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.


View Larger Map

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.

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.

2002 rollback in San Juan

Back in November, we profiled this San Juan condo that was a 36% rollback off the 2006 price. Here's another in the same complex that is now a 2002 rollback.

31606 Los Rios St #146, 92675
Asking price: $180,000
Asking price/ sq ft: $153
Income requirement: $45,000
Purchase price: $455,000
Purchase date: 9/26/05
Size: 2 beds, 2 baths, 1,175 sq ft (built in 1978)
MLS: P626380 (94 days on Redfin)
ZipRealty price tracker: Price Reduced: 5/01/08 -- $220,000 to $180,000
Zillow Zestimate: $370,000
2007 property tax: $4,767
HOA dues: $230
Type: Condominium
Stories: 2 Levels
From listing: EXCELLENT FOR FIRST TIME BUYERS CLOSE TO SCHOOL,PARKS

View Larger Map

The listing description doesn't really do any favors. In fact, it kind of makes it seem as if everyone has given up on this property. It should be no surprise then when we tell you the condo is now in preforeclosure, though it wasn't yet when the property was first listed.

That leads us to believe, though, that the owner probably had stopped making payments at that point - the lender just hadn't filed the notice of default yet. That came April 23.

This property was purchased in 2005 using 100% financing. Then, in November 2006 an additional loan of $4,800 was taken out. That's a lot of debt for a condo with an asking price of $180,000, don't you think?

We counted 15 other properties in some stage of foreclosure on this same street, including four REOs. That means there will be some serious downward pressure on prices continuing for a while.

Assuming the property can somehow be sold for the current asking price, it would mean a loss of $285,800, including 6% sales costs but excluding the possible extra $4,800 worth of losses because of the additional loan against the property.

The sales price also would be $36,000 below the 2002 price - not including sales costs.

No jolly holiday in San Juan

The decorations in the photo of this San Juan home scream "holidays" - and their presence is strangely appropriate. The borrowers who are holding today's subject property have been the beneficiaries of some very generous giving from their lenders. That's lenders with an "s."

26435 N Woodcrest Lane, 92675
Asking price: $370,000-$395,000
Asking price/ sq ft: $235-$251
Income requirement: $98,750
Purchase price: $510,000
Purchase date: 7/20/04
Size: 4 beds, 2 baths, 1,572 sq ft (built in 1972)
MLS: S525924 (49 days on Redfin)
ZipRealty price tracker: Price Reduced: 4/04/08 -- $450,000 to $400,000
Price Reduced: 4/15/08 -- $400,000 to $395,000
Zillow Zestimate: $478,000
2007 property tax: $5,393
HOA dues: $100
Type: Single Family Residence
Stories: 2 Levels
Lot size: 3,050 sq ft
From listing: Cozy Single Family Attached Home in San Juan Village with lots of upgrades. Well maintained. One of the best homes for sale in the neighborhood. This is a short sale. Foreclosure. Short sale subject to lender's approval.


View Larger Map

There are no interior photos with the listing, so we're settling for the Google street view. Here is the timeline for this property:

7/20/04: Purchased for $510,000 using 100% financing (a $408,000 first loan and a $102,000 second).
8/24/05: Re-fi for a total of $544,500 using two loans.
12/6/06: Another re-fi, this time also using two loans totaling $630,000.
1/16/08: Notice of default filed in the amount of $13,211.
3/19/08: Property listed for sale with an asking price of $450,000.

It seems unlikely the lender would quickly agree to a short sale, considering the first loan on this property that was made in 2006 was in the amount of $504,000 - about the entire 2004 purchase price. The second loan of $126,000 stands to be completely wiped out.

As you can see, it appears the years of free gifts for our owners appear to be numbered. Is there any reason to feel sorry for them? They "bought" the house using none of their own money, pulled cash out more than once and will walk away losing nothing except a few points on their credit score. This is clearly the case of the lender left holding the bag.

Assuming a short sale can somehow be arranged and the lender accepts for the top current asking price, the loss would be $138,700, including 6% sales costs, off the previous sales price. It would also be a depreciation of about 23%, not including transaction costs.

But, as we showed you, the loss for the lender would in reality be closer to $259,000, considering how much debt is actually on the property.

