Pienza – New Lots Pricing

[bsrsharma]

SD Realtor,

Thanks for that informative reply. I didn’t know there is so much higher risk in new purchase. My concerns about buying a new house are more “engineering based” – let someone else do the “beta testing”; I am afraid of construction defects that may show up after a while, especially ground settlement/water related. (The house we owned & sold was involved in a similar lawsuit before we bought, and I was a little apprehensive at first looking at all the microfilms full of ‘disclosure’). Especially, anything built in the last 5 years or so should be suspect quality wise. But you add a compelling reason why I should just stay away from anything newly built.

[temeculaguy]

It’s a double edged sword Bsrsharma, older houses can have their issues as well. The last five years the builders were making plenty of money so the quality was pretty good, the mid nineties saw very little builder profit so a lot of corners got cut. Todays windows, copper pipes, insulation and fireproofing are reasons to weigh newer vs older construction. S.D. is totally right about the emotional buyers in new developments but don’t just assume that anything over 5 years old is better, always research the crap out of anything you get serious about. SD, isn’t it true that if a buyer places a deposit based on the builder pre-qualing them and the loan program or the lender vanishes during construction that the buyer is usually refunded their deposit. I know of people who were given their money back recently because the 0 down programs available two months ago went away due to the lenders changing their rules, not the buyer changing their mind.

[temeculaguy]

It’s a double edged sword Bsrsharma, older houses can have their issues as well. The last five years the builders were making plenty of money so the quality was pretty good, the mid nineties saw very little builder profit so a lot of corners got cut. Todays windows, copper pipes, insulation and fireproofing are reasons to weigh newer vs older construction. S.D. is totally right about the emotional buyers in new developments but don’t just assume that anything over 5 years old is better, always research the crap out of anything you get serious about. SD, isn’t it true that if a buyer places a deposit based on the builder pre-qualing them and the loan program or the lender vanishes during construction that the buyer is usually refunded their deposit. I know of people who were given their money back recently because the 0 down programs available two months ago went away due to the lenders changing their rules, not the buyer changing their mind.

[temeculaguy]

It’s a double edged sword Bsrsharma, older houses can have their issues as well. The last five years the builders were making plenty of money so the quality was pretty good, the mid nineties saw very little builder profit so a lot of corners got cut. Todays windows, copper pipes, insulation and fireproofing are reasons to weigh newer vs older construction. S.D. is totally right about the emotional buyers in new developments but don’t just assume that anything over 5 years old is better, always research the crap out of anything you get serious about. SD, isn’t it true that if a buyer places a deposit based on the builder pre-qualing them and the loan program or the lender vanishes during construction that the buyer is usually refunded their deposit. I know of people who were given their money back recently because the 0 down programs available two months ago went away due to the lenders changing their rules, not the buyer changing their mind.

[SD Realtor]

BSR I understand your concern about the new house. As tg says older ones have plenty of problems and can be WAY more costly to repair then anything that crops up with new ones… It is a tough call. I do think newer construction is of higher quality then older stuff but that is a speculative statement made without much analysis.

“SD, isn’t it true that if a buyer places a deposit based on the builder pre-qualing them and the loan program or the lender vanishes during construction that the buyer is usually refunded their deposit. ”

TG the case above absolutely is true and people will get the money back.

The case I was referring to is as follows. Mr and Mrs qualcomm engineers have 125k to put down on the 775k home in 4S. Now they end up going with the preferred lender because they HAVE TO HAVE those incentives. Thus they work with the lender and go with the lenders program… They choose the jumbo loan and float it because the rates are high right now and escrow cannot close until December because the homes will not be complete until then. They are prequalified, they sign the purchase contract. Now the loan package doesn’t disappear at all… It stays in place but Mr qualcomm starts stressing out in November because he looks at his spreadsheet in earnest and thinks man I am gonna be paying almost 5-6k a month for my mtg, prop taxes, HOA, gardner, homeowners insurance, hoa… wowsers!

Maybe I shouldn’t have signed that purchase agreement.

SD Realtor

[SD Realtor]

BSR I understand your concern about the new house. As tg says older ones have plenty of problems and can be WAY more costly to repair then anything that crops up with new ones… It is a tough call. I do think newer construction is of higher quality then older stuff but that is a speculative statement made without much analysis.

“SD, isn’t it true that if a buyer places a deposit based on the builder pre-qualing them and the loan program or the lender vanishes during construction that the buyer is usually refunded their deposit. ”

TG the case above absolutely is true and people will get the money back.

The case I was referring to is as follows. Mr and Mrs qualcomm engineers have 125k to put down on the 775k home in 4S. Now they end up going with the preferred lender because they HAVE TO HAVE those incentives. Thus they work with the lender and go with the lenders program… They choose the jumbo loan and float it because the rates are high right now and escrow cannot close until December because the homes will not be complete until then. They are prequalified, they sign the purchase contract. Now the loan package doesn’t disappear at all… It stays in place but Mr qualcomm starts stressing out in November because he looks at his spreadsheet in earnest and thinks man I am gonna be paying almost 5-6k a month for my mtg, prop taxes, HOA, gardner, homeowners insurance, hoa… wowsers!

Maybe I shouldn’t have signed that purchase agreement.

