'03 condo rollback in LN

The trickle of 2003 rollbacks in South County continues despite some observations that prices and sales numbers for OC as a whole appear to be leveling off for the time being.

Here is another of those discounted properties, located in Laguna Niguel.

28223 La Gallina, 92677
Asking price: $260,000
Asking price/ sq ft: $306
Income requirement: $65,000
Purchase price: $405,000
Purchase date: 5/17/06
Size: 2 beds, 2 baths, 850 sq ft (built in 1995)
MLS: S526912 (104 days on Redfin)
ZipRealty price tracker: Price Reduced: 6/24/08 -- $355,000 to $299,000
Price Reduced: 7/01/08 -- $299,000 to $260,000
Zillow Zestimate: $337,000
HOA dues: $230 + $22
Type: Condominium
Style: Townhouse
Stories: 1 Level
From listing: BEAUTIFUL UPPER LEVEL CONDO. LIGHT & BRIGHT, WARM MODERN PAINT TONES. SUNNY KITCHEN WITH OVERSIZED COUNTER SPACE AND LOTS OF CABINETS! INDOOR LAUNDRY,SPACIOUS PATIO WITH STORAGE CLOSET AND A GATED ENTRANCE.INVITING TIERED FIREPLACE IN LIVING ROOM WITH VAULTED CIELINGS. ASSOCIATION POOL AND AMENITIES. CARPORT WITH EXTRA STORAGE.


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Can you believe this property - a decent starter condo - was legitimately only affordable for people making more than $100,000 per year based on its peak price (if they wanted to be careful and use conservative financing)? Most likely you would answer "yes" if you've been following the local real estate market.

Laguna Niguel - a fairly affluent city as a whole - had an average adjusted gross income of $102,247 in 2005, according to IRS records. Interestingly, when adjusted for inflation, incomes there actually were still lower than they were at the high mark of 2000.

The current owner bought at the peak and used 100% financing. If the property can be sold for the current asking price, the loss would be $160,600, including 6% sales costs. All for the lender.

It also would mean a depreciation of $145,000 or 36% off the peak, not including any sales costs, as well as a depreciation of 13% off the mid-2003 price of $300,000.

$244/sq ft in Coto

We were out driving yesterday in Irvine and noticed a sleek Mercedes pull up next to us with a sign taped to the back left window. Right above the usual information like asking price and contact number, it said in capital letters:

"NEED TO SELL."

No punches pulled.

Coincidentally, we happened to be right next to Central Park West - or whatever you call what's been built there so far.

Is this Coto de Caza seller in the same desperate situation? You would think so considering the property is scheduled for foreclosure auction in less than a month.

55 Via Barcaza, 92679
Asking price: $599,000
Asking price/ sq ft: $244
Income requirement: $149,750
Purchase price: Unknown
Purchase date: 12/20/02
Size: 3 beds, 3 baths, 2,452 sq ft (built in 1989)
MLS: S505588 (298 days on Redfin)
ZipRealty price tracker: Price Reduced: 10/09/07 -- $785,000 to $739,000
Price Reduced: 10/30/07 -- $739,000 to $699,000
Price Reduced: 11/20/07 -- $699,000 to $675,000
Price Reduced: 3/07/08 -- $675,000 to $650,000
Price Reduced: 4/14/08 -- $650,000 to $599,000
HOA dues: $210 + $265
Type: Condominium
Style: Mediterranean
Stories: 2 Levels
From listing: STUNNING 3 BEDROOM 3 BATH 2 STORY MEDITERRANEAN VILLA WITH 2 CAR ATTACHED GARAGE (APPROX. 2452 SQ.FT.) FANTASTIC LOCATION ACROSS FROM THE GOLF COURSE IN GUARD GATED COTO DE CAZA. THIS RESORT STYLE TOWNHOME HAS ARCHITECTURAL DETAILS THROUGHOUT WITH UPGRADED ITALIAN CERAMIC TILE FLOORS, CUSTOM LIGHTING, PLANTATION SHUTTERS, BUILT-IN CABINETS, LARGE MASTER SUITE WITH RETREAT, FIREPLACE AND BALCONY. FRENCH DOORS LEAD TO A BEAUTIFUL BACKYARD WITH SPARKLING SPA. PRIVATE COURTYARD ENTRY AND MUCH MORE!