Beat the bank in San Juan

We have profiled in the past how some lower-end San Juan condo complexes are getting reamed right now, but today's property is in fact a single family home that is a short sale. If you hurry, you might be able to beat the bank on this one - the auction is scheduled for May 19 at 10 a.m. Better get a move on...

25765 Avenida Pedrigal, 92675
Asking price: $399,000-$425,000
Asking price/ sq ft: $374-$399
Income requirement: $106,250
Purchase price: $553,000
Purchase date: 7/29/05
Size: 2 beds, 2 baths, 1,066 sq ft (built in 1972)
MLS: S521688 (76 days on Redfin)
ZipRealty price tracker: Price Increased: 03/26/08 -- $385,000 to $395,000
Zillow Zestimate: $438,500
2007 property tax: $5,722
HOA dues: $75
Type: Single Family Residence
Style: Townhouse
Stories: 2 levels
Lot size: 1,553 sq ft
From listing: Beach Close Home. New ceramic tile with mosaic inlay in the downstairs area. Fireplace in living room. Master Suite with walk in closets and balcony. Upgraded powder room. Private yard with cobblestone patio. Approximately 1 mile to Dana Point Harbor and local beaches. Bank has approved short sale at $425,000. Owner paid $553,000 in July of 2005. Must be able to close quickly to beat the bank!

Owner paid $553,000 in 2005, huh. Want to guess how much of their own money they actually used? You got it: Nothing. Zero. This owner was able to get 100% financing through a $442,400 first mortgage and a $110,600 second - it's yet another 80/20 loan situation.

The notice of default was filed in early November in the amount of $10,553. The notice of trustee sale was posted in February. The amount was $462,982. That means unpaid interest and additional fees have driven the amount well above the original loan amount. This property is going to be a big loser for the lender.

It's kind of a mystery as to why the bank has approved a short sale for $425,000, and yet the property is listed at a price range of $399,000-$425,000. Do you really think the bank will go as low as $399,000? And even if they would, do you think they would get back to you in time to save this from auction?

Assuming a sale for the approved price of $425,000, the loss would be $153,500, including 6% sales costs. It would also be a depreciation of 23% in less than three years, not including transaction costs.


View Larger Map

Other owners on the street are not faring too well, either. You may also be interested to know that 25719 Avenida Pedrigal is an REO that is not for sale yet. Those owners bought the property for $600,000 in 2006 using a $480,000 (80%) loan. The home went back to the bank in January for $449,000 and is owned by Avelo Mortgage.

And, 25711 Avenida Pedrigal is for sale - at $146,500 less than its 2004 price.

Liberal lending leads to '03 rollback in SJC

A recent OC Register story by Matt Padilla on foreclosures spiking unevenly around OC included this observation about foreclosures in Orange County:

Experts generally agree that foreclosures are spiking now because it was too easy to get a home loan during the housing boom. Loose lending combined with escalating home prices spurred speculators to buy several properties and resulted in others stretching to buy a home to live in, experts say.

Today's property - a 2003 rollback in San Juan Capistrano - is an example of easy and available credit during the bubble phenomenon, and what can happen when the proverbial rug is yanked away. It's hard to argue that the owner truly "stretched" to get into this property, because they didn't need to put more than $1 of their own money into the purchase.

The photo at the top is from when the property was on the market as a rental last July for $2,200 per month. This is the only photo with the current listing:
26405 Smoketree Lane, 92675

Asking price: $279,999

Asking price/ sq ft: $233
Income requirement: $69,999.75
Purchase price: $302,000
Purchase date: 11/21/03
Size: 2 beds, 1 bath, 1,200 sq ft (built in 1973)

MLS: S529200 (7 days on Redfin)

Zillow Zestimate: $534,500 (just a bit off)
2007 property tax: $3,300
HOA dues: $112
Type: Single Family Residence

Style: Ranch

Stories: One Level
Lot size: 3,000 sq ft
From listing: BANK says, 'BRING US AN OFFER!' Single-Level Home on Cul-de-Sac with Excellent Community Recreation! Outdoor Courtyard Living! Granite & Tile Kitchen. Dining Room + Covered Dining Patio! Big Living Room Floorplan currently set-up as small Living Room + Den/3rd Bedroom. Big Master & 2nd Bedroom w/ Walk-In Closets. Full Bath w/ Tub. Garage, Carport, Driveway plus low-cost community RV/Boat Parking. EZ Commuter Access for I-5 & 73. Near Shops, Harbor & Beach. WOW~Community Fishing Lakes, Pools, Parks, Sports Fields & Courts, Tot Lots, Nature Trails surrounded by open Countryside!

