40% off the '04 price in San Juan

This San Juan Capistrano REO is another example of the accelerating declines various parts of South OC are witnessing this summer. With a spring sales season that appears to be slowing up, what does that foreshadow for the rest of 2008?

If it keeps going on like this, be very afraid...

30896 Calle San Felipe, 92675
Asking price: $339,900
Asking price/ sq ft: $237
Income requirement: $84,975
Bank purchase price: $328,000
Purchase date: 4/7/08
Size: 4 beds, 2 baths, 1,421 sq ft (built in 1971)
MLS: S541124 (2 days on Redfin)
Zillow Zestimate: $441,000
HOA dues: $25
Type: Single Family Residence
Style: Mediterranean
Stories: 2 Levels
Lot size: 3,880 sq ft
From listing: Seller put in new carpet and interior paint. 2 bedrooms downstairs and 2 bedroom upstairs. Romantic fireplace in the living room. High ceiling. Good size yard with lots of potential. Direct access garage. Close to schools, park and shops. Only minutes away to San Juan Capistrano Downtown, Mission Basilica church, beaches and Dana Point harbor.


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The notice of trustee sale amount on this property was $516,826 - meaning what was a $480,000 loan swelled more than $35,000 above its original amount because of accrued interest charges and other fees. The lender went on to significantly discount the minimum bid at auction to attract a buyer (generally the minimum bid will be very close to the NTS amount), but even at $328,000 it ended up going back to the bank.

The interior appears to be very workable - particularly by REO standards. Not a bad job at all by the bank in installing carpet and painting.

Judging by comparable properties in San Juan that are currently for rent, we assume you could probably get $2,300 per month for this property. If we were to go by the 160 GRM rule as being a good target for an owner-occupant, they should value this property at about $368,000, which means that at the current asking price, we estimate this would achieve rental parity and would cost either about the same or a bit less each month to own than it would to rent.

That makes this property appear to be a legitimate good buy - though you probably would have to think about how much it would cost to fix up the backyard and make any other necessary changes considering the home is being sold as-is by the bank.

The GRM of this property as it stands with the current asking price is around 148 - good for an owner-occupant, but the price is probably still too high to attract a legitimate cashflow investor.

Assuming the house is sold for the full asking price (though it would not be surprising if it sold for more), it would mean a depreciation of $224,100 or about 40% off the 2004 sales price of $564,000. That is some serious price erosion.

51% off in Laguna Hills

It may be a fixer-upper REO now, but this Laguna Hills home sold for more than $600,000 just three years ago.

24981 Presidio Dr, 92653
Asking price: $309,900
Asking price/ sq ft: $220
Income requirement: $77,475
Bank purchase price: $594,517
Purchase date: 6/6/08
Size: 3 beds, 2 baths, 1,409 sq ft (built in 1971)
MLS: S540854 (3 days on Redfin)
Zillow Zestimate: $442,000
2007 property tax: $6,632
Type: Single Family Residence
Style: Bungalow
Stories: 1 Level
Lot size: 5,630 sq ft
From listing: Great Opportunity for 1st time buyer or investor. This single story home offers a 3 bedroom floorplan on a spacious corner lot. Previously remodeled, this home needs a little TLC to recapture it's former beauty. Customized floorplan can be converted back to it's original functionality. Traditional home offers value with front facing garage and driveway, no homeowner's association dues, and full wrap-around yard. Close to freeway, shopping, schools and parks.

There aren't any interior photos, so we can only speculate what the property looks like inside to warrant the "previously remodeled but needs TLC" label.

The previous owner-occupant bought the property right around the peak of the market for $635,000. The seller had purchased the home near the bottom of the market in the mid-90s, so they ended up making $485,000 before sales fees and renovation costs.

The peak buyer used 95% financing from Southstar Funding. He pulled out his downpayment plus some extra in August 2006 by adding a $100,000 loan from Bank of America. Almost a year later to the day, a notice of default was filed on the first loan. The property ended up going back to the bank in June for $594,517.

The bank looks like it's serious about getting this one off the books, and has priced the property accordingly. Assuming a sale for the full asking price, it would mean a depreciation of $325,100 or about 51% off the peak 2005 price.

The beating continues in San Juan

Small condos in San Juan are low-hanging fruit in the world of real estate blogging post-bubble, but some of these properties have fallen so far so fast that it's hard not to take a look in every now and then to see what's happening.

