'03 rollback REO in Aliso

We'd been waiting for this Aliso Viejo property to come onto the market ever since it went REO in late July because we had a feeling it would turn into a comp killer.

We were right. Considering a smaller house in this neighborhood sold for $592,000 at the peak in 2006, and a beat-up, four-bedroom REO with a driveway was down to $525,000 last year, this latest property is another leg down for the surrounding market.

1 Welbury, 92656
Asking price: $465,500
Asking price/ sq ft: $259
Bank purchase price: $423,035
Bank purchase date: 7/29/08
Size: 4 beds, 3 baths, 1,900 sq ft (built in 1997)
MLS: S544076 ( 5 days on Redfin)
Zillow Zestimate: $472,500
HOA dues: $105
Type: Condominium
Style: Mediterranean
Stories: 2 Levels
Lot size: 3,500 sq ft
From listing: GREAT OPPORTUNITY TO PURCHASE THIS DETACHED HOME IN THE GATED VICTORIA COMMUNITY. LARGE OPEN FLOORPLAN W/PERGO FLOORING DOWNSTAIRS. LIVING ROOM W/FIREPLACE, KITCHEN W/BREAKFAST NOOK. GREAT LOCATION AT END OF CUL DE SAC. UPSTAIRS LALUNDRY, TWO CAR ATTACHED GARAGE W/DIRECT ACCESS

Customized financial info:
Minimum Income Requirement (using 30Y Fixed): $114,000, assumes no other debt/obligations.
Down payment needed: $13,950
Monthly Payment on 30Y Fixed at 6.875% with property taxes and mortgage insurance estimated: $3,785.08
Minimum Income Requirement (using 5Y fixed): $109,200, assumes no other debt/obligations.
Monthly Payment on 5Y fixed at 6.375% with property taxes and mortgage insurance estimated: $3,635.97
Disclosure: All rates offered to the client with 1 point cost. Rate quotes assume a purchase transaction with the required minimum down payment, 720 credit score, full income qualification and required reserves. Rates are subject to fluctuation. Custom rate quotes and rate lock advice are available by visiting www.thegreatloan.com.

The previous owners purchased the property during the bubble in 2005 for $620,000. They didn't even have to use a downpayment - First Magnus Financial Corp plucked down the entire sum in two loans - a $496,000 (80%) first and a $124,000 (20%) second.

The first loan was in default in February 2008. The notice of trustee sale amount was more than $525,000, but the property was discounted by more than $100,000 at auction. No takers so the home went back to the bank.

If the property can sell for the current asking price, it would be $154,500 or 25% off the 2005 price, not including any sales costs. It also would be $19,500 below the September 2003 price of $485,000.

Here are the July sales stats for South OC, as reported in the OC Register via DataQuick. Same you-know-what, different day: Volumes showing signs of life but only after humongous median price retractions.