Big rollback in Foothill Ranch

This is the first potential 2003 rollback in Foothill Ranch we've seen lately that's not a small condo - though it's only a rollback of that magnitude if you assume the price at the low end of the asking range.

Still, it's a pretty nice case study of the types of declines that are slowly starting to affect more neighborhoods in South OC.

4 E Jameson St, Lake Forest, 92610
Asking price: $519,999-$550,000
Asking price/ sq ft: $288-$304
Income requirement: About $135,000
Purchase price: $730,000
Purchase date: 3/14/06
Size: 4 beds, 2.5 baths, 1,808 sq ft (built in 1995)
MLS: U8002993 (5 days on Redfin)
Zillow Zestimate: $632,500
HOA dues: $49
Type: Single Family Residence
Style: Contemporary
Stories: 2 Levels
Lot size: 5,000 sq ft
From listing: Beautiful home, this 4 bed room 2.5 bath, a big attic, 2 car garage is completely upgraded, new carpet, new paint, new backyard with Jacuzzi, and gazebo. It s classy and modern but warm and cozy. Great area, safe, family oriented, great neighbors, located by the 241, shops, stores and restaurants walking distance from home. Great schools and parks. You can t go wrong with this house. This house was bought only 2 years ago for 730,000 and now going for this unbelievable price of 550,000. This is a short sale and the lender is willing to move fast with the right buyer. You can t go wrong with this home. Come see for yourself, you and your clients will fall in love when you walk in.

Here is one of those extreme short sales that appears to have been approved by the lender - meaning they will be accepting a huge six-figure loss to get this moved.

The current owner is not doing so well with her real estate purchase. She bought the property at the peak for $730,000 with $657,000 worth of financing and a $73,000 (10%) down payment. We are not sure if she later "liberated" any of her money from the property via a HELOC or standalone second.

If the owner did not take out any cash, and the short sale is approved at $550,000, the owner would lose their $73,000 downpayment and the bank would be out about $107,000. That does not take into account any sales costs. A sale at that amount would also mean a depreciation of $180,000 or 25% off the March 2006 price.

If we were to assume the best offer comes in closer to $520,000 and the sale still is allowed to go through, then the numbers are even more gnarly: That would equate to more like a $137,000 stinger for the bank. It also would mean a depreciation of $210,000, or 29% off the last sale. We also would have a 2003 rollback in the books.

This is what the foreclosure map looks like within a 1 mile radius of this property, courtesy of ForeclosureRadar.com. There are currently about 40 properties in some stage of foreclosure:

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.


View Larger Map

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.

"Huh?" photo of the week

First person to figure out what the deal is with this photo attached to a Lake Forest (Foothill Ranch) condo gets a big gold star and pat on the back. Did they have to make it the No. 1 photo that shows up in the MLS?

OK, so it's a work in progress, we get it. Here is the listing description for this 1-bed, 1-bath, 800 sq ft place: New tile floor, berber carpet, new paint, private end unit, city lights view!! Beautiful unit!! Amazing BUY!!! Couldn't they have waited until after these upgrades went in to take the photos?

This property has been on the market for more than three months at an asking price of $269,000. I'm sure you're as shocked as we are that it hasn't sold yet.

Foothill Ranch rollback

It's high time we take a look at what is going on out in Foothill Ranch (ZIP 92610). In case you're not too familiar with the area, it was annexed to Lake Forest in 2000. Foothill Ranch occupies the northeastern part of that city and is close to the old El Toro Marine base.

I've only spent a little time out there, but it looks like a nice community. One possible downside is its distance to non-toll freeways. It also recently gained some attention during the Southern California wildfires, since it was briefly in danger. Fortunately, the area was spared.

Here's a nice-looking property with a killer backyard pool that's under the real estate gun...

5 Bienvenue Drive, 92610

Asking price: $549,000

Asking price/ sq ft: $390
Income requirement: $137,250
Purchase price: $660,000
Purchase date: 10/7/2005
Size: 3 beds, 2.5 baths, 1,407 sq ft (built in 1994)

MLS: S499329 (176 days on Redfin)

ZipRealty price tracker: Price Reduced: 8/21/07 -- $659,900 to $599,000
Price Reduced: 12/16/07 -- $599,000 to $549,000
2006 property tax: $8,121
HOA dues: $70
Type: Single Family Residence

Stories: Two Levels
Lot size: 3,601 sq ft
From listing: very motivated seller . place your offer. needs. Located on a quiet cul-de-sac in a friendly neighborhood. Large backyard that creates an extension of living space outdoors, perfect for backyard entertaining. (must see). .Dog run and storage area for ATV, motorcycle or jetski. All offers considered.

The suspense is killing me - what are the "needs?" One wonders just how eager these sellers are to unload their property these days considering there hasn't been a price reduction in more than a month. Then again, the last $50,000 price trim back in December is nothing to sneeze at.

We obviously don't know the details of the owners' situation and why they're motivated to sell, but sure as heck nobody wants to be forced to lower their asking price to $111,000 below what they paid a little more than two years ago.

Assuming a sale at the current asking price, the total loss would be $143,940, including 6% sales costs. Or, to look at it a different way, it also would represent a depreciation of 17% since 2005 (no sales costs included).