SD Realtor

[SD Realtor]

BSR I understand your concern about the new house. As tg says older ones have plenty of problems and can be WAY more costly to repair then anything that crops up with new ones… It is a tough call. I do think newer construction is of higher quality then older stuff but that is a speculative statement made without much analysis.

“SD, isn’t it true that if a buyer places a deposit based on the builder pre-qualing them and the loan program or the lender vanishes during construction that the buyer is usually refunded their deposit. ”

TG the case above absolutely is true and people will get the money back.

The case I was referring to is as follows. Mr and Mrs qualcomm engineers have 125k to put down on the 775k home in 4S. Now they end up going with the preferred lender because they HAVE TO HAVE those incentives. Thus they work with the lender and go with the lenders program… They choose the jumbo loan and float it because the rates are high right now and escrow cannot close until December because the homes will not be complete until then. They are prequalified, they sign the purchase contract. Now the loan package doesn’t disappear at all… It stays in place but Mr qualcomm starts stressing out in November because he looks at his spreadsheet in earnest and thinks man I am gonna be paying almost 5-6k a month for my mtg, prop taxes, HOA, gardner, homeowners insurance, hoa… wowsers!

Maybe I shouldn’t have signed that purchase agreement.

SD Realtor

[4spotentialbuyer]

Lots are not selling well in Pienza

As of 08/27, it looks like only 3 lots have sold.
Lot 804 (Plan 2901) – $755,990
Lot 805 (Plan 3212) – $789.490
Lot 806 (Plan 3365) – $792,990

3 lots that were previously “reserved,” are back on the market

Lot 835 (Plan 3365) – $756,990 (Reserved)-available now
Lot 837 (Plan 3365) – $744,990 (Reserved)-available now
Lot 861 (Plan 3365) – $738,990 (Reserved) -available now

Also 2 lots that were not sold as of the last phase still are available
lot 802 (Plan 2901) – $767,490
lot 858 (Plan 2901) – $769,977

1 additional lot that was previously “sold” is coming back on the market

Lot 801 (Plan 3212) -price not available yet

So currently there are only 3 sold out of 11 available homes.

Pienza therefore is having problems selling any of its homes, not mearly the 2901 plan. The builder is not drastically reducing its prices or increasing the incentives…

Other neighborhoods in 4S with similar square footages and in the same price range also have unsold inventory…none of the builders seem to grasp the logicc that there are not many buyers out there for homes in the 700K-800K range especially with the rise in jumbo loan rates and the tightening of credit that has occurred in the last 2-3 weeks.

How long will it take builders to realize that the market has changed?

Perhaps winter? Also, has anyone had any success with using a realtor to make a lowball offer on new homes?

We are trying to hold out a bit longer before buying…

[gn]

4spotentialbuyer,

Do you know why lots 835, 837 & 861 (3365 sq ft) are priced lower than lots 802 & 858 (2901 sq ft) ?

[4spotentialbuyer]

Per Pienza map, looks like lot 802 is larger and is across from a slope—no home across from it so it has a “view.” 858 includes some upgrades…not sure if someone had fallen out of escrow (stainless steel appliances, granite, paint, and “many more”)….

[sdcellar]

We are trying to hold out a bit longer before buying…

Try waiting at least a year (see my earlier post).

[schizo2buyORnot]

I am starting to despair that the really big price drops will only be out in some BFE crap hole neighborhood in east Inland Empire where I have to commute for 2hrs on $3 a gallon gas and that the places I want to buy like 4S/Scripps remain out of reach . . . people seem to keep buying there no matter the climate

Impatient renter

In search of a crystal ball . . . .

[sdcellar]

They’ve had really big price drops in 4S, so I don’t know what you’re talking about.

[SD Realtor]

4Spotentialbuyer just be patient.

sdcellar seems to have a good strategy and more important is factually correct. Piensa has had price reductions compared to the past. It just takes time and the price you want or that is affordable to you may indeed not happen immediately. Try to take a long term view of the deal.

“How long will it take builders to realize that the market has changed?”

The builders know the market very very well. The problem is that they have tremendous margin built in. They will be aggressive when they have to. Think about it this way. Let’s say they slashed all Piensa pricing by 50k. Would that make it all affordable? IMO not really, but psychologically to people on their mailing lists and such, it very well could make a huge difference. It is all relative ya know?

“Perhaps winter? Also, has anyone had any success with using a realtor to make a lowball offer on new homes?”

I have been out to Piensa with 3 different couples in the last year and have made lowball offers. None of the offers were negotiated and the sales office stuck to their guns. Now maybe we came on a busy weekend or bad timing or whatever because I have heard success stories of negotiating. Kind of hard to say.

What needs to happen is more foreclosure activity in 4S so the resale pricing will come down as well and add more pressure to the builders. Resale pricing up there is CRAZY high and makes absolutely no sense to me.

SD Realtor

[4spotentialbuyer]

SD Realtor, Thank you for the feedback…we will continue waiting as I think the builders need to cut the price by at least 50K…I am aware of the reductions in 4S Ranch in the last year, however, the current prices are still too high…there are other builders in 4S Ranch with similar sq. footage homes and we will wait to see which builder reduces its prices…I think we are waiting until Winter 07, Spring 08, or at worse summer 08…while we know it would be better to wait until 2010, we are one of those buyers who want to buy a home to live in and not merely as an investment.

[Author]

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