buyorhold, have you not been reading this site? You couldn't seriously expect you'd get advice to buy now, especially in Carmel Valley area.

I personally get annoyed when someone who hasn't seemed to have posted here before asks a question, which has a fairly obvious answer to this community. Spend some time reading through the forums first. There is a wealth of information there. Then ask some questions that specifically pertain to what you still don't understand. In my opinion you should buy now before the market shoots up again at the end of summer!


Submitted by temeculaguy on June 10, 2007 - 10:11am.

My apologies, I assumed you were the husband, there are so many husbands who pop up here becuase their pregnant wife or just had a baby, just needs that new house (I'm thinking of coming up with a syndrome name as soon as my research is done with regards to granite counters and estrogen). Your loan person is a liar, an idiot, or works for the builder and knows you can't afford it. Interest only is so wrong for someone who plans to be there long term. When does the loan convert to principal, is there a prepayment penaly, what are the adjustment terms? Just about when you decide to have a second kid or take time off work, your mortgage will double, you will need to refinance out of your interest only and rates will likely be higher. Find out the fully amortized, 30 year fixed payment and if you can't afford it, then you have your answer. Mortgage calculators are all over the internet.

Interest only is for certain situations and markets, barely being able to afford the I/O payment in a falling market with rising rates and long term plans is not one of those situations. Quick, read some of the posts about getting your deposit back.

Submitted by SD Realtor on June 10, 2007 - 10:12am.

buyorhold -

I would imagine this "loan person" is someone who works for the preferred lender who you were forced to use if you wanted to collect the incentives. Am I correct?

Also I would imagine that they will float your loan rate, until the close of escrow? Did you guys get the program where you lock in the rate now and then have 1 option to grab a lower rate if they go down?

Anyways, I am sorry to hear of your predicament. How long ago did you sign loan docs? When is close of escrow?

SD Realtor

Submitted by ocrenter on June 10, 2007 - 10:17am.

"we make a decent living, just enough to cover mortgage and mello roos, and a tiny bit $ left"

you need to give us a little more than this. what is "tiny bit?" $1000 a month to save? what's "a decent living?" $200,000 a year?

be more specific

Submitted by Nancy_s soothsayer on June 10, 2007 - 10:55am.

Survival Rule #1: Don't listen to advice given by people, specially non-family, with vested interest to partake with your hard-earned money.

Submitted by cassiopeia on June 10, 2007 - 11:14am.

Here's something I don't get.

this same lot sold back in Apr this year for $721,390 without any upgrades, but the deal fell through. We are paying $765,110 - $30,000 incentive = $735,110 (total) but with upgrades such as granite, upgraded cabinets, jet tub, nicer master shower, french patio doors...

Does this mean the house sold in April for $721K and you are paying $735 in the month of June (that is if we make the assumption that those upgrades are really worth 35K)? Now, I may be wrong, but that means that your house must have been the only one to have APPRECIATED in two months in a market that is widely viewed as FLAT even by real estate shills. You are acting as if you were caught in a time warp and we were still in August 2005. Where have you been?

If I were you, I would eat my pride and tell my husband that he was right. Lose the $10K, it is not that much money and you can be sure that you would be loosing A LOT more in the long run if you decide to go through with the deal. Sometimes it's better to cut your losses.

On the other hand, if you do decide to go through with it, I would advise you to take a traditional loan, just as others have advised you on this board. I have children too and I know how it feels to want to give your child a nice home. But small babies don't need backyards. You can afford to wait a couple of years. I'm sorry if I sound too blunt, I guess a part of me thinks I would have done exactly the same had it not been for these blogs. Good luck.

Submitted by PerryChase on June 10, 2007 - 12:10pm.

If the builder buys out the mello-roos it'll be only for new owners, never for existing owners. You'll be stuck with higher property taxes while your newer neighbors down the street enjoy a lower tax rate.

See related thread.

Submitted by PerryChase on June 10, 2007 - 12:34pm.

Simple calculation:

Assuming you can earn the same interest on investment as you could on mortgage payments.
Interest only on $735,000 at 6.5% = $47,775 year.

You can rent a gated community house at Aviara for $2,775/mo = $33,300/year

For simplicity, ignore property taxes, hoa, maintenance, insurance, tax benefit of mortgage interest, inflation and opportunity costs, and most importantly RISK.

You save $14,775/year by renting.

After 7 years you have $103,425, plus you still get to live in a nice home, in a nice neighborhood.

If you have time, put all the numbers in a spreadsheet and make your own calculations.

Submitted by Bugs on June 10, 2007 - 12:39pm.

