The only safeguard for value concerns during the construction period will be the appraisal. As Carrie noted, if the appraisal comes in low, the builder will most likely adjust the price to match the appraisal. This isn't a given, but it is likely considering most just want to get their inventory off the books. You won't get your financing if the appraisal comes in low, and that doesn't benefit anyone. If values really have fallen as much as you believe, your best bet is to sit back down with the builder. Of my 3 new build deals this year, all 3 have been renegotiated due to similar concerns. If the appraisal comes in at the purchase price, especially with the contracts that builders use, you will most likely lose your earnest funds and leave yourself open to being pursued for additional damages should you back out of the transaction. Depending on how much earnest money is at stake, some people might find it attractive to simply cut their losses if values are really staggering. Builders know this. Believe me when I say that the majority want a completed transaction much more than your earnest money, so open the lines of communication and see if they are willing to address your concerns.
Trying to renegotiate with the builder may be your best bet. They would rather sell the condo for less money than completely lose a sale and have to carry inventory. Go back to the sales rep and explain the situation to them and let them know that you're willing to walk away from the deal all together. Remember that the sales rep doesn't make any money unless you settle so they're more on your side than you think.
As a last resort, some buyers are leaving the earnest money deposit on the table and walking away. The reason why is because the EMD amount is less than the decrease in market value so you actually end up ahead. It sounds crazy, but many are doing that in this market. And you did buy near the peak of the market in Fairfax County so you may really be upside down at this point (especially with a condo).
I don't know what your contract states specifically, but I recommend speaking with a real estate attorney or experienced agent with experience with new home contracts/sales.
I had a past client who got out of his builder contract last year. Most builder contracts don't give the buyer much protection at all. Well that's done now.
Look for a clause regarding expected delivery date. Seems to me a long time has past since you signed that contract. Consult a real estate atty to see exactly where you stand. There is something called ""reasonableness"" I don't know the specifics - consult an atty. You have two options depending on the strength of your position. You could either simply demand your deposit back if your position is good - OR - take a more subtle approach and talk to the sales rep. If he/she knows that you've sought legal advice they might be willing to negotiate a lower sales price for you--- then you could still have the new condo you want & the new 2007 lower price tag.
Sometimes you can have your cake and get to feast - just takes a deft & subtle hand------
Just a thought...
PS: Eventhough the appraisal idea presented earlier seems logical - if you used the builders lender (and got the discount) it will probably appraise as needed anyway - at least in my experience.
If the price has fallen that much, then it should not appraise for a higher price. If your contract has a financing clause, check it and see if it does, then it won't finance and you can get out due to financing. When is the condo set to be complete? 2005 is 2 years ago? On the flip side, if you were locked in 2 years ago and it was 10-20%higher instead of lower, would you let the seller out of the contract. Just a flip thought for you.