July 24, 2006 at 5:59 PM #6985
Gang, my wife and I have been looking in a new development in Scripps Rch called Stonebridge Estates (http://www.mcmillin.com/findahome/stonebridge/stonebridge.html). Higher end homes, but still typical tract housing. But it is a nice neighborhood with decent sized lots and in a quiet area. It is all land that the fires torched several years ago.
Has mello roos (1.9%), nonetheless, if we can get a house at a reasonable price, we will deal with it. The development is struggling, but they just will not admit it and I honestly feel that there is price collusion among the builders. McMillin is the mater dvelopor and I think they opened in 2003 or 2004. The first development Mill Creek (Brookfield) has been completed and they are now struggling to close out the 2nd, Astoria (also Brookfield) can seem to sell out the close out phase. They have dropped prices slightly but not much. There are also several resales on teh market in both Mill Creek and Astoria that have just been sitting on the market.
Brookfield’s nicest development is Calabria, which had it’s grand opening in 2004, they just did release 5 and every single person on the list deferred. We are waiting for release 9 for the lot that we like, so we will be waiting awhile. But they still have 23 homes for sale, some back from Release 1 and these idiots have not budged at all from their prices and are not offering any real incentives. Some incentives on teh oldest inventory. It is mind boggling that they can afford to carry all of this inventory. And they wonder why people are not buying the homes.
Shea (Sanctuary) also has a development in there and also has not lowered their homes and has about 12 homes for sale that have been for sale for months. One of the sales folks had the audacity to tell me that “their prices are the biggest incentive”. Their cheapest model is $1.4M. Warmington is another developer in there who can not seem to close out either and recently slightly lowered prices, but it is a joke, because they were ridiculously overpriced to begin with. They are now embarking on their second development there called Viscaya starting at $1.2M. These are not million dollar homes!
So to make a long story short, these greedy builders are just not getting it. (I do not think that they read any of Rich’s articles.) Or they are not desperate enough yet to start to lower the prices or provide any incentives. It has become a game of chicken and we are waiting to see who will blink first.
One of the other couples looking in the neighborhood told us once a Shea sales person slipped and told them once that all of the builders had met and discussed the pricing and that the other builders were coming down hard on Brookfield for not raising their prices. So there is definitely something going on over there. But when they do not sell homes and loose customers, then they may change their approach. Davidson and Greystones are also going to building there and it will be interesting to see if they are market savvy or arrogant and foolish with their starting prices.
Is anyone seeing builders dropping prices and providing incentives? I guess they must have the profit margins to wait it out or have not become that desparate yet. Any insight, observations, and feedback would be appreciated.July 24, 2006 at 7:56 PM #29508
Look through the real estate ads, and almost every builder is offering incentives and price reductions.
Partial copy of bubbleinfo.com posting about Bressi Ranch. So be aware of builders who sold at a disount, but left the home in pending status, so the real sale price does not show up on the MLS.
Bressi Ranch Update
“Today’s check of the MLS shows twelve pending listings in Bressi listed by the builder. Every one of them have already closed escrow, but they still show pending. Why? Do they have something to hide?
Here’s how they turned out (add the 000s)
List Price/ Sold Price Date Closed
690 630 6/20
721 615 5/26
739 649 5/26.”
Go to his website to see more pricing.
My friend has several buyers who are sitting still until fall. They want to wait for the sellers to really crack. Look, last year we had 1 buyer for every seller, and today, 1 buyer for every 8 sellers. Who will blink first? The sellers. Be patient.
By the way, inventory started climbing in the summer of 04. In April 04, we had 3,000 homes, in summer 6000, and by fall, 12,000. Can someone correct me if I’m wrong. So the market started weakening in the summer of 04.July 24, 2006 at 8:28 PM #29513waiting hawkParticipant
Here is the best deal!
ExtravaganzaJuly 24, 2006 at 8:29 PM #29514hsParticipant
“The San Diego real estate market has been slowing down for almost 2 years now. Flat with some good deals here and there is a good description. Some reasons for this are that many agents kept trying to push the range on listings, anticipating the… MORE->
About Dawn Lewis”
This lady Dawn Lewis, who is a realtor, says the same thing.
Check http://realtytimes.com local market condition in San Diego county. You will see her comment there.July 24, 2006 at 9:30 PM #29517BugsParticipant
I don’t know if the builders are really cooperating with each other but I guess I wouldn’t be surprised either way. This price range is the last bastion of optimism – it’s been propping up the averages whilst almost everything else has been sliding. Once it goes there won’t be any pretenses remaining.