Because Google street view is our friend, here is what the street looks like:
Here is the story behind this property:
11/13/03: Current owner purchased for $302,000 with $1 down using a $241,599 1st loan and a $60,400 2nd loan. Let's call it 100% financing.
2/16/05: New loan for $369,000 from Resmae.
10/24/05: Re-fi from World Savings for a total of $391,500 in loans.
3/7/07: Re-fi again for total debt of $439,850. This includes a $370,400 1st loan and a $69,450 2nd from Countrywide.
3/26/08: Notice of default filed on the 1st loan in the amount of $9,605.

Assuming a sale for the current asking price, the shortfall would be $38,800.94 off the 2003 price, including 6% sales costs. But, as the financial history above shows, the true loss the lender will likely face is much more considering the amount of debt that is actually on the property.

Now you see how easy it was for the owner to buy a house with essentially no money of their own and then have their house provide "free" cash during the boom years. Do you feel they should be bailed out, and that they deserve to stay in the home and have the principle on their loan reduced?

Trust us - this is no aberration. In fact, it is the hidden story of South OC real estate during the bubble. There is a significant amount of properties that have similar stories to tell, and we'll do our best to share many of them with you.

"Huh?" photos of the week

This week's entry is from a San Juan condo listed for sale at $359,000, which is $200,000 off its 2005 peak price. Actually, this one isn't so much about head-scratching photos as it is a question of paint-color judgment. See for yourself:


Either the camera is shot, or there is some sort of discoloration in the kitchen, as you can see in the top-center of this photo:

Fear not...the color scheme even continues into the bedrooms:


There is nothing wrong with wanting to express yourself creatively. We're just not so sure your house's interior is the best place on which to unleash all the fury of your imagination.

Not just another loss in San Juan

Sure, the lower-end condo market is getting creamed right now in the mission capital of Orange County, but it's far rarer to see rollbacks among San Juan's more expensive luxury homes. Here's one of those exceptions...

31421 Paseo Diosa, SJC, 92675

Asking price: $1,475,000

Asking price/ sq ft: $335
Income requirement: $368,750
Purchase price: $1,648,000
Purchase date: 6/20/06
Size: 4 beds, 5 baths, 4,400 sq ft (built in 2006)

MLS: S518548 (3 days on Redfin)

2007 property tax: $8,424
HOA dues: $283
Type: Single Family Residence

Style: Contemporary, Mediterranean

Stories: Two Levels
Lot size: 6,500 sq ft
From listing: Long dramatic hallway through 1st floor sets the tone once you've entered. This well thought out, elegant floor plan is sure to please. Tastefully upgraded throughout the entire home. 3 en-suite bedrooms and large master suite.

The sales record in Zillow makes it appear that this is the original owner. Regardless of the exact situation, there is something unsettling and a little saddening about the scant amount of furniture in the photos and lack of wall decorations - it makes it seem like someone either never fully moved in, or already moved out and called in a stager who adheres to some degree of minimalist philosophy.

It does not "feel" like anyone's home.

Assuming a best-case sale for the full asking price, minus 6% sales costs, the loss on this property would be $261,500. Not including sales costs, it would also represent a depreciation of 10% off the original (peak) sales price.

San Juan condo woes...50% off peak

The lower end of San Juan Capistrano's condo market is continuing to feel a lot of pain. This 2-bedroom, 1 bath property we found is now asking about 50% less than it sold for in June 2006. That's right - a 50% decline in less than two years.

32145 Paseo Carolina #67, 92675

Asking price: $169,000

Asking price/ sq ft: $203
Income requirement: $42,250
Purchase price: $340,000
Purchase date: 6/8/06
Size: 2 beds, 1 bath, 834 sq ft (built in 1971)

MLS: P620346 (19 days on Redfin)

ZipRealty price tracker: Price Reduced: 2/14/08 -- $189,000 to $169,000
2006 property tax: $3,409
HOA dues: $265
Type: Condominium

Style: Contemporary

Stories: Two Levels
From listing: Great opportunity to own in San Juan Capistrano! This affordable 2 bedroom/1 bath two-level unit is close to schools, shopping, dining and freeway access. Community pool, spa and spacious greenbelts. This one won't last long.

