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.