HILLSBOROUGH -- A nationwide homebuilder that's cut prices in response to the market has a band of neighbors fighting for their home values.

In a new neighborhood where the first homes sold for well over $300,000 three years ago, KB Home recently began advertising homes for half that much.

Albert Mealer and his neighbors could see their equity disappearing in one fell swoop. "We had to do something," he said.

On the first weekend of May, the 20-plus residents of the Kenion Grove subdivision staked For Sale By Owner signs in their yards.

They didn't want to sell. They just wanted to send a message that they weren't going to lose as much as six figures of equity without a fight. They will meet with a KB Home executive this morning.

Mealer thought he was finished negotiating when he bought his house for $247,000 in August. Now he finds himself back at the table with the builder, which still owns more than 20 lots in Kenion Grove.

This time, he's negotiating the price of homes KB has yet to build, to try to keep them from dragging down the value of his house.

KB spokeswoman Cara Kane said her company has to respond to the market. "Homebuyers are now looking for an affordable home at a certain price point that they can afford," she said.

To comply with homeowner association rules, KB has been building larger homes with no frills, but Mealer said they don't match the existing neighborhood. "It's a box with windows," he said.

Mealer said KB appears willing to compromise: If the homeowners association revises its rules to allow homes of less than 2,000 square feet, he thinks KB will hit its price point with smaller homes that retain the high roof pitches, dormers and ample windows that the current homes have. He was hoping to iron out those details this morning.

When KB bought dozens of vacant lots from M/I Homes two years ago, homes in Kenion Grove were selling for about $118 a square foot -- already far below M/I's 2006 per-square-foot price of $173. This spring, KB started building the downscale models in the neighborhood, with a starting price range of $138,900 to $160,990. The largest, most expensive base model would sell at $59 per square foot -- barely more than one-third of the original M/I price -- with an opportunity for upgrades.

"We're just trying to meet the demands of what the new homebuyer's looking for," Kane said.