Affordable is right, at least by Orange County standards. There's another property in the vicinity with the identical square footage as our subject property that's asking $369,900. Think they've got any shot at selling? Me neither.

Still another is hoping to get $265,000. Don't see it happening considering our subject's price, but guess you never know.

Zillow thinks this property is worth $335,500. Perhaps they are a bit optimistic in their valuation.

As we mentioned above, a sale at the current asking price would wipe out 50% off the peak value paid for this unit in mid 2006. It would represent a loss of $181,140 (with 6% sales costs deducted), or a depreciation of 50.3% (no sales costs included).

Another near-2002 rollback

Yesterday we profiled an Aliso Viejo condo that was very close to a nominal 2002 rollback. Here's another one in San Juan Capistrano:

26522 Paseo San Gabriel, 92675

Asking price: $205,000

Asking price/ sq ft: $237
Income requirement: $51,250
Purchase price: $355,000
Purchase date: 6/09/2005
Size: 3 beds, 1 bath, 864 sq ft (built in 1971)

MLS: S513270 (50 days on Redfin)

ZipRealty price tracker: Price Reduced: 12/14/07 -- $248,231 to $220,000
Price Reduced: 12/21/07 -- $220,000 to $205,000
2006 property tax: $3,797
HOA dues: $205
Type: Condominium

Style: Traditional

Stories: Two Levels
Lot size: 1,200 sq ft
From listing: BEST VALUE IN THE MISSION AREA AND MAYBE IN ORANGE COUNTY AND SOUTHERN CALIFORNIA!!!!!!!!!! PRICE UNDER MARKET FOR QUICK SALE!!!!!! FORECLOSURE!!!!!!!!! 3bed + 1 bath end unit.

Insert observation about excessive exclamation points in description here. Why is it exciting that this is a foreclosure? I'm sure the former owner isn't jumping for joy!!!!!!!!!!

This property's sale history is also interesting. Here it is via Redfin:

6/9/2005: $355,000 (26.6% realized yearly appreciation)
12/06/2002: $196,500 (20.8%/yr)
9/28/2000: $130,000 (37.1%/yr)
1/27/1998: $56,000 (-60.3%/yr)
4/15/1997: $115,856 (0.8%/yr)
7/26/1990: $110,000

The gains this decade were completely unsustainable and unwarranted in any sane market, which is not surprising considering how things were going. In five years, between 2000 and 2005, the property increased by 173% or $225,000. Compare that appreciation with what happened in 1990-2000: This property saw just a nominal $20,000 appreciation over that entire decade!

Some aggressive price cutting has already taken place on this one and suggests motivation to get it moved. Assuming it does sell at the current asking price, the nominal decline from the peak would be $150,000, or 42%.

The sales price also would be just $8,500 shy of the December 2002 one. Had the owner who bought in 2002 held the property until being forced to sell now for the current asking price, they would lose $3,800, assuming 6% sales costs.

The magic number is 38

Both of these San Juan Capistrano condos are priced at 38% off their peak 2005-2006 prices. The second is REO, and the first seems to be one as well, judging by the transaction history. Happy condo hunting!


26466 Calle S. Antonio #102, 92675

Asking price: $244,700

Asking price/ sq ft: $273
Income requirement: $61,175
Peak purchase price: $395,000
Peak purchase date: 9/19/2005
Size: 2 beds, 1 bath, 897 sq ft (built in 1971)
Days on Redfin: 52
$ decline from peak: $150,300
From listing: Two bedroom one bath condo in disirable community featuring tile kitchen floor, one car garage, and enclosed patio. Close to freeways, schools, and shopping.

26448 Paseo Pamela, 92675

Asking price: $207,500

Asking price/ sq ft: $241
Income requirement: $51,875
Peak purchase price: $335,000
Peak purchase date: 3/24/2006
Size: 2 beds, 1 bath, 860 sq ft (built in 1973)
Days on Redfin: 2
$ decline from peak: $127,500
From listing: Great opportunity in the city of San Juan Capistrano!!! Located just miunutes from shopping and dining. Home features upgrades throughout the kitchen and bathroom. Recently remodeled with new granite counter tops, newer cabinets, tile and wood flooring, and newer appliances. Don't miss out on owning in this community with it's own pool and spa!!