At $244 per square foot, this property is the third-cheapest Coto property up for sale on the MLS - at least by that metric. The No. 1 cheapest in terms of price per square foot we already profiled. The second-place finished is a fixer-upper.

The owner of our subject property purchased in 2002 and he refinanced in April of 2007 for $785,000 worth of debt spread across two loans. About five months later, the property was on the market for $785,000. Coincidence? Doubt it.

The property didn't sell, so now we're looking at nearly 300 days on the MLS and $186,000 in asking price reductions. The clock is also ticking on the delinquent first loan.

A notice of default was filed in March, and in mid-June the notice of trustee sale was handed out for $673,555. The original amount of that loan was $628,000.

Assuming the property can actually be sold for the current asking price, it would mean a significant loss for the lender. That lender is Countrywide...err....Bank of America.

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:

One-upmanship in RSM

HAPPY FOURTH OF JULY!

We previously posted back in March about this rollback condo in RSM. That property is still on the market with a notice of default and notice of trustee sale to its credit, but now it's got some serious competition.

Presenting another 2002 rollback:

108 Flor De Sol #72, RSM, 92688
Asking price: $169,900
Asking price/ sq ft: $206
Income requirement: $42,475
Purchase price: $230,000
Purchase date: 11/13/03
Size: 2 beds, 2 baths, 825 sq ft (built in 1986)
MLS: S537514 (11 days on Redfin)
Zillow Zestimate: $224,000
HOA dues: $250
Type: Condominium
Style: French
Stories: 1 Level
From listing: lower end unitwith 2 bedrooms and 2 baths,inside laundry,walking distance to community lake,shopping center, and more

This property is not showing up in ForeclosureRadar as a preforeclosure, but we assume it is a short sale. It was purchased in 2003 using 100% (85-15) financing.

Judging by the list of nearby properties for rent, we expect you would be able to find a tenant willing to pay about $1,500 a month to live here. That means this property would be worth around $240,000 to an owner-occupant who wanted to buy and achieve rental parity. To an investor, this condo is likely worth about $150,000-$165,000.

Assuming the property can be sold for the full asking price, it would mean a decline of $60,100 off the 2003 price and a depreciation of $2,600 from the 2002 price, not including any sales costs. You also may be interested to know properties like this in the same complex were selling for a bit more than $350,000 in 2005. This one is more than 50% off the neighborhood peak.

A decline like this is not unique to the complex - it's happening to properties all around RSM. We've also noticed more anecdotal examples of 2003 rollbacks in areas like Laguna Niguel, Aliso Viejo and Mission Viejo. Larger properties are coming into the mix as well.

You are now excused to attend to your patriotic duties:

Near the '02 price in Laguna Hills

The OC Register is reporting that by S&P-Case/Shiller methodology the current real estate bear market has caused greater price declines in 15 months than those seen during the entire 71-month downturn in the 1990s.

Today's property is evidence of the accelerating downward trend of property values in the area. It's a short sale in Laguna Hills that is asking far closer to its June 2002 sales price than the amount "paid" in 2006.

The real estate bubble is long gone.

16 Carriage Hill Ln, 92653
Asking price: $399,000
Asking price/ sq ft: $212
Income requirement: $99,750
Purchase price: $635,000
Purchase date: 8/25/06
Size: 3 beds, 3 baths, 1,879 sq ft (built in 1982)
MLS: S520441 (142 days on Redfin)
ZipRealty price tracker: Price Reduced: 2/05/08 -- $590,000 to $535,000
Price Reduced: 3/03/08 -- $535,000 to $499,000
Price Reduced: 3/31/08 -- $499,000 to $465,000
Price Reduced: 5/04/08 -- $465,000 to $449,000
Price Reduced: 6/06/08 -- $449,000 to $399,000
Zillow Zestimate: $557,500
HOA dues: $240 + $32
Type: Single Family Residence
Style: Contemporary
Stories: 2 Levels
Lot size: 4,000 sq ft
From listing: One of the largest private lots in The Indian Creek Homes Community. This home offers a spacious floor plan with a living room and formal dining room and an abundance of light with all the windows. Peaceful backyard with a weatherproofed deck, lighting and sprinklers. Kitchen has been upgraded granite countertops and new appliances. Lowest priced home in this community...you wont be disappointed!


