What does your contract say? And, this sounds like a big production builder - is that correct?

There are probably 200 homes in this neighborhood but the builder is a smaller, niche builder. Nothing in the contract concerning extras. I was just shocked I finally picked what I wanted after going back and forth for a while and I am ready to push the approve button and it’s $15K more than it was several days ago. I signed my contract in September and visited the design center in October.

Losing a $75K deposit is not really an option. Again I am surprised as a courtesy they didn’t let me know to approve everything since prices were going up! I am hoping they honor the prices that were in place a few days ago.

Sorry this is happening to you.

What made you put such a large deposit on a house under construction at the height of the market with unknown closing mortgage rates?

The "niche" builder could of course go belly up before your house is done so I would probably skip all upgrades presuming you have to pay for them now. While anything can happen, no one expects house prices to be higher a year from now. Lots of people are losing way more than $75k in the next year.

We just looked at the model home in a small (6 homes total) development. Base price is just under $1.3 million. They gave us a very nice portfolio of the lot drawings, blueprints, finish choices, upgrade choices, etc. With only one time through, our changes would increase the price by at least another quarter million.

@Marc Gore - The real answer to your question is that it is a little bit complicated and probably worth spending a small bit on an attorney in your area to review your contract and advise you.

@User just wants to poke you and has absolutely no idea what your options are. So ignore that. Really it all depends on your contract and the laws in your state which we really can't know. There are several contract arguments to be made such as promissory estoppel, but there are also statutory requirements for price changes once a deposit is taken. In many states, customers must be given an opportunity to lock-in options before the price increases take effect or be allowed to terminate the contract.

However, many builders have a kick-out clause in their contract where they can simply void the contract with some moderate notice. This would effectively remove your ability to win any action as they could always just give you your money back and terminate the contract.

What made you put such a large deposit on a house under construction

In my area, $75k deposit on new construction would be so low as to be out of the question.

Not sure what the upgrades are but if it’s faucets and lights, I would forgo the upgrades and replace with your own finishes later. You could even let the contractor/builder know that the price increase has changed your mind.

IMO we need to know what these upgrades were to satrt . I find peolple doing new builds are a bit naive when it comes to a visit toh teh builders design center . What you look at in a show home is aton of addons pure and simple. Almost every thing that makes the house look awesome is an add on. I tell my clients to take me with them when they are doing this. I think the flooring is worth the upcharge , the lighting never Get the builder grade lighting and redo it down the road on space at a time. The kitchen depends on what has to be there for final sign off and what you can do after . So easy to get wrapped up in all the things you need to decide . As for the prices going up that happens often in this market . I agree tell the builder which upgrades you can forego. But we need to actually get a list of the things that went up 46% and show us the contract .

Just offer two options, List all the prices you've relied on for the options you'll choose at the original prices. List the total cost for this #1 option. Second, list the options and prices you'll choose with the new prices. List the total for this #2 option. Forward these two choices to the builder without any judgmental language added. The builder will pick whichever one makes him the most money. You are negotiating by not letting the builder set the final terms with no choices for you.

Housing is slowing quickly. It's going to continue to slow as rates climb. Prices will decline. You can include a third option of the return of your deposit.

I do not agree that new build housing prices will fall there are way too many things that are just a lot more expensive now that ever and I will bet those prices will not come down.

I too do not agree that housing prices will fall. The supply issue governs everything. There already was an issue of low supply of housing before interest rates were increased. Now that interest rates are higher, people are reluctant to move if they have a mortgage with ~3.5% interest to buy a new house at ~7% interest. That leads to even less supply than the already low supply. Laws of supply and demand are fundamental to price. No supply, price is higher, or at best, prices will stay at current levels.

Hard to say for new houses. When people become unemployed, they don't buy houses and demand falls. Builders go bust and it doesn't really matter that the house cost $X to build if the demand isn't there.

But - it is true that we have rarely-to-never seen a change in interest rates so fast and people are going to be reluctant to sell if they can't buy another house with cash.

Certainly those currently building and those in construction industry are going to have biases and may not be fully objective.

Investors are done at this point in the cycle - that hurts demand a lot. In many SE markets, 30% of purchases have been investors. Count me as an investor who will not buy until we have significant capitulation which is probably a year or two away.

THe issue seems to be whether it is appropriate to raise prices by 42% in one week - ie you were given prices last week when you made selections and in one week you received a revised price list with a 42% price increase.

I understand that prices rise but I do think that a rise of that magniture in a week is excessive especially if the customer were not alerted in some way that the price was going up that much. Generally I have received quotes on various things in which there is boiler plate that the prices are good for X amount of time.

Certainly as customer relations you should have been told that prices would increase by that amount so you needed to lock in immediately.

As to how to proceed, I would be assertive but not aggressive. Ask for an explanation of why the sudden rise in prices without having let you know when you were with the designer last week. Also ask for an invoice specifying what the charge is for each component and then ask again - nicely - what occurred with their vendors that impacted prices so drastically in one week.

Hey everyone,

Thanks for the responses. The $75K was 10% down on a newer development in Grande Dunes, which is a well established area on the northern end of Myrtle Beach. Honestly I don’t think the builder or neighborhood is in danger of failing. I didn’t make a copy of the prices prior to the price hike (didn’t think I needed to) and I realize inflation still exists but 42% to me is excessive. Even more distressing is the two girls from the design center didn’t even give me a heads up to approve anything before the price hike. FWIW my realtor is very experienced in this area and hasn’t seen this happen before. She thinks they will honor the prices they quoted me when I favorited everything. Total price for upgrades was $36K, with a $20K builders credit. The 42% hike took it up to $55K or so before the credit.

Sounds like they just forgot to factor in the credit?