Finishing the week with a bang

All week this week we've shown you anecdotal examples of luxury South OC properties that would be selling at a loss if a buyer could be located to complete a successful sale. These don't explain the full market by any means, but they do show that no area is completely immune - no matter what the price tag - to the recent real estate troubles.

Here's one more, this time in San Juan. It's a pretty new house and a relatively recent addition to the inventory of homes for sale...

Asking price: $1,399,000

Asking price/ sq ft: $351
Income requirement: $349,750
Purchase price: $1,496,500
Purchase date: 2/06/2006
Size: 5 beds, 4.5 baths, 3,986 sq ft (built in 2006)

2006 property tax: $14,522
HOA dues: $286
Type: Single Family Residence

Style: Contemporary

Stories: Two Levels
Lot size: 6,900 sq ft
From listing: Don't miss your chance to take up residency in the exclusive gated community of Rancho Madrina. Just a short walk to downtown San Juan Capistrano where you can dine, shop, frequent the local farmers market, be entertained at the local movie theater and live theater, visit the historic San Juan Mission or even catch the Amtrak to work or for a weekend getaway and avoid sitting in traffic. Much to tell about this home! Distressed hardwood flooring, stained crown molding, upgraded kitchen cabinets and granite countertops, 4 sets of French doors and 2 singles, incredible garage, surround sound throughout home. .. Too many upgrades and features to list. You must see it with your own eyes!

The obvious approach here in the description is to set the scene and let your emotions take over. It's up to you to decide whether or not it was successful - but if you are interested, make sure you "don't miss your chance."

Will it be like this property, which is still encouraging people to "Hurry!!!" even though it has now been on the market for about 200 days? Or will it sell quickly?

The carrying costs on this property look pretty high - 2006 property taxes plus HOA dues alone total $1,496. That's before any upkeep, insurance and mortgage.

Assuming a sale for the full asking price, the loss on this property would be $181,440, including 6% sales costs. That's a decrease of more than $8,000 per month, spread over about 22 months of ownership.

Thankful on Thanksgiving

Happy Thanksgiving! Hope everyone enjoys an excellent holiday with their loved ones. I'm grateful for a lot of things, including my family and friends, my health, my steady job, our nice place to live in a very nice neighborhood (when will it be safe to buy again?). Too many other things to mention.

On a day like today, it can't be very nice to be a seller who either can't find a buyer, is facing foreclosure or who is looking at a tough financial road ahead as they attempt to unload their property at a loss and rebuild their finances. We wish all of them the best. Particularly the owner(s) of this San Juan Capistrano house. Not a condo this time, but a single family home.

Considering how big the loss is, though, it is likely and we are optimistic that it's a bank or banks that will be absorbing the brunt, and the individual owners will be relatively spared from the fallout of a loss of at least 42% in value in a year and a half.

29425 Avocado Lane, SJC, 92675

Asking price: $370,000

Asking price/ sq ft: $228
Income requirement: $92,500
Purchase price: $640,000
Purchase date: 4/26/2006
Size: 5 beds, 2 baths, 1,620 sq ft (built in 1974)

MLS: S504960 (71 days on Redfin)

2006 property tax: $3,128
HOA dues: $110
Type: Single Family Residence

Style: Contemporary

Stories: Two Levels
Lot size: 3,445 sq ft
From listing: LOWEST PRICE PER SQUARE FOOT! This 5 bedroom (5th bedroom added without permits)2 bath home is great for investment or BIG family. Crown moldings, nobody behind, lots of potential, separate laundry area. Bring paint brush, mops and you have a NICE home for the value.

What does "best home for the value" mean? Textbook tale of unfortunate owner getting into the market at exactly the wrong time, for a perfectly overinflated price.

The property changed hands in 2001 (beginning of the bubble) for $270,000, and that owner cashed out in 2006 with a hefty gain of $370,000, not including sales costs - the house "made" $74,000 a year! That's about the median household income in O.C.

Now, things have horribly changed. The original wishing price of $519,000 failed, and now the property has been slashed in price by $149,000. If the property is sold at the current asking price, the loss would be an absolutely staggering $292,200, including 6% sales costs. That also equates to a decline of about 42% from the previous sale, not including transaction costs.

36% off in San Juan? "NEET!"