There’s no reason not to wait right now. If interest rates dropped to zero tomorrow the market would still be flat because the investors mostly know better than to purchase in this market. Take 25% or more of the buyers out of the game and the inventory stacks up pretty fast.
I’ll betcha by 10/01/2006 those prices will have been cut by 10%. And it still won’t be enough to stem the tide.July 24, 2006 at 9:32 PM #29518nlaParticipant
I happen to know Dawn Lewis. She’s a very succesful agent in Eastlake area. She was the salesagent when we purchased our first home from KB Home in 1999 and she also lived few houses away from us before. Before the housing boom she left KB and became an independent realtor.
-peaceJuly 25, 2006 at 8:02 AM #29541PDParticipant
I was watching this development before they started selling as I was interested in buying there. The initial price for the first homes was supposed to be $650,000 (as per the mailings I received). I went to the grand opening. There were so many people there that they had buses to transport people from their cars to the model homes. It was packed! They had many tables set up in the street for people to fill out their purchase forms. The initial prices turned out to be just under $900,000. These builders have already made huge profits. If they would have had a profit at 650k, then they raked it in. That may be part of the reason that they have not felt the pressure to reduce prices.July 25, 2006 at 8:23 AM #29545
PD and everyone else thanks for your feedback. I agree, I think they are sitting pretty, that is why there is no pressure to lower prices. But by 2007 that will probably change. At every release, I try to meet the other families that want to buy there and we are actually trying to organize ourselves and go in and buy several properties as a “buying group” to leverage our buying power.
PowaySeller, I saw the Bressi Rch info on Jim’s site. The problem with that development is that it sits right under the flight path for Palomar airport and it is also sold and marketed as Carlsbad although it is actually in the San Marcos school district.
I think we will wait until these guys come to their senses, they can not afford to wait forever and time is on our side this time.July 25, 2006 at 9:25 AM #29555
One of my realtor friends told me that he has several buyers waiting on the sidelines until September, because he thinks that in the fall, the motivated buyers will have to face reality. So will the builders. The peak summer selling season will be behind us, and there will be fewer buyers out there. Inventory might go up. Although the testing-the-water sellers may retreat, the ARM holders and Nokia people will be very motivated sellers. Those who need to sell will lower their prices to compete against the few buyers out there.
Our market prices are determined by 30,000 homes that are sold. All you need are 30,000 motivated sellers, and prices will drop very fast. The other 1 million homes will be repriced automatically.
I am surprised that these builders are not lowering prices. Builders are well aware of the cyclical nature of real estate, and are quick to adjust when they see the cycle change. I wonder what’s going on with this particular group?July 25, 2006 at 9:46 AM #29559
I concur with you wholeheartedly, I follow the market closely and read all of the various blogs that you do. I also have access to Sandicor (MLS) and watch the resales closely.
This particular group of builders and development is an anomoly. Their prices have not waivered one bit. They are all sitting on lots of inventory and carrying the costs for it. Brookfield in particluar still has 23 homes for sale and did another release of six more. I am certain there is price collusion going on there. I would have never thought of it, however their behavior is completely against the grain of other developments and the market dynamics. It just does not make sense.
Also, the slip of the tongue by the Shea sales rep that the builders all do meet and do discuss prices. As I mentioned, she shared that the other builders had given Brookfield lots of grief for not raising prices in line with them.
I am wondering if there is a consumer housing watch group out there that I can contact to poke around and see what is happening here? Does anyone know of anything?July 25, 2006 at 9:50 AM #29562
BobbyD, you seem very anxious to buy. Did you read privatebanker’s and Bug’s posts about the bottom of the last SD real estate cycle, which occured in years 5 or 6 of the decline? Banks had so many REOs, they hired entire REO departments, and homes were boarded up. I was told that some homes sat on the market for ONE year with NO ONE even looking at it! Why don’t you wait until we see that dire situation once again? It will be 3-6 years away, but that is when you will find the types of bargains you seek.July 25, 2006 at 9:58 AM #29564
PowaySeller, I agree completely. We are actually not in a hurry at all and are “bubble-sitting” just like you. We sold our house last year at the peak and moved into a condo for the time being while we wait for a bargain. We own the condo, so we are not paying rent either. So we can afford to wait, and will do so. I guess I just have a lot of angst in wanting to see these greedy developers feel the heat and would like to see them sweat and retreat. Their smug arrogance just making me nuts.
In the meantime, I am learning about foreclosures and completely agree with your thoughts and approach. Thanks for all of the feedback and allof your informative and well thoughtout posts.July 25, 2006 at 11:44 AM #29572sdrealtorParticipant
Correction: Bressi Ranch is in the Cralsbad School District. But yes the air traffic is constant!
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