Rollback-chaser in San Clemente

We're going back to San Clemente today to profile a former million-dollar property that has been significantly discounted from its 2007 price.

It's symbolic of what may be a growing shift in the distressed real estate market. In previous months, we became accustomed to seeing 100% financing deals from 2004, 2005 and 2006 find their way to the open market either as short sales or foreclosures.

Now, we're beginning to see some properties that last changed hands in 2007 come back onto the market in distress. This is one example...

918 Avenida Presidio, 92672
Asking price: $899,000
Asking price/ sq ft: $257
Purchase price: $1,415,000
Purchase date: 5/21/07
Size: 3 beds, 4 baths, 3,500 sq ft (built in 1989)
MLS: L24675 (308 days on Redfin)
Zillow Zestimate: $1,303,500
Type: Single Family Residence
Style: Contemporary/modern
Stories: 3+ Levels
Lot size: 9,375 sq ft
From listing: Fabulous home recently remodeled with ultimate upgrades, cherry wood cabinetry, pecan wood & travertine flooring. Master suite with walk-in closet, cozy fireplace and gorgeous view of canyon. Entertainers kitchen with top of the line appliances, sub zero refrigerator, great room with wrap around deck with 170 degree view of surrounding hills and Dana Point Harbor. 2 car attached garage.

Customized financial info:
Minimum Income Requirement (using 30Y Fixed): $186,000, assumes no other debt/obligations.
Downpayment needed: $179,800
Monthly Payment on 30Y Fixed at 6.375% with property taxes and mortgage insurance estimated: $5,717.86
Minimum Income Requirement (using 5Y fixed): $174,000, assumes no other debt/obligations.
Monthly Payment on 5Y fixed at 5.75% with property taxes and mortgage insurance estimated: $5,427.06
Disclosure: All rates offered to the client with 1 point cost. Rate quotes assume a purchase transaction with the required minimum down payment, 720 credit score, full income qualification and required reserves. Rates are subject to fluctuation. Custom rate quotes and rate lock advice are available by visiting www.thegreatloan.com.

The current owner paid $1.4 million for a house without air conditioning? Not like they really need it in San Clemente anyway...

We purposely omitted the ZipRealty asking price history before. Here it is:
Price Reduced: 11/16/07 -- $1,499,000 to $1,449,000
Price Reduced: 11/23/07 -- $1,449,000 to $1,448,888
Price Reduced: 12/05/07 -- $1,448,888 to $1,443,888
Price Reduced: 12/14/07 -- $1,443,888 to $1,439,000
Price Reduced: 12/26/07 -- $1,439,000 to $1,399,000
Price Reduced: 01/12/08 -- $1,399,000 to $1,398,888
Price Reduced: 01/18/08 -- $1,398,888 to $1,382,888
Price Reduced: 01/24/08 -- $1,382,888 to $1,379,000
Price Reduced: 02/09/08 -- $1,379,000 to $1,339,000
Price Reduced: 03/18/08 -- $1,339,000 to $1,325,000
Price Reduced: 03/24/08 -- $1,325,000 to $1,279,000
Price Reduced: 04/14/08 -- $1,279,000 to $1,199,000
Price Reduced: 04/21/08 -- $1,199,000 to $1,175,000
Price Reduced: 04/28/08 -- $1,175,000 to $999,000
Price Reduced: 05/24/08 -- $999,000 to $949,000
Price Reduced: 08/04/08 -- $948,888 to $924,000
Price Reduced: 08/15/08 -- $924,000 to $899,000

Counting? That's a total of 17 price reductions so far, culminating in a total discount of $600,000 off the original asking price.

The current owner is unfortunately going to get hurt here. He purchased the property in mid 2007 using 85% financing from Sea Breeze Financial and a $215,000 downpayment.

As you can see from the current asking price, he stands to lose the entire sum - should the property sell. If we were to assume the bank allowed the sale to go through, it would mean a loss of $569,940, including 6% sales costs. The owner would lose his downpayment, and the lender would be out $354,940.

Not including sales costs, it would mean a depreciation of 36% off the previous sales price. But, it would be an increase of $202,500 or 29% above the September 2003 price of $696,500.

To complicate things, this property also is a preforeclosure. A notice of default was filed on the property in June in the amount of $62,262.