Here's an example of one that's selling for $156 per square foot. It's also more than 50% off the bubble-inflated price of just three years ago.

26462 Calle San Francisco #53e, 92675
Asking price: $178,900
Asking price/ sq ft: $156
Income requirement: $44,725
FB purchase price: $406,500
Purchase date: 1/26/05
Size: 2 beds, 2 baths, 1,145 sq ft (built in 1971)
MLS: S538367 (2 days on Redfin)
Zillow Zestimate: $401,500
2007 property tax: $4,346
HOA dues: $230
Type: Condominium
Stories: 1 Level
From listing: 3 bedrooms with 2 baths and 2 car garage on a corner lot.

This property sold for $100,000 in 1989 - right before the 90s decline - using FHA financing. Redfin/Zillow show us this place sold for $406,500 in 2005.

Judging by properties on the MLS for rent, we would estimate you probably could be able to rent it out for around $1,350-$1,400 per month - assuming you put in a little money and did the necessary cosmetic fixes.

If we were to look at this property from an owner-occupant point of view and wanted to hit a GRM of 160, then we would value this property at about $216,000, if we assume rental value of $1,350 per month. Rental parity: Check.

But, it is unlikely an owner-occupant would want to occupy this type of space long term, so we would think this property could be appealing to a cashflow investor, if the price were right. As the property is priced now, the GRM is around 133. Not bad, but perhaps not quite low enough.

Take a closer look at the asking price of $178,900. It's $227,600 or 56% below the peak "value" in 2005. If the property sells for the current asking price, it also would mean the condo would have increased in value by a reasonable 3.1% every year since 1989.

"Gorgeous and elegant" Aliso REO

Perhaps you thought we were kidding when, in a recent post, we showed that a number of 2003 rollbacks are coming on to the market in South OC.

This REO in Aliso Viejo is tough to ignore. It's fresh on the MLS for more than 40% off the 2006 price. How many offers do you think this one will receive?

12 Los Palos, 92656
Asking price: $472,900
Asking price/ sq ft: $236
Income requirement: $118,225
FB purchase price: $825,000
FB purchase date: 9/20/06
Size: 3 beds, 3 baths, 2,000 sq ft (built in 1997)
MLS: S537806 (2 days on Redfin)
Zillow Zestimate: $599,000
2007 property tax: $10,170
HOA dues: $55
Type: Condominium
Style: Contemporary/Modern
Stories: 2 Levels
From listing: Gorgeous and Elegant two story 3 bedroom, 2.5 bath condo. Full custom features throughout entire home. Beautiful marble floors and cozy fireplace in living room. Upgarded kitchen with black granite counter tops and black GE appliances. Wrought iron stair railing leads to upstairs bedroom. Nice paronamic canyon and mountain views. Beautiful front and rear yards with custom landscaping.


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By our rough estimate using a form of Case-Shiller methodology, this property's asking price makes it a mid-2003 rollback.

The previous owner used 100% financing from a lil' old company called Countrywide when they "purchased" the property in 2006. The property went into default and eventually went back to the bank in April for $510,000.

Like yesterday's property, this was not the former owner's primary residence.

The property is priced aggressively - for comparison, 2 Leon is asking $639,900, and 4 Alegre is trying to get $615,000 even though it's smaller. Today's listing should complicate things a bit.

Assuming the property is (only) sold for the full asking price, it would mean a depreciation of $352,100 or 43% in less than two years. It also would be $296,100 or 39% less than the 2004 price. That would effectively wipe out the majority of bubble appreciation.

No bottom on pricing yet...

21% off in Laguna Beach

Today's property is one of six REOs in Laguna Beach (1060 Flamingo Road is actually a vacant parcel that has been re-engineered by the city).

It's being offered by the lender for more than 20% off the peak 2006 price.

943 Tia Juana St, 92651
Asking price: $784,900
Asking price/ sq ft: $491
Income requirement: $196,000
FB purchase price: $999,000
FB purchase date: 10/30/06
Size: 3 beds, 2 baths, 1,600 sq ft (built in 1972)
MLS: U8002228 (44 days on Redfin)
Zillow Zestimate: $1,000,500
2007 property tax: $7,659
Type: Single Family Residence
Stories: 2 Levels
Lot size: 2,500 sq ft
From listing: Great Ocean Breezes from this secluded light & bright single family property.Master suite has vaulted ceiling with french doors leading to private deck(Made of beautiful hardwood)Has ocean view from living room deck.Large living room with ceiling fan.Hardwood floors through out.Private serene backyard. Close to nearby park


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The previous owner purchased the home one day before Halloween in 2006 for $999,000. No downpament required. First Magnus Financial funded the purchase with a $749,250 first loan and a $249,750 second.

