Carl had hit the nail on the head with his question: â€œDo you want the house?â€
If you are buying because you want a fine place to live for many years to come I think you should put your apprehensions aside, make the best deal that you can and buy the house that fits your familyâ€™s needs.
In the current market, value is VERY subjective - it's really what anyone is willing to pay for a home that meets their needs, NOT what someone else paid for the same house up the block a year ago. Or even 5 months ago, for that matter.
The market is in still going up - if you want a home, you have to pay current values and play by current rules. Or, you can always take the chance and sit the market out, hoping it will turn downwards at some point. Problem is, when will that be? How much will it go down? Or even more important, how much higher will it go before it dips a bit in a market correction ... and will it dip as low as current values ...
Good luck to you.
The "worth it" question:
Whenever I see a "is it worth it" question on Trulia the Poster is basically concerned about over-paying and this is why a RealtorÂ® CMA is a good idea to understand the "worth" of a subject property. However, buying is also based on qualitative aspects that are many times difficult to convert to $$, but must be done. Only you can apply these values.
The "worth it" answer:
In my opinion, the answer regarding worth is only finalized once the property is later sold by the Buyer. In fact, since the future is unknown, this really comes down to how long you will occupy the new home; the longer the period of ownership, the less likely you will find yourself in a net negative position. Only when you sell property will you finally know if it was all "worth it".
Some stats to consider:
The Castello pricing is at $370 psf (without upgrades I assume). Here are "pricing stats" for the Dublin and San Ramon areas:
Concentrating on Dublin (sf range 2100-2500; listing date 4/1/13 to present), current Actives (5) listings are averaging $325 psf; Solds (2) are at $367 psf; a $6.9K pricing delta you may or may not consider significant.
Switching to San Ramon (sf range 2100-2500; listing date 4/1/13 to present), current Actives (9) listings are averaging $360 psf; Solds (11) are at $347 psf; a $52.9K pricing delta.
You might find the following of interest as well:
"Why You Do Need a RealtorÂ® When Buying From a Builder"
Think about it another way --- if you're not paying cash, note that interest rates are expected to go up.
So the cost to buy ---- down payment, and the monthly mortgage payment --- should also factor in your determining if it's worth $850K to you or not.