Village: Portola Springs

Tract: Manzanita (74 detached homes) in the City of Irvine

Builder: Richmond American

Schools: Irvine School District (IUSD): Westwood Basics, Sierra Vista Middle, Northwood High

Tax Rate: Property tax rate of approximately 1.8%.

HOA Dues: Master Association to be $175 to start and $150 at build out.  Sub Association to be $138.

Plans:

Residence 1 - 3-4bd/2.5-3ba - 2202 sq. ft.

Residence 2 - 3-5bd/2.5-4ba - 2533 sq. ft.

Residence 3 - 4-5bd/3.5-4ba - 2829 sq. ft.

<u>PRICING</u>

Phase 1 (August or September 2006)
Residence 1 - $973,730

Residence 2 - $1,043,000

Residence 3 - $1,095,900

Residence 1 - $898,000

Residence 2 - $966,000

Residence 3 - $1,029,000

Phase 3 (Picked up 4/28/2007 - September 2007 Move-in)

Residence 1 - $848,180

Residence 2 - $898,200

Residence 3 - $908,700

Phase ? (Picked up 7/7/2007)

<u> Plan 1</u>

Unit 6 - $801,480

Unit 21 - $812,950

<u>Plan 2</u>

Unit 8 - $839,600

Unit 20 - $812,950

<u>Plan 3</u>

Unit 5 - Sold

Unit 23 - 872,800

<u>Plan 3X (3d floor loft is standard)</u>

Unit 7 - $893,550

Phase ? (Picked up 11/03/2007)

<u>Plan 1</u>

Unit 21 $754,900

<u> Plan 2</u>

Unit 8 $774,000

Unit 20 $804,900

<u> Plan 3</u>

Unit 5 $832,000

<u> Plan 3X</u>

Unit 7 $864,000

Picked up 1/29/2008

Just visited Manzanita yesterday and got the price sheet. No change in prices except for plan 3x (with 3rd floor loft) was listed for $879,900 (up from $864,000).

Phase 1 - probably from August or September 2006
Residence 1 - $973,730

Residence 2 - $1,043,000

Residence 3 - $1,095,900

Phase 3 (September Move-in)

Residence 1 - $848,180

Residence 2 - $898,200

Residence 3 - $908,700

Looks like prices have come down a little bit more.  It was also interesting that the salesperson said they would listen to offers below asking price.  This is the first time I received this response from any of the new home builders.

zer0g -

How much lower do you think they will consider?

More softening!  Good news.
SCHB

Now these are getting down in range of the pricing of the Paloma Condo tract.  Will this force Paloma to reduce?

If the builder is outright saying that they are willing to listen to offers below the asking price, is it reasonable to conclude that at the corporate level, they have already developed a plan to lower prices across the board (yet again)... but that they don’t want to play their cards… and would rather see what the home buyer is subjectively thinking he/she can get away with on the offer?  Or, could this be another partial TIC concession - the builder can accept less on the offer, but CANNOT advertise how low they are really willing to go.

When did they roll out the latest round of price reductions? 

If they’ve officially lowered asking prices, the Irvine Company must have blessed it, which means they probably permitted other Portola builders to lower their prices as well.  Has anyone picked up a price sheet from Paloma, Los Colinas or Serra in the last few days?

It’s also interesting that they are willing to negotiate lower than the current asking price—it must mean that the Irvine Company has sanctioned a reduction even lower than what they’re asking now. 

IIIrvine - I’m not sure how much lower they would consider, however, the salesperson did seem rather desperate.  There was absolutely no one looking.

GavriloPrincip - I can only assume they rolled out the latest price reductions for the phase 3 release.  Allegedly all the phase 1 and 2’s were sold out.  Maybe all the homebuilders are approved for price reductions on their next phases?  It was also interesting that she was very reluctant to give me any specific incentives being offered, instead saying it can be negotiated based on which house was chosen.  This is a departure from the traditional offer incentive but no budging on price strategy.

If model three has been reduced from 1.1 million to 910K in just over 5 months…. there must be something seriously wrong with the development… I mean, 190K reduction seems like serious money to me… I guess it also shows just how much "fat" is present in all of these developments.

You asked about a price sheet from Las Colinas?  Phase three is:
Today:  Residence One  $1,138,000 minus $45,000 in design center credits
                                   Two  $1,114,000 minus $45,000
                                Three  $1,201,000 minus $50,000
                                  Four  $1,292,000 minus $55,000
 
Is this less expensive than Phase 2 or 1?
 
 

This is exactly the same pricing for Las Colinas that has been in place since January 23, but with the design center credits (and I believe they’re also offering a 3% broker participation).  The design center credit has increased slightly, IIRC; I think it was previously $45k for Plan 4.  The lowest priced Plan 4 on the previous price sheets was lot 278, priced at $1,274,00.  It must have sold, with the next-lowest priced Plan 4 being $1.292. 

Dropped in yesterday.  When I first saw these, I absolutely hated them.  Given a fresh look (and without the crowd), I found myself liking them quite a bit.  They are detached condos, and Richmond American expanded their profit by placing two homes on a single lot.  They are partially zero lot line, where your yard abuts the wall of the neighbor’s garage. 