Less than six months later, he refinanced into $1,079,990 worth of loans from WaMu. By December, the first loan was in default. The home ended up going back to the bank for $1,021,078.

Don't feel too bad - this wasn't his primary residence anyway.

Assuming the property sells for the current asking price, it would be $214,100 or 21% below the previous sales price.

Here is a map of properties in some stage of foreclosure within one mile of this property, courtesy of ForeclosureRadar.com:

Jump on in...water's fine!

Today's REO property in Mission Viejo provides anecdotal evidence that loans made last year are already beginning to blow up and add to the foreclosure inventory in South Orange County.

You'll also love the backyard...

25421 Adriana St, 92691
Asking price: $500,000
Asking price/ sq ft: $194
Income requirement: $125,000
FB purchase price: $865,000
FB purchase date: 5/29/08
Size: 5 beds, 3 baths, 2,72 sq ft (built in 1967)
MLS: P642596 (2 days on Redfin)
Zillow Zestimate: $714,500
2007 property tax: $6,446
Type: Single Family Residence
Style: Contemporary
Stories: 2 Levels
Lot size: 7,540 sq ft
From listing: 4 bedroom 3 bath home. Large backyard with pool. Lots of upgrades although the property does need some upgrades. 2 car attached garage. Living room with fireplace. PLEASE NO FHA offers. See agent remarks


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So the property is upgraded but needs more upgrades. Is that code for "it was nicer before but now it's trashed"?

The previous owner paid $865,000 in April 2007 using 100% financing. The property was already in default by December, and it went back to the bank at auction in May.

Who wouldn't want to take a dip in the backyard pool? Gross.
Assuming the bank finds a buyer willing to take the property for the asking price, it would mean a depreciation of $365,000 or 42% in a little more than one year as the property devolved into a vacant fixer-upper! Never mind the fact that the kitchen had been recently remodeled...

No arguing the property is in a sad state right now. It's even more disheartening when you consider what it looked like right before its previous sale last April, when it was occupied by a family who took care of its home.

These photos are from the 2007 MLS listing....

And here's what we see now on the current listing...

Interestingly, the previous owners who sold in 2007 listed the home at $750,876 but were able to sell for $114,124 more than their asking price.

REOs in Ladera

Same street...same situation: REO. These two properties are both bank-owned foreclosures in Ladera Ranch.

REO No. 1 (photo above)
22 Duskywing Ct, 92694
Asking price: $900,000
Asking price/ sq ft: $346
Income requirement: $225,000
FB purchase price: $750,500
FB purchase date: 10/03/03
Size: 5 beds, 4 baths, 2,600 sq ft (built in 2002)
MLS: S519387 (143 days on Redfin)
ZipRealty price tracker: Price Reduced: 3/21/08 -- $1,080,000 to $900,000
Zillow Zestimate: $837,000
2007 property tax: $11,041
HOA dues: $185
Type: Single Family Residence
Style: Traditional
Stories: 3+ Levels
Lot size: 5,800 sq ft
From listing: This property has it all! Pool, Spa, Covered Patio, Fireplace, Fountains, in-ground Trampoline and that's just the backyard. Tons of upgrades. Custom paint, window treatments, cabinetry, countertops, flooring and so much more. A great deal...don't miss out. Check out this fabulous 5 bedroom, 4 bath home with a spacious family room adjacent to the chef's kitchen with stainless appliances and granite countertops. Generously sized living room and dining room, downstairs bedroom, 3rd floor bedroom suite and loft plus a child's clubhouse. Master suite and master bath with dual vanities, jetted tub, spacious shower with seat and walk-in closet. Spacious secondary bedrooms with a shared bath and an amazing park-like backyard. DON'T MISS THIS OPPORTUNITY.


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Judging by the sales history, you wouldn't expect this one to have ended in foreclosure. The former and original owners purchased the home from William Lyon Homes and financed $700,000 of the $750,500 purchase price from American Sterling Bank.

