Legal Question in Real Estate Law in California

Re: Townhome Purchase

You could potentially recover damages for fraud, but not for unfavorable results due to market timing. The seller can reduce prices any time, leaving people who agreed to buy at a higher price feeling cheated, but this in itself is not actionable unless there is an actual fraudulent misrepresentation, such as an agent saying "we are going to raise prices next week" when in fact the agent knows prices will not change (or knows they will be reduced) and says that with the intent that you rely on that assertion.

You indeed could have forfeited your earnest money if you didn't close, and this is not helpful to your fraud case - if you closed to avoid forfeiture of a deposit instead of to avoid a price increase, that negates the "reliance" or "causation" element of a cause of action for fraud.

Your fraud case is surely not a clear-cut winner, but I think there's enough to warrant taking it to a nearby attorney (or two) for a free initial consultation on whether you have enough to be able to plead and prove all the elements of fraud.