Before you get overly connected to that $10,000, consider how much of a loss that builder has already suffered on that unit between the time it was previously in escrow and now. At the retail price of the upgrades their loss is a lot more than the $10,000. Now project that rate of loss over the next 12 months.

Taking a $10,000 hit right now is definitely the better choice compared to what's going to happen to your financial position if you buy that house now. At some point it is not unreasonable to think that house could lose $10,000 in value every couple of months. An annual loss of $60k is not at all beyond the realm of reason.

Stick around for a while I'm sure you'll save a ton of money on that house.

Submitted by NotCranky on June 10, 2007 - 1:51pm.

If you and your husband decide to cancel fight for your deposit on the grounds that the sellers rep and mortage guy are being misleading.Accuse them of teaming up on you if they are in anyway affiliated. Ask the builders sales Rep if they have ever sold a model like the one you are interested in for less or if the would ever consider it in the future.Ask them what they would do for you if that happened,especially since you feel you are being mislead.
Put it in writing registered mail.Quote some of the things the posters here are saying. If they offer you a lower price ,which they might take it or tell them you don't trust them and that the price would have to be 20%or more lower to make sense stand your ground. CC and send a copy to the mediation center of the local NAR if you have to.Maybe take them to small claims. I know I would get my deposit back.

Best wishes

Submitted by deadzone on June 10, 2007 - 2:29pm.

If you make a "decent" living, what makes you think you can afford to buy a $735,110 house? You'd better make a damn good living to pay that much. But regardless, I'd be surprised if it is worth half that much in 5 years.

Submitted by lendingbubbleco... on June 10, 2007 - 6:25pm.

Step 1: Put $10,000 non-refundable deposit down on tract home in 4Closure Ranch (future foreclosure candidate yourself...congratulations!)

Step 2: Come to piggington seeking affirmation or some type of "help" with your decision.

Absolutely brilliant strategy!!! Hope it works out for you...


P.S. Thanks a MILLION yourself--for helping us to ascertain that we must be NOWHERE near the bottom!

Submitted by Enorah on June 10, 2007 - 7:34pm.

Is it just me, or does the op seem like a total fabrication?

Buyorhold, if you really are in this situation, please forgive me.

Submitted by cyphire on June 11, 2007 - 12:09am.

Dear buyorhold - I don't know you but I would strongly counsel to try to get your deposit back or just eat it.

I am a business person - and I like to look at risk / reward calculations. If you said you planned on being in the house for 30 years (or 20), I still think you are rushing into this, but at 7-10 I think it is a huge mistake.

There is a reason that the builders are giving away kitchens, etc. - they need to. Getting the equivalent of a 5% bonus for buying at the top of a market is no bargain.

The chance that your neighborhood will go up in value is small, the chance that it could go down is huge. Look at the fundamentals and also look at history. This is EXACTLY what happens at the end of a bubble. The bubble deflates and people still buy on the way down. I don't think that you need to wait forever - it's really hard to time a real estate market. But prices are insane. Look at what those houses were selling for (or other comparable areas 7 years ago. Or 10 years ago. You are locking yourself and your future into an asset which will probably decrease and giving yourself little breathing room. If you don't mind taking a 70K hit on paper minimum - do it. I don't think you want to.

Another thing - that is quit a bit inland - it's going to be hit (is getting hit) very hard right now. Wait 1 year - look at the market - you will be jumping for joy you didn't plunge in. There is a reason all the other people did not finalize their sales. And a final note... The developers are not idiots. They are only putting a small fraction of what is being built on the market. They have already said that they will probably give back the last 3 years of profits over the next couple.... Don't pay their way out of it with your money just for some upgrades which cost them small amounts...

Submitted by buyorhold on June 11, 2007 - 12:20pm.

Over $200k / year.

Submitted by buyorhold on June 11, 2007 - 12:26pm.

Wow, that was not very nice at all. My husband asked me to look inth because he thought it was good reference and he wanted me to read what other people's opinion of the market is.

Is it really necessary to mock me?

Submitted by buyorhold on June 11, 2007 - 12:27pm.

What is "op"?

Submitted by buyorhold on June 11, 2007 - 12:30pm.

Hello Cyphire,

Thank you for the opinion. I think you may be right. I have talked to several more friends at work, and they advised me to considering renting a bigger home for several years rather than buying right now.

thanks again.

Submitted by capeman on June 11, 2007 - 1:34pm.