It's hard not to feel for San Juan Capistrano condo owners who recently bought properties, considering how fast prices have fallen. Even the NAR is conceding that 2008 isn't looking so great right now for real estate, either. Not good news for this property, which is already trying to sell at a steep discount:

31604 Los Rios St. #145, SJC, 92675
Asking price: $305,000
Purchase price: $475,000
Purchase date: 3/21/2006
Original asking price: $449,000
Income requirement: $76,250
Size: 3 beds, 1.5 baths, 1,165 sq ft (built in 1978)
From listing: VERY NEET TOWNHOME, Excelent for first time buyer, located in very nice area, walking distance to school, shopping center, Mission and transportacion.

Word count of listing: 22. Misspelled word and grammar mistakes count: 5.

English doesn't appear to be the agent's first language, which is fine. But would it have killed them to run this by someone who perhaps had a better grasp of the language? The way it is now - with mistakes galore (e.g. "neet," "excelent," "transportacion") - eats away at the agent's credibility.

Would you (as a potential buyer) expect a successful professional to let a descriptions like this get posted on the MLS? No way, and the seller deserves better representation.

A stab at a wishing price of $449,000 wielded nothing, and now the property has been reduced by $144,000. It's now at 88 days on Redfin. The price alone makes it sound like it would be attractive to someone, but can this potential buyer find adequate financing, even at this price?

If we assume a sale at this price and 6% in selling costs, the loss on this property would be $162,300 in a little more than a year and a half. To put this another way, that's a decline of $8,115 per month of ownership. This property would also have fallen in value by 36% since March, 2006 (not including sales costs).

How about 38% off?

I hope that reduction sounds good, because it's exactly the kind of discount you can get if you're willing to pay asking price for this San Juan Capistrano condo...

26547 Calle Santa Barbara #46, SJC, 92675

Asking price: $265,000

Asking price/ sq ft: $262
Income requirement: $66,250
Purchase price: $430,000
Purchase date: 10/4/2006
Size: 3 beds, 2 baths, 1,011 sq ft (built in 1974)

MLS: S499359 (99 days on Redfin)

ZipRealty price tracker: Price Reduced: 10/24/07 -- $280,000 to $265,000
2006 property tax: $3,222
HOA dues: $200
Type: Condominium

Style: Spanish

From listing: Bank will accept list price. Need quick sale. Three bedrooms and two baths. Needs some TLC however this upstairs unit has great potential. Large living room, family style eating area ajoining kitchen. Private patio for entertaining. Close to shopping and the quaint town of San Juan and walking distance to the famous San Juan Mission! Five minutes and your at the ocean. Don't miss this great opportunity.

Finally, things are starting to get into the realm of reality - a household making the median county income of about $75,000 can actually afford this place, with a little room to spare. Not exactly a spacious home to raise a family in, but a good start.

Looks like the kitchen could use a bit of tidying up. Is it too much to ask to move the garbage can out of the way for one minute while taking the picture?

It's also nice to see a no-frills approach being taken by the bank, as evidenced by the description. Motivation is in the air. Wonder what would happen if you offered a bit less? Will the bank continue to try and hold out for this price, would it consider biting on a lower offer, or would it eventually be forced to cut the price further if there are no takers?

The bank has already reduced the price once. Who's to say it wouldn't again? It could be tempting to jump at this property, but there are a couple issues:

1. You don't want to be a knife catcher in a falling market that continues to tumble after you purchased your property, and...
2. While this was a heck of a price cut from the last sale, it's still above the 2003 price by about $40k. Since we're still in the early stages of this down market, it would seem unlikely the falling values are going to turn around any time soon. So, see No. 1.
   

If the property sells at this price, it would be for $165,000 less than the sale in 2006, equating to a decline of 38% in a little more than a year.

It's only money, right?

Properties like this don't just grow on trees, you know. Unfortunately, neither do these kinds of losses nowadays...

27281 Paseo Peregrino, San Juan Capistrano, 92675

Asking price: $1,595,000

Asking price/ sq ft: $380
Income requirement: $398,750
Purchase price: $1,900,000
Purchase date: 9/7/2005
Size: 3 beds, 2.5 baths, 4,200 sq ft (built in 1982)

MLS: S485973 (175 days on Redfin)

ZipRealty price tracker: Price Reduced: 5/25/07 -- $1,949,000 to $1,875,000
Price Reduced: 6/18/07 -- $1,875,000 to $1,775,000
Price Reduced: 8/08/07 -- $1,775,000 to $1,595,000
2006 property tax: $20,424
Type: