Turning back the clock in Lake Forest

This REO is one of a handful of foreclosure properties in Lake Forest. It's also been sitting on the market for a little more than five months despite a discount of $123,000. If you were to factor in sales costs, the money received would be less than the property's price in 2003.

23238 Orange Ave #5, Lake Forest, 92630

Asking price: $241,900

Asking price/ sq ft: $271
Income requirement: $60,475
FB purchase price: $350,000
FB purchase date: 4/28/2006
Size: 2 beds, 2 baths, 883 sq ft (built in 1980)
MLS: S498266 (149 days on Redfin)

ZipRealty price tracker: Price Reduced: 8/06/07 -- $364,900 to $306,900
Price Reduced: 9/07/07 -- $306,900 to $291,500
Price Reduced: 9/22/07 -- $291,500 to $264,900
Price Reduced: 10/20/07 -- $264,900 to $251,600
Price Reduced: 11/28/07 -- $251,600 to $241,900

2006 property tax: $2,447
HOA dues: $245
Type: Condominium

From listing: Spacious 2 bedroom, 2 bath end unit. Great for first time homebuyer or investor. Ground floor unit with large patio including laundry room. Walk in closet. Close to community pool. Association dues pays for WATER AND TRASH

Check out the sales history: 0.7% yearly appreciation between 1989 and 1999. Then, 20.2% yearly appreciation between 1999 and 2003. Then, 18.7% yearly appreciation between 2003 and 2006.

Is there really any surprise that this property has already fallen significantly in value, considering its value more than tripled between 1999 and 2006 after it only appreciated by $8,000 total in the previous decade?

If we assume that the property somehow finds a buyer at the current asking price, the decline from the peak would be 31%, or $108,100. With 6% in sales costs, the property would net $227,386 - just below the property's 2003 sales price.