Price Drop in Tract Raises Signs of Protest

John and Ann Widay fell in love with the new house in Canyon Ridge the moment they first saw it. Situated on the rim of a pristine canyon preserve, a short drive from the city, the home in the Mira Mesa subdivision had virtually everything a young family could ask for.

There were vaulted ceilings and four sunny bedrooms in the 2,200-square-foot tract home. And, instead of leering out their kitchen window into a neighbor’s back yard, they could gaze across the brushy expanse of Penasquitos Canyon Preserve that snaked past their new-found community.

But there was more. The builder, Fieldstone, offered incentives such as free landscaping, washers, dryers, refrigerators. There were offers to pay closing costs as well as for window and flooring upgrades.

The asking price for the Widay’s home on Norcanyon Way: $288,000. “We were very sold,” recalls the 23-year-old mother of one.

There was, however, one small catch, say the Widays and others who bought homes in the subdivision. Selling agents, they said, warned buyers to close escrow by the end of December or lose the incentives.

What’s more, said Heidi Miranda, another Canyon Ridge homeowner, a selling agent advised her to act quickly because housing prices in the subdivision would undoubtedly be raised after the first of the year.

But the higher prices never came. Instead, on Jan. 6, Fieldstone homeowners were stunned to learn that the bottom had virtually dropped out of housing prices at Canyon Ridge.

The builders had slashed prices of homes in the newest phase up to 20%, from $32,500 to $50,000--a year’s salary for many buyers, the homeowners say. Now, for example, the same model on a comparable lot just two doors from the Widays sells for $254,000.

Some homeowners claim they were misled by the builder to believe that the homes were worth more than their actual value. Fieldstone, they say, knowingly maintained inflated prices on the homes, trying to attract the greatest number of buyers before making a premeditated price reduction.

The company denies waging such tactics, insisting that its prices are subject to the whims of the softening housing market. In fact, because of diminished buyer interest in Canyon Ridge, Fieldstone says it was forced to drop prices to attract new customers--therefore protecting the value of homes already sold.

Anyway, the buyers were free to shop the market, says Project Manager Brian Milich. “We don’t force people to buy our homes. We want happy customers at Fieldstone.”

Milich acknowledged that incentives were offered to counter slackening sales, but he denied that Fieldstone sales agents used pressure tactics.

“I’ll never know what was said to individual buyers or how they interpreted it,” he said. “Our customers sign a disclosure statement that says, while we think their home is a good investment, we cannot predict what will happen to property values in the future.”

But some Canyon Ridge homeowners aren’t buying that argument. They are demanding rebates--above and beyond the $7,500 the company has already handed out to selected owners--claiming that Fieldstone must share in their equity losses.

Heidi Miranda said she was ready to buy from another builder in December when Fieldstone sales agents began playing hardball. “They told me prices in the subdivision were definitely going to go up,” she said.

“They also gave me a refrigerator and a washer and dryer--just to be nice--they said. Now they’re trying to tell me I paid more money for my house because they gave me the refrigerator. Well, no refrigerator costs $30,000. Especially one that was a gift.”

Amid growing frustration, 65 owners who closed escrow between September, 1989, and January, 1990, met March 8 with the builder and found little satisfaction, they say. Last week, the group contacted a lawyer and is considering taking the matter to court.

“We were all led to believe that the houses at Canyon Ridge were selling like hot cakes,” said one homeowner who asked that his name not be used. “It was like this rush-rush last-minute deal.

“They made us believe that ours was the last house available and that we had to jump on the bandwagon at that very moment--or else lose out on a fantastic deal. It hit us all by surprise to hear that they were having trouble selling homes.”

Added Ann Widay, who claims that she and her husband undersold their previous home to meet Fieldstone’s escrow deadline: “They misled us, took advantage of us,” she said. “The company spends millions advertising the Fieldstone value. Well, the Fieldstone value isn’t worth squat.

“Most of us put our life’s savings into these homes. But this company has turned the American Dream into a nightmare.”

Earlier this month, angry buyers began using their homes in a public protest against the Newport Beach-based home builder.

On Norcanyon Way, where workmen hurry to put finish the newest homes, scores of “For Sale” signs hang on garages and in windows--despite a contract buyers signed precluding them selling their new home for one year. “For Sale. But Not by Fieldstone,” reads one. Another, outside the Widays, reads, “For Sale. Ask Why.”

Widay, an airline sales agent whose husband is a Navy pilot, said the signs have prompted pleas from Fieldstone to remove them. “This is a huge corporation. We’re just little individual homeowners. This is the only voice we have,” she said.

“The signs are a good way to get perspective buyers to ask the question “What’s going on here? Why are these new homeowners unhappy with their homes?’ I mean, we can’t stand out on the street flagging people down.

On any weekend, Widay talks with dozens of would-be Fieldstone buyers who spot the signs. “It’s like a circus around here,” she said. “I’ll be on the cordless phone, explaining the situation to people who have seen the sign.

“Then the doorbell will ring with more people. So I’ll just talk to the person on the phone and let the others listen in. It’s the only way I can handle all the interest.”

The intent, she says, is to warn new buyers to be wary of the builder’s promises.

“We’re happy with our homes,” Widay said. “But we all feel like we’ve been ripped off. We tell them they can’t believe a word Fieldstone tells them. As the saying goes ‘Let the Buyer Beware.’ ”

Talk of dissatisfied customers disturbs Milich, the project manager. Over the past few months, he says, he has devoted nearly 100% of his time to the homeowners’ concerns--despite his responsibilities with more than a half dozen other Fieldstone projects.

“It hurts me, as an individual,” Milich said of the homeowners’ tactics, adding, however, that the signs have not affected sales. “It’s taken a lot of my time. But we just do not believe that people were misled. We were within our legal right to do what we did.”

This week, a company task force headed by Milich plans to begin meeting individually with affected Canyon Ridge homeowners to see if a compromise can be worked out. Milich, however, declined to discuss whether the builder would offer rebates or upgrades as part of those negotiations.

In the meantime, Fieldstone has received numerous calls from prospective home buyers who have seen the “For Sale” signs and want to know what is going on at the planned 338-home Canyon Ridge subdivision.

For Milich, the price reduction was not a calculated move to dupe home buyers but rather a last-ditch effort to preserve the long-term value of the homes.

Late last year, Fieldstone was selling homes in Canyon Ridge at the rate of one house every two weeks, he said. Now, Milich claims, that rate has improved to three homes each week--because of the reduced prices.

“We’ve raised prices four times since January 6,” he said. “And we have people camping out again before openings. The perception now is that it’s a successful project.”

But that was not the case in December, he said, when sales had reportedly dropped to a near standstill. “If prices stayed up where they were and we couldn’t sell anymore houses, the value of the community would have begun going downhill,” he said.

Numerous vacant houses, what Milich called “standing inventory,” would have encouraged vandalism and, perhaps, increased the crime rate, he said.

“There’s the psychological effect of unsold houses,” he said. “But to the contrary, our price reductions in January allowed us to sell houses again and eventually raise prices.”

Several San Diego real estate experts said they could not predict the outcome of the homeowners’ case, should it go to court. But not everyone was sympathetic to the buyers.

“Some buyers are so concerned about equity that they want a guarantee from builders that housing prices are going to go up. But guess what? Housing prices don’t always have to go up,” said Gary London, director of Price Waterhouse real estate group.

Builders, he said, are in business to make money, not drop prices.

“They’re not doing this on purpose,” he said. “In fact, they’re probably just as miserable as the homeowners.”

London agrees, however, that prices will eventually rise again.

“A home is a home first and an investment second,” he said. “Instead of worrying about immediate profits, these people should be concerned with their life style and the neighborhood.

“If they bought the house because they feel they have a right to a quick-hit profit, I have no sympathy for them.”

Hal Struck, vice president of sales and marketing for Pardee Construction in Los Angeles, said his company also dropped housing prices early this year to compensate for a slacking market, but not anywhere near $50,000.

“I’m surprised to hear claims that any builder talked about a guaranteed appreciation of the market,” he said. “It’s like the stock market; nobody’s going to guarantee success. It’s just downright dangerous for any builder to give financial advice.”

The Widays and other Fieldstone homeowners acknowledge that the company had a right to reduce prices. But they claim the builder had been considering such a move for months prior to January and that they should have been informed of those plans before they bought.

Ann Widay said that, contrary to company claims, there have been no price increases on Canyon Ridge homes since January.

“I have the prices lists to prove it,” she said. “We keep looking for these houses with higher prices and we can’t find them.”

These days, the talk at Canyon Ridge--in the back yards and at the mailboxes--centers on the chances of an impending lawsuit.

They talk about people such as Rommel and Lina Diawatan, who were in escrow on their home when the price reductions were announced. Today, applying the money he paid for his home, he could buy the most expensive Canyon Ridge home at its new price--and still have $12,000 left over, the accountant said.

For Ann Widay, every day she and her family spend in their new Canyon Ridge home heightens her anger--and her determination to settle her score with Fieldstone.

“Even if we stay here 30 years,” she said, perched on a couch in her sunny and spacious living room, “this house will always be a reminder of the fact that Fieldstone took advantage of us.