The owner financed the entire purchase price using a $508,000 first loan and a $127,000 second. The original asking (wishing) price was $590,000. No go. Now, the property has been reduced by $191,000. It's still on the market.

Here is the sales history:

Aug 11, 1988: $195,000
May 04, 1990: $249,000
Jun 10, 2002: $375,000
Jul 24, 2002: $359,000
Sep 27, 2004: $575,000
Aug 25, 2006: $635,000

Between 1990 and 2002 (around the beginning of the 1990s downturn to the beginning of the last housing bubble) the property appreciated by $126,000. That's a total of 51% over the course of about 12 years. Not bad at all.

From 2002 to its sale at the peak of the bubble in 2006, the property sold for $635,000. That's an increase of $260,000 or 69% or in just four years. When compared to some of the other escalating property values around South OC, this is actually a relatively modest appreciation.

Assuming a sale can go through for the current asking price, the lender would lose $259,940, including 6% sales costs. It would also mean a depreciation of 37% in less than two years, not including any sales costs.

2003 rollbacks: Here they come

A few examples don't make for a solid trend, but we've noticed a handful of 2003 rollbacks have recently come on to the market.

Once a rare phenomenon confined to small condos in "lower-end" pockets, the 2003 rollback - a property up for sale with an asking price below the price it was sold for five years ago - is slowly becoming more and more common in more parts of South Orange County.

Here are some examples of properties that have hit the MLS in the past couple weeks that fit the pattern.

9 Tanglewood, Aliso Viejo, 92656
Asking price: $629,900
2003 purchase price: $641,500
Size: 4 beds, 3 baths, 2,163 sq ft (built in 1990)
Comment: This REO came up for sale in mid-February for $650,000. Its price attracted plenty of interest, and the property went pending in March. Unfortunately, it could not be saved from foreclosure and went back to the bank in April for $580,000.

21182 Chestnut #209, Mission Viejo, 92691
Asking price: $325,900
2003 purchase price: $362,000
Size: 3 beds. 3 baths, 2,519 sq ft (built in 1986)
Comment: The current owner used 89% financing to purchase the home. We're not sure if any money was pulled out of the property later. If it sells at the current asking price, it would mean a loss of $55,654, including 6% sales costs. Note: The photo is of another unit in the complex.

21436 Firwood, Lake Forest, 92630
Asking price: $325,000
2003 purchase price: $375,000
Size: 3 beds, 2 baths, 1,746 sq ft (built in 1983)
Comment: This property is in "good overall shape" - whatever that means. The current owner paid $519,000 in 2005 and used 90% financing from World Savings Bank. If the property sells at the current price (they actually started out by listing at $225,000 before raising the price by $100,000) the loss would be $213,500, including sales costs.

3 Redbud #126, RSM, 92688
Asking price: $264,900
2003 purchase price: $275,00
Size: 2 beds, 2 baths, 1,002 sq ft (built in 1987)
Comment: This now-REO went for $385,000 at the peak in 2006. The previous owner used 100% financing and couldn't keep the condo for too long. It went back to the bank in April, but it appears the lender is putting in new carpet and paint to try and help get this place sold.

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.

Back to earth in San Clemente

This Forster Ranch property in San Clemente used to be a million-dollar home during the bubble, but is now back up for sale in six-digit price land.

1620 Vista Luna, San Clemente, 92673
Asking price: $897,000
Asking price/ sq ft: $337
Income requirement: $224,250
Purchase price: $1,020,000
Purchase date: 11/30/06
Size: 4 beds, 3 baths, 2,663 sq ft (built in 2004)
MLS: S525487 (89 days on Redfin)
Zillow Zestimate: $853,000
2007 property tax: $8,399
HOA dues: $248
Type: Single Family Residence
Style: Cape Cod
Stories: 2 Levels
Lot size: 6,000 sq ft
From listing: Panaromic Ocean Views at this home in the gated community of The Reserve South. This spacious home has 4 bedrooms + Large loft with Tech Center, 3 bathrooms & 3-car Garage. 1BR/1 BA located on the first floor for guests. Travertine flooring throughout first floor. Granite counter tops in the kitchen with island bar. Great viewing deck from the master bedroom.

