East Bay New Home Developers Bringing Prices DOWN, too!

April 13, 2008 by Jim Walberg · Leave a Comment

East Bay real estate prices are NOT being helped by new home developers “dumping” their unsold homes!

The East Bay real estate markets continue to feel the impact of the price corrections, and the credit meltdown that have occurred. However, there is another BIG factor effecting real esate prices, too – new home developers “dumping” their unsold inventory. We just assisted a family in the sale of their San Ramon home that was only two years old - 3-bedroom, 2-bath, 1,600 square feet, 2-car garage, and on a 3,500 square foot lot. They needed a larger home because of their growing family and they wanted to stay in the community because of the great school district. They sold the home for a fair price and came out with some profit from when they purchased it. It was in a great location in San Ramon and in walking distance from two great schools. We began their home search two weeks before the close of escrow on thier San Ramon home. As part of the home search process we suggested they check out several of the new home develops as options. What an education we all received! (Remember, in order to get the benefit from us regarding negotiating with a New Home builder, you need us to go with you to the new home develop and register you in during your FIRST visit. If that does not occur you will be on your own, and the commission paid to us by the new home developer is not refunded to you. That increases their net profit and they love it when a Realtor is not representing you!)

The home they sold was built by Linnar Homes. They learned if they purchased their next home from Linar’s new home division they might qualify for some incentives. That was an understatement. They just completed their purchase contract on a new home built by L innar Homes in San Ramon. Here is the summary of what we were able to negotiate.

Price: only $140,000 higher than the sale of their present home – $785,000! Two months ago this same home was listed for over $1,000,000 with Linar!!!
3,300 square feet, 4-bedrooms plus a den, 3-baths on a 9,000 square foot lot, plus a 3-car garage!
Located in an upscale community in Danville!

This transaction just changed all the comparable sales within that neighborhood – dropping home values of those that purchased at the original price by over 20%! This is now the new comparable price that appraisers will be using when confirming sales prices of homes for the mortgage company. So, are you starting to understand the impact of new home developers “dumping” their unsold inventory on the price of your home?

Another example is happening in Dublin right now. Greenbrier Homes has a small new home development that they have been selling new homes in for several years. We have a listing in this small little subdivision built along an open space trail system along a creek. It is beautiful. Our clients bought their new home one year ago. It is the best floor plan, they purchased the upgrades that were offered in order to make it even more sellable, and it is a corner lot facing the creek. The home is listed for $749,000 and it is beautiful. Greenbrier Homes has one last new home to sell. It is the same floor plan as our listing, and it has all of the comparable upgrades. Last week Greenbrier announced they were selling it for $649,000! Our clients just took their home off the market and have concluded that they will not be able to sell it for a year or more because of the new comparable sale this event will create. Business is business. Any developer can sell their new homes for any price they want to. My comments are meant to have you understand an additional factor that is having an effect on the prices of some of the communities in the East Bay. Do you have any similar experiences you want to share? Let me know…leave a comment below!