First of all take everything you hear from real estate agents with a grain of salt. That being said, there is no $1.5 to $2 million market in San Ramon. That was a figment of people's imagination. The default rate on homes in Norris Canyon is through the roof and there are several that should be coming back on the market around $1 million in the next few months.
Furthermore, John Laing Homes declared bankruptcy, so here's what's going to happen. The homes in Roubion under construction will be liquidated and whatever the market price is, which will be between $1 million and $1.5 million. This will reset the price for every other home in hte area, because the Roubion homes and lots were far superior to any of the Toll Brothers ones.
After the homes in Roubion get liquidated the remaining lots will be sold, most likely to another builder. The builder that buys those lots will have a significantly lower basis, and will redesign the homes to be smaller and cheaper to build, so they can sell them for less and still make a profit. They'll probably target homes in the range of 2,500-4,000sqft and don't be surprised if prices are well below $1 million.
All this will take time, but this is what will happen. In the meantime we'll see more and more bank owned homes selling out there dirving down the prices. March 2009 had the HIGHEST default rate ever in the state of CA. This mean s we can expect a massive wave of bank owned homes hitting the market in about 5-6 months.
If you're realling interested in buying a $1.5 to $2 million home, wait for at least 6 months and then start to look in Alamo, Diablo Country Club, or other places that historically have proven to be the high end enclaves in the tri-valley. I grew up in San Ramon and I love it, but it's just not a $2 million community.
There is no doubt in my mind that the homes out there will be under $1 million probably before the end of this year. I think it's a much better long term value than Windemere, but you need to wait to see what happens to the John Laing lots, the builder that buys those is the bulder you probably want to buy a house from.
Thank you for a good information. You are one of few realtors advising potential home buyers to wait to purchase. Based on the amount of foreclosures in Norris Canyon combined with Roubion bankruptcy, do you believe the home in Norris Canyon will be selling under 1 Million in 2009 or 2010. There is one home already priced at 1.099 Million. With Windemere and Shapell selling their new 4000+ sq. ft home around 1 Million, is it a good bargain purchasing a foreclosed Tolls brother home for around 1 Million or is it a failed development where the price will keep on coming down?
All I knew about is the cost of housing should not exceed 1/3 of gross income, using this formula 1 mil house with 80% mortgage requires 200K or less annual income depending on interest rate. Even this formula is too general to apply to everyone. Cost of living is such a flexible thing, doubling it or cutting it in half doesn't necessarily change quality of life drastically. In the things you list, besides pre-school, I don't see any needs of private schooling for my kids in San Ramon. More expensive cars? I am fully confident my two Toyotas will run another 10 years without any issue. Following your formula, an average family would never be afford a house in bay area, even house price drops another 20%. Maybe time for a change?
Income x 2.5 is the formula used for decades to measure affordability. 500K x 2.5 = 1.25 million home. I went under slightly to account for the increased cost of living overall (private school for kids, more expensive, cars, groceries,utiliites, cell phones, landscaping costs etc) compared to the previous decades this formula was used. Sure, you can get fancy and strech your budget and qualify to own homes more expensive than that. But this is how banks have been measuring ability for the last 60 yrs. The 5 y rs that they got away from this, will lead many of those banks now to go bankrupt. (see any business news on tV) and many homeowners will lose homes b/c they did not follow this rule.Plus, don't you want to save $$ for a rainy day?
In general you are correct, property taxes are tax deductible. You will get a percentage of it back by paying less taxes; but no more than the percentage of your tax bracket, in general. However, the whole argument is mute, since AMT is hitting more and more tax payers; the AMT deminishes the effects of tax deductions overall. Take Care
I can send you the spreadsheet with all utilities, taxes, other expenses which show this. John
If you want full details, let me have your email address and I'll send them to you. I believe I can negotiate some good deals with Toll Brothers and John Laing homes for buyers, provided tey are not already registered there of course. Let me know if you need any help.