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

[recordsclerk]

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.

[temeculaguy]

I think the wave just has’t hit that price range yet, visit this post in four months and you will see a different story. Here’s a tale from the front lines of the bust in Temecula. Two weeks ago today I visited the grand opening of a development and they seemed to have priced aggressively. 359k for 2100 sq ft detached alley home ($140 hoa includes all landscaping, pool, no mello roos) granite and choice of cabinet finish and upgraded fixtures free. Last Sunday I went back and after two full weekends of it being open, not one sale. I even asked the salesperson if they were out of sold buttons for their map and she confirmed, not one sale and that phase is being framed and may have passed some room option cutoffs.

Today I visited another large development a mile away that had opened and started selling in January, but to my dismay they are only pouring foundations for the models now and expect the models to be done in August. Same price today that was set in Jan 07 is 359K gets you a 1500 sq. ft. attached triplex, no granite, pay for cabinet finish upgrade, etc. I think they had less sold buttons than they did in January. I told her what the new ones nearby were going for and her jaw dropped. She countered with “well you have to look at what’s included in ours” and opened up the brochure to reveal 6×6 white tile counters and honey oak cabinets. I told her the competition is not only detached and larger by 30% but include everything they charge for. She muttered something about her manager not informing her of this and I added that despite the competition being cheaper, bigger and better, they haven’t sold anything, then wished her luck at these prices and headed to the parking lot where it was easy to find my car as it was the only one besides the salesperson’s. This change took only 120 days.

Maybe only the outlying areas and the lower priced homes will decline during this bubble. Maybe 4-S maintains it’s price level and never goes down with the rest. Good luck with that.

[Bugs]

Ya’ know how the bulls like to characterize their willingness to overcommit their resources as being a form of boldness and courage? I’d agree that applies when times are good and the market is reaching ever upward. However, I think the bold and courageous decision right now is to resolve to hold off buying until the market settles.

When your significant other is on your case to buy now it takes some hair to stand up and say “time is on our side and the longer we can wait the better off we’ll be”. Those who lack that courage will pay for it.

The people who have held off from buying during the last 18 months have, for the most part, been well rewarded for their patience.

[gn]

temeculaguy,

Thanks for telling us what’s going on in Temecula.

“… she confirmed, not one sale and that phase is being framed and may have passed some room option cutoffs”

What do you mean by “being framed” ?
And “may have passed some room option cutoffs” ?

[temeculaguy]

The wood framework is underway and almost complete. These houses like many new houses have choices you can make about the floorplan. An upstairs living room (loft) instead of a 4th bedroom, A bathroom off a secondary bedroom, a den without a closet in lieu of a bedroom, decks, etc.

All options have a deadline date for each option category, once they start framing they cant change the configuration of the rooms or walls (usually the cutoff is just prior to framing). Plumbing options for things like laundry room sinks or additional hose spigots and electrical options such as ceiling fan outlets, cable, phone, wiring for surround sound and outdoor t.v., etc. are usually not allowed once drywall has started. At each stage, chunks of options are eliminated. If a house does not have a buyer by the time framing starts it has a harder time selling because some people want the 4th bedroom and not the loft. If it get to cabinets and appliances, the builder guesses or goes with the cheapest and that can turn away some buyers. With each option cutoff date that is passed, the builder’s odds of selling at full price diminish. When the house gets to what is called “standing inventory” (done except for flooring) they really panic.

[citydweller]

I hope this isn’t a stupid question, but why don’t they just stop before framing, and wait for a buyer, so that all the options are still available. It seems like they are just lowering their chances of getting it sold by “guessing” what the buyer will want.

[schizo2buyORnot]

Spoke to two different builders in 4S. Currently they are not even pouring foundations until they have a phase release and buyers committed (earnest money paid). Then they pour the foundation and begin the building process. This is causing a slow down in the original plan but they are not stuck with built homes which aren’t sold. This is the story in 4S Ranch at least. Don’t know about elsewhere. Thinking of buying there. Pressure from wife is immense.

In search of a crystal ball . . . .

[temeculaguy]

Having never built homes I’m guessing here, but once framing starts they keep moving because raw wood is exposed to the elements and they have already made “reservations” so to speak with the various subcontractors, scheduling their time in advance, there may be a financial penalty if they cancel on short notice. Plus they already paid for the models, the sales staff, permits and advertising, shuting down in a falling market is probably a bad idea. What they will do is delay the next phase until a percentage of the released phase is sold and discount the unsold stuff. It seems to be a double edged sword because if they sell three houses and then discount the other three, the first three buyers will cry foul and they haven’t really bought, just reserved with a deposit. It is my guess that most builders have a lot of money invested by the time the foundation is poured that they might as well and finish and get paid even if it is for less than what they had hoped for. Plus they have no guarantee they won’t have to lower prices further, they probably want to get what they can while they still can since the average Joe may not follow the market like a pigintonian.

[Author]

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