In August 2004, they took on a new $750,000 first loan and a $101,306 second, liberating their downpayment plus a bit extra. In December 2004 the debt was consolidated into a $864,000 loan, and this was increased in April 2005 to an $886,600 loan from Bank of America. A second loan was added in March 2007 for $24,900.

The total amount of debt on the property was now more than $910,000. Doubtful that much if any principal was paid on that $886,600 loan - the notice of default came in January 2008, and the notice of trustee sale was filed in May for $930,979, which is $44,379 more than the original loan amount.

ForeclosureRadar shows the property went back to the bank June 5 for $945,219. It's a little odd then that Redfin shows the property has been on the market since before it was REO. Perhaps the listing is old and hasn't been taken down yet?

Either way, this will be a big loss for the banks involved. A sale for anywhere close to the asking price (doubtful since to compete with our other subject property they would need to drop the price substantially) would still show an increase over the 2003 sales price.

Here's REO No. 2:
11 Duskywing Ct, 92694
Asking price: $719,900
Asking price/ sq ft: $277
Income requirement: $179,975
FB purchase price: $970,000
FB purchase date: 5/22/06
Size: 5 beds, 4 baths, 2,600 sq ft (built in 2004)
MLS: S533904 (23 days on Redfin)
Zillow Zestimate: $774,042
HOA dues: $160
Type: Single Family Residence
Style: Craftsman
Stories: 3+ Levels
Lot size:
From listing: **Spacious & Upgraded Cul De Sac Home** This is a great Floorplan; Featuring a mainfloor Bedroom or Office,Open Family Room to the Kitchen, Granite Kitchen Counters & Natural Stone Backsplash, Ceramic Tile, Berber Carpet & Wood Floors, Plantation Shutters, Crown Moulding, Cased Windows, Freshly Painted, Spacious Master w/Upgraded Tile Bath, Walk-In Closet, Jacuzzi Tub & Separate Shower, Wired for an Alarm System, Custom Built-in Media Niche, Surround Sound Pre-wiring. Landscaped Yard w/Slate Patio, Lush Foliage & Waterfall. Great Opportunity! A Must See!

This REO followed a different path than the other one on the street. The former owners did not buy from the builder, but instead paid $970,000 to a private seller during the peak of the bubble. They financed $873,000 (90%) through Countrywide and put $97,000 down.

The payments soon became unbearable, and the property slipped into foreclosure. The notice of default on the first loan was filed in October 2007, and the trustee sale for $781,392 ($53,892 more than the original loan amount) came in January 2008. The property went back to the bank on April Fools Day for $669,375.

Assuming the property sells for the full asking price, it would mean a depreciation of $250,100 or 26% off the 2006 bubble price, not including any sales costs.

If you'd like to get an idea of what the area looks like in terms of foreclosures, take a look at this heatmap from ForeclosureRadar.com. The site limits at 200, so imagine what 42 more markers would look like on this if we could see them all at once:

(The green markers signify notice of defaults, the blues are notice of trustee sales, and the red ones are bank owned. For an explanation of the California foreclosure process, click here.)

Million-dollar REO in San Clemente

Today we go back to Forster Ranch in San Clemente to show you a bank-owned property that, if sold for its asking price, would demonstrate more than a half-million dollar decline in value from its previous sales price during the bubble.

2525 Costero Magestuoso, 92673
Asking price: $1,149,000
Asking price/ sq ft: $280
Income requirement: $287,250
Bank purchase price: $1,439,287
Purchase date: 4/1/08
Size: 4 beds, 5 baths, 4,100 sq ft (built in 2003)
MLS: S533569 (25 days on Redfin)
Zillow Zestimate: $1,986,500
2007 property tax: $11,458
HOA dues: $248
Type: Single Family Residence
Style: Tuscan
Stories: 2 Levels
Lot size: 7,500 sq ft
From listing: Stunning home in a gated community. MOVE-IN CONDITION. Upgraded Travertine throughout downstairs. Bedroom and full bathroom + powder room downstairs. Master bedroom with retreat and romantic fireplace. Family room with built-in entertainment niche, cozy fireplace. Breakfast nook, breakfast counter. Gourmet kitchen with granite stainless steel appliances. Plantation shutters throughout. Huge bonus room with built-in entertainment center w/ 62'HDTV and queen size Murphy bed. Upgraded back yard with salt water dipping pool/spa, waterfall, fire ring and sitting area. Covered patio with ceiling fans, BBQ with fridge. Hurry on this one, this will not last.