When this property last sold in 2006, it went for $383/sq ft. As you can see, those days are gone.

The previous owner took over the property thanks to $918,000 (90%) financing. Even if they had stopped there, they likely would be in trouble considering the home's current market value and asking price. They didn't stop, though.

In April (less than five months later), they took out a $75,000 stand-alone second from E-LOAN and also refinanced into a $862,500 ARM from Sierra Pacific Mortgage. Two months after that, another loan - we're not sure what type - was taken out from National City Bank, this time for $150,000.

If all that money was extracted, the total debt on this property could have been as high as $1,087,500 - more than 100% of the cost of the property, right as it begun to quickly depreciate.

Assuming a sale for the current asking price, the loss could be as much as $244,320, including 6% sales costs and assuming there is in fact $1,087,500 of debt on the property.

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

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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.

(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.

More 2003 pricing in Aliso

We had already begun to notice some instances of 2003 pricing in Aliso Viejo, and this property - new to the market this past week - is another example.

14 Trofello Lane, 92656
Asking price: $400,000
Asking price/ sq ft: $238
Income requirement: $100,000
Purchase price: $425,500
Purchase date: 11/14/03
Size: 3 beds, 3 baths, 1,680 sq ft (built in 1998)
MLS: P639476 (3 days on Redfin)
Zillow Zestimate: $471,000
2007 property tax: $5,779
HOA dues: $242
Type: Condominium
Style: Mediterranean, Townhouse
Stories: 2 Levels
From listing: Turnkey property in the prestigious community of Alivo Viejo. This home is located in a gated community. Entry into large family room with a fireplace which opens to dining room and kitchen. 3 bedrooms all upstairs. There is very large loft which could be an additional bedroom/office or gameroom. Surround sound throughout, fire sprinklers, recessed lighting, A/C & heating, Inside laundry + 2-CAR attached garage with direct access! One of four full sized concrete driveway. This is a great opportunity to own your own home in a beautiful city, close to freeway access and shopping galore. Just minutes away from beautiful Laguna Beach. This home awaits your moving van! You will love it here! This is a home that won't last long.

A good variety of photos with the listing - but unfortunately a couple of them are sideways. If you take a look at them on Redfin, you can see the MLS logo is right side up, meaning whomever put them into the system is to blame, and not Redfin for somehow accidentally rotating the images.

Also, they might want to re-check to make sure they've spelled the name of the city right in the listing description. "Alivo Viejo?" Very amateurish.

According to public records, the current owners bought in 2003, and have priced this one to sell immediately - even at the risk of opening the listing with a price $25,500 below what they paid. The listing does not carry the all-too-comon "short sale" label, so if this is correct we're assuming that either the owner has enough equity in the property to absorb the hit, or they are going to have to bring some money to the closing table to make the sale happen. Props to them for pricing the property aggressively. It should sell soon.

We conservatively estimate this property could rent for about $2,400 per month. So, the target price for an owner-occupant using a GRM of 160 would be $384,000 - close to the asking price and also close to receiving our seal of approval as a good real estate buy.

This should also prove to be a comp killer for 18 Trofello - that property has only two bedrooms but is asking $399,900. There is another property for sale - 45 Trofello - that is three bedrooms and also is priced at $399,900. And, 34 Trofello is the largest of the bunch but is by far the most expensive at $475,000.

Assuming our subject property sells for the full asking price, it would equate to a loss of $49,500, including 6% sales costs. All that bubble equity that so many prospered off of? Gone.

A sale would also mean the property would have depreciated by about 6% (not including sales costs) over the course of around four-and-a-half years. Worthwhile investment?

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.

Serious price cutting in San Clemente

A reader pointed out this San Clemente short sale property to us. It's a story that has played out countless times already all over Orange County: The owner purchased at the peak, then can't or doesn't want to keep the house for whatever reason and gets the home listed for a wishing price that either a) would be just enough to cover the mountain of outstanding debt, or b) would result in a magical windfall of cash if a greater fool can be hooked in. Either way, it's completely out of touch with the market, so no dice.

The asking price is consequently altered again and again to try and keep up with the sliding market. Has the price been cut enough now so a buyer would be interested, and has it been enough time so the lender would accept a sale at this price?

