Well below '04 in Coto

Today's property is a short sale and preforeclosure behind the gates of Coto de Caza. As you'll see, it's also priced 16% below the 2004 price.

9 Creek View Rd, 92679
Asking price: $675,000
Asking price/ sq ft: $293
Purchase price: $805,000
Purchase date: 4/12/04
Size: 3 beds, 2.5 baths, 2,303 sq ft (built in 1996)
MLS: S560550 (41 days on Redfin)
Zillow Zestimate: $808,000
HOA dues: $210
Type: Single Family Residence
Style: Traditional
Stories: 2
Lot size: 3,920 Sq. Ft.
From listing: Beautiful highly upgraded 3 bedrooms plus a loft in a Cul De Sac.Adorable and private cusomized yard. Formal living and dining rooms with volume ceiling. Light and bright gourmet kitchen with center island and granite counter tops. Base boards and crown moldings throughout the house. Customized fireplace, window coverings, window and doorway casings. Two tone paint every where, cedar closet in master. This is a model perfect home and will not disappoint.

This property was built at the bottom of the previous housing downturn, and originally sold for $247,000. In the middle stages of the previous housing boom (2004), this property went for $805,000. That's an increase of 226% in eight years.

The current owners used 95% financing from National City Mortgage. Then, in mid-2007, they refinanced into $832,500 worth of loans from Sea Breeze Financial to liberate their downpayment plus $27,500.

Now that the house is offered for sale for $675,000, the bank stands to lose about $200,000, assuming a successful sale is accomplished and we include 6% sales costs. The owners gained some spending money but would take a hit on their credit score. Fair trade?