Here is pricing:

Plan 1

Unit 6 - $801,480

Unit 21 - $812,950

Plan 2

Unit 8 - $839,600

Unit 20 - $812,950

Plan 3

Unit 5 - Sold

Unit 23 - 872,800

Plan 3X (3d floor loft is standard)

Unit 7 - $893,550

Also, Portola Springs master ass’n is $175 / month (wow!) now and reduce to $150/month at build-out, and the Manzanita ass’n dues are $138/mo.  Tax rate is approx. 1.8%.

Another interesting tidbit - TIC owns the lots and will not release the lots to the builder for phase release and construction until a certain number of each existing phase is sold.  I was also told that although there were plans for certain units to go on certain lots, that is subject to change as the project goes along.  I don’t know if that is a builder decision or a TIC decision.  Does anyone here know?

When I first saw these, I disliked them too.  Maybe I’ll check them out again now..

EvalS asked:
"I was also told that although there were plans for certain units to go on certain lots, that is subject to change as the project goes along.  I don’t know if that is a builder decision or a TIC decision.  Does anyone here know?"
I don’t know for sure, but reputable scuttlebut has it that the some of the builders are contemplating bailing out of their later planned phases at PS.  TIC wants to maintain certain pricing levels, and it means most of the sales have ground to a halt (at those prices).  I doubt TIC would turn anyone away that could actually move units at the price points they demand.  Currently, the market is getting in the way of those demands, though.  The situaiton is unrealistic and TIC appears to abe ttempting to deny reality, thinking or hoping that an upswing is just around the next bend.
SCHB

You are absolutley right about builders wanting to back out of PS! I worked for Richmond until earlier this year and the land costs for Manzanita are very high. Each lot cost 735,000 before building the actual home. Pardee is already jumping ship and Cal Pac wants to rezone and resize lots and sell them to KB. Taylor Woodrow wants to purchase Pardee’s lots for more Las Colinas products. There is alot of builders begging for mercy and TIC is not going to budge….

Keith,

Good to know you used to work for a builder.  There has been a lot of speculation around here regarding building costs per square foot for new construction.  I think the guess was around $125 per sq ft.  If you know, could you confirm or set us straight?  Many thanks in advance.

keitht925,
I had the same question as EvaL.  In addtion, how can land cost $735K per lot?  Does not make sense.  Does part of land cost get recaptured at the backend?
Many thanks.

I know it is hard to believe but, land cost is that high on the irvine ranch. The 735k price was for the (what is known as the ‘take down’) of the first phase at Manzanita. TIC is allowing builders a smaller price tag with a much slimmer profit margin than anticipated. Richmond is now probably paying 590k per lot with the market like this. Taylor Woodrow and Pardee have paid about the same for their lots in PS too. Down at Covenant Hills K hov and Pardee spent over 1 mill per cut lot for their products capistrano and encantada. In orange county, builders dont even make a ten percent profit it’s actually unheard of. And yes after the lots are purchased, depending on the product types, some homes can cost up to 125 per square feet. Manzanita i believe is at about 85-90 per square foot.

Keith - Thanks so much.  I know that many of us were interested in the basic costs of new homes. 

As I look at Manzanita, it appears that builder cost currently is approx $547K for a Plan 3, but they are asking $872K, by my math, RA is pulling more than a 10% profit on each unit of Manzanita.  Aside from costs for the sales agents, what am I missing?

Thanks in advance.

PS to IHB admins - since we’re going a bit off topic on an area of general interest (Builder Costs for New Construction), should we create a new topic and copy/paste some of Keith’s info into it?

The profit split may have changed within the last few years but , as keith said, builder profit is capped at 10% (or less after misc. costs) by TIC. Everything beyond that belongs to TIC. It’s a highway robbery at best.

And keith, correct me if I’m wrong, but I don’t think the $125 psf figure is direct construction cost. Does your figure include all soft costs? We are building out in the Antelope Valley and our direct costs per SFR is $55 psf.

EvaL—-The gap between the land cost, actual sales price and Richmond’s ten percent is the total profit that goes to TIC. As sad as it is, TIC profits more off each home sold rather than the builders. No builder has ever received over 12% profit on any project. Also, flooring and option concessions must be figured in as well as carry costs for the models and parking lot since those lots are purchased ahead of time with no direct return on profit. Interior design, included options and landscaping are all costs that are included with the ‘carry cost’ until the models are sold. TIC lets you recover your ‘marketing’ costs before they figure out profits. With this type of market, Richmond is lucky to get a 8.5 % profit off of Manzanita.
 
Raymond—I dont think your Antelope Valley homes are designed by Rober Hidey and come with wrought iron fixtures that are 5,000 a piece at cost to the builder’s purchasing department. And i dont think you hire Anne Mattison to consult on your exterior stucco coloring or Barbara Stowers to consult on your ‘diverse’ elevations that are not completly the same across each floorplan. Manzita has a high framing cost.

keitht925,

I asked whether your $125 psf figure was the direct construction cost. According to your reply, I’m guessing it isn’t.

TIC owns everything in Irvine so they have the upper hand. So they will squeeze anyway they can. Too bad, they builders have to accept TIC’s terms or need to get out.

New Pricing - Picked Up 11/03/07
 
Plan One - $754,800
Plan Two - $774,000
Plan Three - $832,000
 
 

BethN-  Do you know if the prices are for completed units or new units without pre-picked options?
SCHB