2237 Avenida Salvador, 92672

Asking price: $675,000

Asking price/ sq ft: $358
Income requirement: $168,750
Purchase price: $975,000
Purchase date: 1/17/06
Size: 2 beds, 2 baths, 1,885 sq ft (built in 1973)

MLS: S507030 (202 days on Redfin)

ZipRealty price tracker: Price Reduced: 9/29/07 -- $1,275,000 to $1,205,000
Price Reduced: 9/30/07 -- $1,205,000 to $1,199,000
Price Reduced: 10/15/07 -- $1,199,000 to $1,149,000
Price Reduced: 2/07/08 -- $1,149,000 to $800,000
Price Reduced: 4/10/08 -- $800,000 to $650,000
Price Increased: 4/14/08 -- $650,000 to $675,000
Zillow Zestimate: $792,500
2007 property tax: $3,442
Type: Single Family Residence

Style: Contemporary

Stories: One Level
Lot size: 7,371 sq ft
From listing: Great opportunity to own a single level ocean view custom home on the street of dreams--this incredible home offers newly remodeled and enlarged kitchen perfect for entertaining family and friends-great room with oceanviews and fireplace-two very large master suites opening to your own private tropical backyard-lush landscape,private oceanviewing spa-plans for second story-this incredible home is in turnkey move-in condition with potential if extra square footage is desired--short sale-reduced to sell this week end open sun 2-4

As you can see from the listing, this property has been on the market for more than six months without a sale. The price was inexplicably raised very recently by $25,000 (or is it a calculated increase to a price the lender would accept?) but a successful sale has not yet been achieved.

Can you see this property going for $676 per square feet? That's what would have happened if it sold at the original asking price.

"The street of dreams." What a sad thought knowing that by buying this property the owner ironically ended up stepping right into their own real estate nightmare.

The home has been reduced $600,000 since its original listing - that's a 47% discount. Assuming a sale is made for the full asking price, the loss would be $340,500, including 6% sales costs. Or, it would mean a decline of 31% off the peak, not including sales costs.

The sale before the one in 2006 was in 1995 - at the bottom of the previous real estate downturn - for $250,000. If a $675,000 sale does go through now, it would still mean the property appreciated a hefty 8% every year from 1995 to 2008. Not bad.

It's now an '03 rollback in Aliso

It is becoming undeniable: We are now seeing some 2003 rollbacks that are not small condos in in Lake Forest, RSM and San Juan. Here is a property in Aliso Viejo that fits that description. Its most recent price reduction makes it a 2003 rollback.

35 Baneberry, 92656

Asking price: $575,000

Asking price/ sq ft: $303
Income requirement: $143,750
Purchase price: $575,000
Purchase date: 11/26/03
Size: 3 beds, 3 baths, 1,900 sq ft (built in 1997)

MLS: S520608 (67 days on Redfin)

ZipRealty price tracker:
Price Reduced: 2/12/08 -- $689,000 to $625,000
Price Reduced: 4/12/08 -- $625,000 to $575,000
Zillow Zestimate: $634,000
2007 property tax: $8,026
HOA dues: $100 + $27
Type: Condominium

Style: Traditional

Stories: Two levels
From listing: Former model detached home. Gorgeous, end of cul-de-sac home with 3 bedrooms, 2.5 baths. Large bonus/loft, yard with great view of the park. Nicely upgraded. This beautiful home is in a private, quiet location but is close to all amenities, shopping, freeway, restaurants, schools.

The owner before this one made out like a bandit. Zillow says they purchased the property for $268,500 in 1998 in a comparably balanced real estate market, and then sold well below the peak in 2003 for $575,000 - a profit of $306,500, before sales costs or upgrades, in six years. Can you imagine how much more "easy" money they would have made if they had instead sold in 2004 or 2005?

There isn't even any true competition for this property - at least not in the immediate vicinity. Another home is for sale at 12 Baneberry, but that's a smaller model. Oh, they're asking more - $595,000. Don't see this other one getting sold at that price, particularly now that our subject property has cut the asking price again.

Assuming a sale at the current asking price, the loss would be $34,500 (because we factored in 6% in sales costs), and essentially means bubble equity amassed during the roaring years of 2003-mid 2006 would have been wiped out.