Luxury rollback in Laguna Niguel

Continuing this week's theme of million-dollar properties gone awry amidst a tumbling market, here is one from prestigious Laguna Niguel...

Asking price: $1,299,900

Asking price/ sq ft: $399
Income requirement: $324,975
Purchase price: $1,461,500
Purchase date: 6/23/2005
Size: 5 beds, 4.5 baths, 3,255 sq ft (built in 2005)

ZipRealty price tracker: Price Reduced: 9/12/07 -- $1,695,000 to $1,595,000
Price Reduced: 10/21/07 -- $1,595,000 to $1,495,000
Price Reduced: 12/03/07 -- $1,495,000 to $1,299,900
2006 property tax: $15,177
HOA dues: $159
Type: Single Family Residence

Style: Mediterranean

Stories: Two Levels
Lot size: 8,015 sq ft
From listing: Huge Price Reduction-Reduced over $200,000! Gorgeous home located in the prestigious guard gated community of San Joaquin Hills. Spacious floor plan highly upgraded w/ gourmet kitchen, granite counters, wrought iron spiral staircase, surround sound, built-ins, custom paint, crown moldings, plus much more. Large entertainers tropical backyard w/ plans for a sparkling pool in the side yard, built-in BBQ, tranquil fountains & sunset views! HOA amenities include pools/spas, sports park, totlot & more.

This is certainly a legitimate luxury home. It's nicely sized, it's got a large lot, the amenities are there, and it's located in a guard-gated community. Tastefully decorated, nicely staged and professionally photographed. The only "disadvantage" is the location - it's not exactly ocean close. Not that it's far, though.

Wonder who will be expected to pick up the cost of the "plans for a sparkling pool in the side yard." Heck, I'm planning a miniature ice rink in my living room and a championship golf course in my backyard, but it doesn't mean I'm going to pony up the dough to see it to completion.

Judging by the sales history, these appear to be the original owners. This is obviously not the outcome they expected when they bought into the Orange County real estate market two years ago. One would have to assume considering the price reductions and time on the market (107 days on Redfin) that this is a necessary sale - and it's very unfortunate timing.

Assuming a sale at this price, the loss would be $239,594, including 6% sales costs. To break things down further, it would be a decline of about $5,575 per month of ownership (not including transaction costs), or a depreciation of about 11%.