Too perfect in San Clemente

What, the sunsets near your home don't always look this dramatic and beautiful? Today's property, located in San Clemente, is wiping out some - but not all - of its bubble price gain. That seems to say we have further to fall...

2111 Via Teca #6, 92673
Asking price: $699,000
Asking price/ sq ft: $368
Purchase price: $894,000
Purchase date: 6/15/05
Size: 3 beds, 2 baths, 1,900 sq ft (built in 1986)
MLS: S538396 (86 days on Redfin)
ZipRealty price tracker: Price Reduced: 7/30/08 -- $759,000 to $699,000
Zillow Zestimate: $716,000
HOA dues: $199
Type: Condominium
Style: Cape Cod
Stories: 2 Levels
Lot size: 5,000 sq ft
From listing: Ocean & Catalina View In This Exclusive Gated Commnunity of Marblehead. Prime Location With Breathtaking View From The Master Bedroom. Elegant Hand Crafted Staircase With Formal Dining Room. Huge Master Bedroom With Large Walk-In Closet. Two Stone Fireplace & Newer Appliances & Views Abound

Customized financial info:
Minimum Income Requirement (using 30Y Fixed): $150,000, assumes no other debt/obligations.
Downpayment needed: $24,465
Monthly Payment on 30Y Fixed at 6.25% with property taxes and FHA mortgage insurance estimated: $5,312.28
Minimum Income Requirement (using 5Y fixed): A client wouldn’t take an ARM under this scenario as FHA Jumbo Financing is being used and the ARM rates are above Fixed rates because of the severe credit market disruptions. Investors have little appetite for high loan-to-value ARMs.
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.


Notice in the financing info - thanks to our friends at the Great Loan Blog - a potential buyer would take the 30-year, fixed-rate loan because an ARM wouldn't make logistical sense.

We can't tell for sure, but the sales history Redfin is showing is certainly indicating that this property was successfully flipped in 2005 for a $194,000 profit before renovations and sales expenses. Not bad for four months of ownership, if this is the case.

How does renting a comparable unit stack up to an owner's estimated monthly price of $5,312.28? We checked available properties and found you could rent a larger, 4-bedroom home for $2,800 a month. So, for around $2,500 less per month, you could rent a bigger, really nice property in the same city and not have to worry about depreciation. Seems like a no-brainer at this point in time.

Assuming the house sells for the current asking price, it would mean a loss of $236,940, including 6% sales costs. Not including sales costs, it would mean a depreciation of 22% off the bubble-inflated 2005 price.