Home Buying in Dublin>Question Details

hopeful_buyer, Home Buyer in Dublin, CA

KB Homes Fallon Ridege home prices dropped by 20K for all 4 models.

Asked by hopeful_buyer, Dublin, CA Thu Sep 12, 2013

Looks like the new home prices are cooling of a little bit. KB Homes which initially advertised to start the Fallonridge community prices from low to mid 750K all of sudden increased the prices to 850K even before the start of release. It looks like they don't have many buyers at these prices and they had to start reducing the prices. I hope this is a sign of prices reaching the peak and buyers are little less willing to buy at this crazy prices.

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I'm very glad more people is noticing the trend: prices going down and much more inventory. Now what are going to say those Realtors that said I was crazy:-) Fallon Ridge is one proof, they just had to drop prices by 20K and Winwood has 6 homes ready to move-in that they can't sell. Soon we will se how Winwood will have to drop prices. Home buyers: don't buy anything, prices will continue dropping until they be at the same level as was one year ago: 200k less!
3 votes Thank Flag Link Thu Sep 12, 2013
That's interesting. I was waiting for Windwood to drop prices. Last week I called and they said they were out of units. So, was the manager lying? Where do you get the info about the 6 homes?

Any inputs on how new homes will be priced since the previous releases might have been sold higher?
Flag Mon Sep 23, 2013
I seriously doubt prices will doubt, $200k. We've had a huge run-up this year, and it's good to take a breather, and some quality correction, but there's nothing happening in the economy to make the market correct to your wishes.
Flag Fri Sep 13, 2013
Agree with many answers below - it's not just builders who have been seduced by the increasing prices - we're now seeing many regular sellers dropping prices as well. Will prices drop down dramatically as suggested by Daniel? I don't believe so. Like any market, there is always an overcorrection before it balances and moves on. New homes are not exempt from this - I believe we'll see a price correction and then the market will continue to move forward.

Here are a couple of posts that may be helpful:

East Bay Housing Market Cooling Off: Top 5 Reasons

Cash Offers Decrease in 2013 – Good News for Home Buyers
2 votes Thank Flag Link Fri Sep 13, 2013
Hello Hopeful buyer,

I have signed up several buyers at KB homes at Fallon Ridge. They were very disappointed to see the prices go up so fast from where they were supposed to start.

But, now I am getting calls from the KB sales office asking me to see if any of my buyers are still interested. They are willing to entertain offers from the buyers and negotiate on terms and options. So this is good news and if you are looking to buy a home there, I would love to help you.

Make sure you take an agent with you so they can register you there. If you have not registered at other sales offices, please take advantage of what your agent can provide you and register with an agent. The builder will pay your agent a commission so it costs you nothing. I give my buyers a lot of inside scoop on how much the homes are going up in each phase, what the whole neighborhood resale homes are going for and if it makes sense to buy in that development.

By getting an agent you have a lot to gain and nothing to lose.

Meena Gujral
Achievers Realty
2 votes Thank Flag Link Thu Sep 12, 2013
I think they are getting a reality check. With interest rates rising and purchase prices in the Jumbo loan range, it's MUCH harder for people to qualify. If they truly want to move units they will need to be realistic. When you consider a conforming limit in Alameda county of $625,500 and you are looking at the desired 20% down; that translates to a purchase price of $781,875. Anything more than that will require either the borrower put more than 20% down, look for Jumbo financing or consider an FHA mortgage which goes to a $729,750 loan amount. None of those are particularly desirable.
2 votes Thank Flag Link Thu Sep 12, 2013
Prices are stabilizing across new developments. I have seen a reduction in KB home prices and also Standard Pacific. I think it is much more season then to say we're in another bubble. Normally, during this time of the year, property price do level off a bit, which btw makes it a great time to buy.
1 vote Thank Flag Link Sat Nov 2, 2013
This is not really surprising. Home prices have surged strongly the past year, especially since January. The housing market is (as always) driven by supply and demand. There was huge demand for new homes in Dublin and other areas. When builders see buyers camp out, and when releases sell out in a couple of hours, it is not illogical to conclude that there is upward pressure on prices, and it is normal for builders to raise prices in that scenario, just as a resale seller would. Some sellers (including builders) have gotten a bit ahead of the demand curve. As prices surge, fewer buyers are willing or able to pay the increased prices, and elect to pass. This naturally cools demand for homes, and causes sellers to rethink their asking prices when it becomes apparent that the market will not bear their asking price.

Sellers & builders who have overpriced their property will have to adjust their price to meet the demand. This is normal and healthy. Buyers have sensed that things have changed in some areas and price brackets, and have regained some negotiating position. The market will ultimately find its equilibrium until something else changes. I agree with Carl… unlikely to see a huge drop in prices. There is just too much demand, and not enough housing has been built to accommodate the increase in population. There will always be ebbs and flows as in any market.

Here is an interesting article on market value: http://www.680homes.com/blog/2012/10/03/waht-is-real-market-value/

Good luck!

Doug Buenz
The 680 Group at Alain Pinel Realtors
(925) 463-2000
Web Reference: http://www.680homes.com/
1 vote Thank Flag Link Wed Sep 18, 2013
Yes!....20K more this week = $40,000 in the last weeks....the bubble continue deflating...
0 votes Thank Flag Link Sat Sep 21, 2013
Daniel - to call this a "bubble" is to not understand what a bubble is. The market is currently correcting because overzealous executives for new home developments set prices higher than the actual market. Correction? Yes. Bubble bursting? Absolutely not.
Flag Sat Sep 21, 2013
I actually see them reducing 20k more this week.
0 votes Thank Flag Link Thu Sep 19, 2013
Hi Hopeful_buyer,

It never fails to amaze me how astute some buyers, like yourself are. Some builders indeed did increase their prices rather significantly, even before the houses were released. I too registered my clients on the first day the houses were to be released, only to find that the price had gone up from 750K to 815K. This is due to supply and demand and interest rates. As you are probably aware interest rates have gone up slightly, thus reducing the demand and therefore forcing some builders to reduce their prices.

I strongly urge you to seek a realtor to aide you in the purchasing of your home. Since the realtor will have your best interest at heart, as opposed to the sales agent who will have the builders best interest.

Syed Ahmed
Intero Real estate
0 votes Thank Flag Link Thu Sep 12, 2013
Hi hopeful_buyer,

Building on Gregorio's comment:

The Builders are also aware of the future market risk of conforming loan limits being reduced in the new year. This may compound the affordability issue; however, it should be noted Jumbo pricing continues its current ability to compete with conforming rates – the question is the duration of this trend.

"Regulator seeks to cut Fannie, Freddie loan limits"

Web Reference: http://tinyurl.com/lqdntrd
0 votes Thank Flag Link Thu Sep 12, 2013
Thanks for posting. They were being pretty greed at corporate, so have bumped the prices $100k more than their initial advertisement. To see if this is just KB being foolish vs. a general trend, is to talk to the other new home communities and see if they have any inventory, and how prices changed from the last release.

Let us know what you discover.

Good luck.
-Sunil Sethi
Web Reference: http://www.sunilsethi.com
0 votes Thank Flag Link Thu Sep 12, 2013
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