It's not too often you see an REO listing mentioning what good shape the house is in (move-in condition, no less), but then again this is a luxury property. Nice of the previous owners to leave the huge HDTV.

Speaking of the previous owners, they paid $1.7 million in 2006, using 100% financing from Bear Stearns. Can you imagine being handed the keys to a property like that without having to chip in a dime of your own money?

It was indeed too good to be true. The notice of default on the first loan came in August 2007, and the notice of trustee sale was filed in November for $1,353,839 - which is above the original loan amount of $1,275,000.

Assuming the bank can sell the property for the current asking price, it would mean a depreciation of $551,000, or 32% off the 2006 price, not including any sales costs.

We'll leave you with a snapshot of the foreclosure activity in the 92673 ZIP code, courtesy of ForeclosureRadar.com. The green markers signify notice of defaults, the blues are notice of trustee sales, and the red ones are bank owned. For an explanation of the California foreclosure process, click here.

60% off in Aliso Viejo

Asking prices for "lower-end" properties in Orange County continue to decline. Here's an Aliso Viejo REO that blew the doors off of aggressive pricing, and is now pending sale.

It looks like we have another 2002 rollback on our hands.

23593 Los Adornos, 92656
Asking price: $185,000
Asking price/ sq ft: $148
Income requirement: $46,250
FB purchase price: $468,000
FB purchase date: 12/9/05
Bank purchase price: $210,000
Bank purchase date: 4/3/08
Size: 3 beds, 2 baths, 1,246 sq ft (built in 1971)
MLS: S533952 (on market 5/29; pending 6/5)
Zillow Zestimate: $299,000
2007 property tax: $4,854
Lot size: 2,351 sq ft
From listing: Single Story 3 Bedroom, 2 Bath Townhouse With Enclosed Patio. Walking Distance To Association Pool. Close To Schools, Freeways , Shopping And Schools.

Looking at the previous sale (before the home went back to the bank at auction), it's easy to see how the "investment" was doomed from the start. The buyer received 100% (80/20) financing from Freemont Investment & Loan. They fell behind on payments on the first loan and received a notice of default in December 2007.

The NTS was for $394,246 in March, yet the lender discounted significantly to try and get this place sold at auction. It didn't work, and the property went back to the bank for $210,000 in early April. As you can see by the asking price, when the property came on to the market as an REO the bank wasn't messing around. If all banks discounted like this, we would be at the bottom in pricing in no time.

We estimate you could probably rent this property out for about $1,800 per month. So, that would make the target price $288,000 for an owner-occupant, using a GRM of 160. The asking price puts the property at a GRM of about 103. From here, this looks like an excellent deal.

One thing to be careful of is foreclosures. There are four other properties on the same street that are in some stage of preforeclosure right now, which could help keep prices depressed or even make them fall a bit lower, despite the fact that we are already well below rental parity.

Assuming the property closes for the full asking price (considering how low this property was priced, the final sales price could easily be higher), it would signal a depreciation of $283,000, or 60% off the 2005 price (not adjusting for any sales costs).

It also would be $60,000, or 24% below the December 2002 price of $245,000.

Back to the bank

Since we posted earlier today on last month's foreclosure numbers, we thought you also might want to see a sampling of a few of the properties that have gone back to the bank in the past week as full-fledged foreclosures, after nobody bought them at auction.

These new REOs come from all parts of South County - and are across virtually every price range. These painful real estate times are not only reserved for the lower-end properties.

Remember, the bank purchase price is not necessarily what the lender will ask for once it is listed for sale on the MLS.

70 Nantucket, Aliso Viejo, 92656
Bank purchase price: $556,000
Notice of sale amount*: $643,330
Previous purchase price: $563,000
Purchase date: 3/23/04
Size: 3 beds, 3 baths, 1,609 sq ft

74 Bedstraw Loop, Ladera Ranch, 92694
Bank purchase price: $674,100
Notice of sale amount: $751,430
Previous purchase price: $611,500
Purchase date: 2/25/04
Size: 5 beds, 3.5 baths, 2,556 sq ft

27712 Paseo Barona, SJC, 92675
Bank purchase price: $743,928
Notice of sale amount: $741,798
Previous purchase date: 9/10/03
Size: 3 beds, 3 baths, 2,651 sq ft