Honestly it is good that you asked this question before finalizing the deal. My parents live in 4S and bought in '99 so I am not worried about them losing their arses. I have spent a lot of time there on my parents balcony when almost all of 4S was just a big dirt ball. It has all gone up and been sold during the housing bull run and is going to be the perfect example of how a whole community can be destroyed by an asset bubble popping. I don't see anything but that whole area going down 20-60% in the near term and if you want to be able to get out of the house at some point the best way to do it is to not get into one in the first place. I would rent in the area and watch things play out. Losing 10k upfront is much more palatable then erasing a 20% deposit and being stuck in a depreciated but nice-looking prison for 15 years. As a lifer in San Diego and one who saw 4S grow from the drawing board to what it is I say stay away until it has dropped at least 30% or 2-3 years has passed.


Submitted by gracie on June 11, 2007 - 5:24pm.

Wow Chris...Do you think 4S will drop that much?

Submitted by PD on June 11, 2007 - 6:35pm.

20% is probably in the bag. A 60% drop seems improbable but is not impossible. New areas will be hit hard.

Submitted by cyphire on June 11, 2007 - 7:11pm.

My pleasure - buyorhold. Any neighborhood which has been built in the last 5 years, or is still being built (units available) is going to get creamed. The reason is that there is no underlying stability because everyone just bought. That is where you will find investors, folks who didn't realize the commute was gonna be tough, folks who didn't realize that they were too much out of pocket, etc.

The builders control these areas - they will keep offering incentives which will kill the resale market - and since as I wrote above there will be more and more resales. There are also no fixer ups, no tear downs, no remodels so there is only new houses. This also creates an EASY comparison model, makes it too easy for future buyers to compare properties. This doesn't work in the sellers favor in the future because the comps are too close.

Good luck and make your own decision. I don't want to steer you wrong - but I think you will be very happy for the next 2+ years if you don't buy.

By the way, as it is a new area - there will be LOTS of rentals. They don't always come on quickly but I think that there will be more and more of them for people who need to recover some of their out of pocket but don't want to sell figuring prices will go back up.

I would bet (I am betting with my own situation) that prices will not go up.

Good luck!

Submitted by SD Realtor on June 11, 2007 - 7:13pm.

buyorhold -

Part of life on the blogs is learning to develop a thick skin. Don't worry about responses that annoy you rather then address the issues you inquire about. I think that you did get what you are looking for in the responses that addressed your question directly. I agree that going hard after the deposit will be difficult at best, however if you can go ahead and rent for awhile you will more then recoup your deposit back.

SD Realtor

Submitted by schizo2buyORnot on June 11, 2007 - 7:40pm.


The decision to buy in 4S with a 7-10 year horizon is a good one. Especially with a young family. I am on the cusp of doing the same thing, I have even looked at Pienza also.

Many, not all, of the posters here are empty heads who are praying the market will go down, but even if it does they probably don't have the wherewithal to buy anyway. 4S is a very very desireable family community. The commute is about as good as it gets for a new home community in the SD area. I believe this is one of the reasons for 4Ss resilience to large price drops. There are many waiting on the side lines itching to buy and live in 4S.

Stupid statements like "20% is in the bag and 60% is possible" for price drops with nothing to back up such a statement is worthless fortune telling.

Perhaps the most salient FACT (yes folks an actual fact which impacts the RE market) is that inventories in San Diego have begun to drop year over year. (See here )

Inventories are are still high but they have stabilized and have even dipped slightly year over year. This likely means that we have either arrived or are very near the bottom. The bottoming process may take several years however. It may indeed be a long time (5-7years?????) for RE purchased now to see significant appreciation. But the market is acting like it is bottoming. One other note. The SD market is very negatively impacted by older communities in which condo conversions made RE spike and then crash. The biggest price drops/foreclosures are in many of the less desireable communities. Fieldstone's resistance to lowering the price further is because the demand is there (all those waiting on the sidelines to buy in places like 4S).

Buy in 4S hold for 7-10 year and enjoy owning in one of the best family communities in San Diego while you enjoy at least an hour a day of extra time with the family because you don't have to communite to San Marcos, Temecula, or beyond. I will likely buy either Pienza or Maybeck at the next release.

In search of a crystal ball . . . .

Submitted by temeculaguy on June 11, 2007 - 7:47pm.

Buyorhold, my apologies if my posts sounded rude, it was meant in a spirit of humor. Ditto what SD said, you have to have thick skin on the blogs, but in trade you will get some wisdom and insight from some great minds that you might not encounter in your normal circles, and you might get some feedback from someone who screams at passing cars, the cost of free advice. If it was lending bubble you were referring to about mocking you (which I think it was) you have to admit you walked into it throwing down a deposit and then asking for advice. At least you were brave enough to not go with the "a friend of mine from work" angle, those crack me up.

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