Rollback days

We're in the dog days of summer, and Labor Day is in sight. The real estate market seems to be in a bit of a sluggish mode as well. Sales are up - but are still significantly below average levels. Prices are still falling, but in many instances aren't coming down nearly as fast as they were a number of months ago. "Demand" for homes is much higher than last year, but it still appears it is concentrated in the lower-priced segments, where 66% of homes are either REO or short sales.

Here's a property in Lake Forest that's feeling the heat.

26871 Apache Trail Dr, 92630
Asking price: $380,000
Asking price/ sq ft: $271
Purchase price: $620,000
Purchase date: 12/8/05
Size: 3 beds, 2 baths, 1,400 sq ft (built in 1979)
MLS: P651323 (12 days on Redfin)
Zillow Zestimate: $459,000
Type: Single Family Residence
Style: Brown Shingle
Stories: 1 Level
Lot size: 5,000 sq ft
From listing: A single family home located in a great neighborhood of sycamore creek community.Spacious living room and large kitchen with high vaulted ceiling. 3 bedrooms plus den/office.New steel shake roof.low tax,no mello roos.Enjoy nature bike trails, park and hill view.

Customized financial info:
Minimum Income Requirement (using 30Y Fixed): $96,000, assumes no other debt/obligations.
Downpayment needed: $11,400
Monthly Payment on 30Y Fixed at 6.375% with property taxes and mortgage insurance estimated: $2,949.58
Minimum Income Requirement (using 5Y fixed): $91,200, assumes no other debt/obligations.
Monthly Payment on 5Y fixed at 5.75% with property taxes and mortgage insurance estimated: $2,801.05
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 owner purchased the home during the bubble in 2005 using 98% financing. But, she soon liberated her $11,000 downpayment by refinancing two years later for $622,250 with Bear Sterns whomever they are now. The home slipped into default in December 2007, and it is scheduled for auction in October.

This appears to be one of the many sad stories of the real estate bubble. Yes, this owner financed a lot of money, but she did make a downpayment and didn't tap the home for too much money while she could. This makes her conservative compared to many of the others we've profiled before.

Assuming the home can be successfully sold for the current asking price, it would mean a loss of $262,800 off the previous purchase price, including 6% sales costs. Not including transaction costs, it would mean a depreciation of 39%.