25075 Costeau, Laguna Hills, 92653
Bank purchase price: $686,776
Notice of sale amount: $663,142
Previous purchase price: $790,000
Purchase date: 12/21/05
Size: 4 beds, 2 baths, 1,679 sq ft
Note: Photo is of another house on the street

52 Saint Croix, Laguna Niguel, 92677
Bank purchase price: $642,237
Notice of sale amount: $642,203
Previous purchase price: $740,000
Purchase date: 9/20/05
Size: 3 beds, 3 baths, 1,746 sq ft


34322 Camino El Molino, Dana Point, 92624
Bank purchase price: $718,529
Notice of sale amount: $706,690
Previous purchase price: $736,000
Purchase date: 3/8/04
Size: 4 beds, 3 baths, 2,500 sq ft


* - This includes the amount of the outstanding loan, plus any additional fees and interest. This is typically also the opening bid amount, but banks have begun lowering opening bid amounts to attract bidders.

Big REO discount in Foothill Ranch

Foothill Ranch is holding up better than some other inland-ish areas of Orange County, but it isn't without its cracks. Here is a bank-owned property that is being offered at a healthy reduction from the previous bubble price.

31 Blazewood, 92610
Asking price: $609,900
Asking price/ sq ft: $265
Income requirement: $152,475
Peak purchase price: $808,000
Peak purchase date: 6/21/06
Size: 4 beds. 3 baths, 2,300 sq ft (built in 1994)
MLS: P603386 (247 days on Redfin)
ZipRealty price tracker: Price Reduced: 11/06/07 -- $729,750 to $714,900
Price Reduced: 11/28/07 -- $714,900 to $649,900
Price Reduced: 1/10/08 -- $649,900 to $609,900
Zillow Zestimate: $679,500
2007 property tax: $7,625
HOA dues: $70
Type: Single Family Residence
Stories: 2 Levels
Lot size: 3,610 sq ft
From listing: Upgraded home with tile flooring downstairs and carpet upstairs. Bonus room upstairs, crown mouldings, inside laundry, raised baseboards offered in this home. Private courtyard leads to double door entry. Large private balcony off front two bedrooms. Some minor cosmetic repairs needed. BACK ON MARKET as of 3/24/2008.


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Check out the house in the Google street view above and you'll see some telltale signs of foreclosure: Dead lawn and what looks like an accumulation of some trash out front (you may have to rotate around a bit to find the property, plus be careful of getting the property confused with an identical-looking one across the street).

Talk about great timing: The previous owners cashed in just as the market was beginning to turn in 2006 and walked away with a healthy $326,000 in profit (before sales costs) just for holding the house for three years. Perhaps they did some of the upgrades the listing hints at, but judging by the picture below the kitchen was barely touched, if at all.

The next owner wasn't so lucky.

She purchased the home for $808,000 in June 2006 - a startling amount considering the same home sold for less than $485,000 in 2003. What's not so startling is the financing: $200 down was all that was necessary to take possession of the property, thanks to 99.9% financing from Suntrust Mortgage.

A notice of default was filed in April 2007, and the property ended up going back to the bank in September for $691,338.

It appears the turnaround was quick, as the home was on the MLS in late September. The only thing lacking was a buyer. Now, eight months and $119,850 worth of discounts later, the REO is still on the market.

If the property can sell for the current full asking price, it would equal a depreciation of $190,100, or 24% off the peak price.

(Another) Dove Canyon REO/rollback

Two Dove Canyon REOs in the same week? Believe it.

29 Muirfield, 92679
Asking price: $689,900
Asking price/ sq ft: $287
Income requirement: $172,475
FB purchase price: $699,000
FB purchase date: 11/24/03
Size: 4 beds, 3 baths, 2,400 sq ft (built in 1990)
MLS: U8001604 (62 days on Redfin)
ZipRealty price tracker: Price Reduced: 5/22/08 -- $714,900 to $689,900
Zillow Zestimate: $835,500
Type: Single Family Residence
Style: Cape Cod, Traditional
Stories: 2 Levels
Lot size: 6,270 sq ft
From listing: Beautiful 4 bedroom pool home with view located in Dove Canyon. Open bright floor plan, Pool Spa, Gated community!

The photos and description leave something to be desired. It will be interesting to see how low the bank will go - and how quickly it will continue the price cuts, if at all.

