41% off in Laguna Hills

Can you imagine paying more than $500,000 for this 1,213 sq-ft, 29-year-old Laguna Hills condo? Someone did in 2006. A relatively small percentage of people in America could have been able to afford this property using conservative (historical) lending standards.

But, more people can afford this place at its current - and much lower - price. The question is whether or not anyone wants it now, or if they are waiting for it to drop further.

22512 Caminito Costa #9, 92653
Asking price: $299,000
Asking price/ sq ft: $246
Income requirement: $74,750
Purchase price: $510,000
Purchase date: 5/1/06
Size: 3 beds, 2 baths, 1,213 sq ft (built in 1979)
MLS: S529863 (32 days on Redfin)
Zillow Zestimate: $391,500
2007 property tax: $4,736
HOA dues: $340
Type: Condominium
Style: Colonial
Stories: 2 Levels
From listing: Condo situated near the Irvine Spectrum in the community of Laguna Village. Master bedroom has access to green belt situated in the back of the property. Two car enclosed attached garage. Kitchen has granite counter top. Inside laundry & good size living room. Property close to the 405 & 5 Freeways. Complex has pool, spa, tennis and basketball courts.

This condo is affordable to a household making around the median income in Orange County. Do you think this is the type of home that a median income warrants (don't forget to factor the granite countertops into your decision)?

This looks like the least-expensive property in the Laguna Village complex. Others include 23235 Caminito Andreta #48, which sold at the peak for $475,000 but went back to the bank for $196,989 and is for sale asking $309,900 (35% discount).

At least two properties nearby are for rent: 23422 Caminito Flecha is asking $1,995 per month, and 23395 Caminito Juanico #298 is asking $2,150. If we assume our subject would rent for $2,000 per month, this property would be valued at $320,000 to an owner-occupant, using a target GRM of 160. Rental parity shows itself again!

Assuming our subject property can actually be sold for the full asking price (remember, this is a short sale that has been significantly discounted), the loss would be $228,940, including 6% sales costs. Not including sales costs, it would equate to a depreciation of 41%.