$234/sq ft in Lake Forest

We've appreciated the updates from one of our readers about Lake Forest, which continues to experience price declines even though sales volume has recently picked up.

(By the way, everyone is always welcome to send tips, thoughts or local market observations either to the comments section beneath each post or to our e-mail)

Today's property is one of those that continue to apply downward pressure on prices in the area. At first we noticed this phenomenon primarily in small condos, but now it appears to be spreading into larger single family homes as well.

24256 Larkwood Ln, 92630
Asking price: $390,000
Asking price/ sq ft: $234
Income requirement: $97,500
Purchase price: $630,000
Purchase date: 5/2/05
Size: 3 beds, 2 baths, 1,670 sq ft (built in 1964)
MLS: S534907 (3 days on Redfin)
Zillow Zestimate: $463,500
Property tax: $6,746
Type: Single Family Residence
Style: Contemporary
Stories: 1 Level
Lot size: 7,363 sq ft
From listing: (No description)

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Assuming this one can rent for $2,300 per month, the target break-even price for an owner-occupant would be around $368,000, using a GRM of 160. Not quite there, but, like yesterday's property it is at least in the ballpark.

We mentioned downward pressure on prices, so here is an indicator of what is going on in the immediate area around this property - on the same street:

• 24276 Larkwood received its notice of trustee sale in late April. That owner bought with $0-down financing in 2005 and paid $575,000. This property is a bit smaller than our subject. It's for sale for $449,000.
  
• 24191 Larkwood is for sale and is asking $470,000. It's even smaller than the other two properties we just mentioned. The owner paid $593,000 in 2005 but only had to put $400 down. If the property sells for the asking price, the loss would be $151,200, including 6% sales costs. We should probably also mention that the property has begun the foreclosure process.
  

As you can see, things aren't looking too good for this neighborhood, since these properties are likely to determine near-term pricing if and when they change hands. Things really aren't looking good for either of these other two sellers, because our comp-killer subject property is blowing them out of the water in terms of price.

Our featured property is asking $234 per sq ft. The other two are asking $372 and $410. Sorry, but this is far from 2005, so they might need to re-adjust their expectations. However, considering how much debt is on those properties the wiggle room likely is nothing or next to nothing.

If our subject property is able to sell for the full asking price (we would guess the lender(s) involved would play a big part in this), it would be $240,000 off the 2005 price and $145,000 off the 2004 price. It would also mean a depreciation of 38% off the 2005 sale and 27% off the 2004 price - leading us to believe this would likely be a 2003 rollback. None of these calculations include sales costs.