Either way, this is not good for two other properties on the same street: 32 Muirfield has the same number of bedrooms and bathrooms, but is larger. Asking price is $720,000, and it has been on the market for a while. And, 1 Muirfield comes in with a crazy-high price tag of $889,900, despite the fact that it's smaller and has one fewer bedroom than our subject property. Market time is about a month and a half.

After purchasing the subject property with 85% ($594,150) financing five years ago, the previous owner re-fied into an $807,500 adjustable loan in 2005.

That effectively liberated the downpayment and then some. Oops. The property eventually went back to the bank in February for $706,500 and is currently held by Deutsche Bank.

Two months on the MLS as an REO has not yet yielded a willing and able buyer, but it certainly has produced a 2003 rollback.

Portola Hills REO

We haven't been spending nearly enough time following what is going on in some of the more inland areas of South Orange County...so here we go with today's subject property in Lake Forest (Portola Hills).

As you can see, we have yet another property purchased during the bubble with virtually no risk to the borrower. Not a happy ending, and now after the foreclosure process this home is bank owned and looking for a new owner to step in.

28651 Pendleton Rd, 92679
Asking price: $469,900
Asking price/ sq ft: $301
Income requirement: $117,475
Peak purchase price: $600,000
Peak purchase date: 8/18/05
Size: 3 beds, 3 baths, 1,561 sq ft (built in 1994)
MLS: S534628 ( 3 days on Redfin)
Zillow Zestimate: $788,500
2007 property tax: $7,534
HOA dues: $117
Type: Single Family Residence
Style: Contemporary
Stories: 2 Levels
Lot size: 7,087 sq ft
From listing: Honey Stop The Car!!! Great location and ready for a new owner. Secondary bedrooms have a jack and jill bath and did I mention that the rooms are a nice size? Master is on the other side of the hall. Master bath is just waiting for your decorative touches to make it your very own relaxing bath. It has serious potential. The high ceilings add to the already nice floor plan. Needs a little TLC but bring your creative eye and save!!

No kidding the place is ready for a new owner. Let's look at how things went with the previous one:

• 8/18/05: Purchased for $600,000 in August 2005. Financing was in the form of a $479,900 first loan and a $119,950 second. Buyer put down a whopping $150; First Franklin financed the rest.
  
• 11/1/07: Notice of default in the amount of $14,157.
• 2/6/08: Notice of trustee sale posted, $508,829.
• 3/13/08: Property goes back to the bank (Deutsche Bank) at auction for $417,084 (discount off NTS amount did not attract any action).
• 5/31/08: Listed on Redfin as an REO.
  

And, to top it off, the former owner apparently messed up the house enough so that it is now a fixer-upper property. Way to go, buddy.

Judging by nearby rentals, this one could probably rent for around $2,500-$2,600 per month considering larger, 2,100-sq ft models seem to be going for about $2,800 per month. So, if we aim low and assume this rents for "only" $2,500, our target breakeven price for an owner-occupant would be about $400,000, using a GRM of 160 (160 x rental rate of $2,500/month).

If we assumed a rental rate of $2,600, then we as an owner-occupant would want to aim to stay at or below $416,000. This one is still priced high by this logic, but is at least in the rental parity ballpark.

Assuming this property can be sold for the full asking price, it would represent a depreciation of $130,100, or 22% off the peak purchase price in 2005.

REO movin' through in Dove Canyon

Today's property is a bank-owned home in Dove Canyon that has been connected to a buyer and is now in the "backup offers accepted" stage. All it took was a significant discount off the peak price...

38 Golf View Drive, 92679
Asking price: $879,900
Asking price/ sq ft: $315
Income requirement: $219,975
Peak purchase price: $1,200,000
Peak purchase date: 11/1/06
Size: 4 beds, 4.5 baths, 2,789 sq ft (built in 1994)
MLS: S533615 (11 days on Redfin)
Zillow Zestimate: $993,500
HOA dues: $205
Type: Single Family Residence
Style: Contemporary
Stories: 2 Levels
From listing: This spacious 4 bedroom and 4.5 bath home with pool and spa backs to a beautiful golf course view! Located on a cul-de-sac, this home has granite counters, stainless steel appliances,and double ovens. Family room has built in wood cabinets. Double door entry to masterbed room and retreat with fireplace. Large 3 car garage with built-in storage cabinets too!