Massive REO price slashing continues

We're in Aliso Viejo today to see another heavily discounted foreclosure property. How long will it take the market and its new-found "strength" to knock this home off the market?

7 El Caserio, 92656
Asking price: $460,900
Asking price/ sq ft: $261
Income requirement: $115,225
Bank purchase price: $560,250
Purchase date: 12/12/07
Size: 3 beds, 2.5 baths, 1,766 sq ft (built in 1999)
MLS: P635833 (2 days on Redfin)
Zillow Zestimate: $606,500
2007 property tax: $8,892
HOA dues: $30/mo; $70/qtr
Type: Single Family Residence
Style: Contemporary/Modern
Stories: 2 Levels
From listing: Beautiful Home in Talavera gated community, home features 3 bedrooms, 2 1/2 bathrooms, with a laundry room upstairs, a very light and bright kitchen with pantry and dining area, a spacious living room with a fireplace that separates the family room as well, 2 car direct access garage, elegant master suite, nice sized backyard

The bank has priced this property aggressively. It is $193,100, or about 30%, off the 2004 price - not including any sales costs.

This home is a good deal - at least by today's standards. But is it at or near rental parity, thus making it a more viable financial option than renting?

By surveying comparable properties in Aliso Viejo that are currently for rent, we estimate this property would comfortably fetch about $2,600 per month.

That would value this property at about $416,000 for an owner-occupant, using a GRM of 160. So, we're not going to label this one as an excellent real estate purchase quite yet, but we're certainly getting closer to the point where these types of deals could become available.

And, thanks to a slew of continued price declines, that day could be sooner than we had originally expected.