Ladera luxury, almost 30% off

First off, if you haven't had a chance to check out this post on the Irvine Housing Blog, be sure to give it a look. It's an in-depth examination of some examples of how abuse has been alive and well in Laguna Beach.

Today, we're looking at a home in Ladera Ranch that was once worth above the million-dollar mark.

87 Zinnia St, 92694
Asking price: $850,000
Asking price/ sq ft: $250
Purchase price: $1,190,000
Purchase date: 4/5/07
Size: 4 beds, 3.5 baths, 3,400 sq ft (built in 2003)
MLS: S572674 (5 days on Redfin)
HOA dues: $205
Type: Single Family Residence
Style: Cape Cod
Stories: 2
Lot size: 5,000 Sq. Ft.
From listing: A UNIQUE property and a once in a lifetime opportunity to own/operate a business from a much sought after Front Street Business District where you can both work and live in luxury. Private and separate entrance to approx. 480 sq ft front office for business activities and a dramatic two story entry to home with a convenient open floor plan including a giant bonus room, large kitchen with granite counters, gated courtyard plus three large balconies and much much more.

How would you like a live/work property with no driveway that sold for more than $1.1 million two years ago? The current owners only had to use a downpayment of $88,000 - they were able to finance the remaining $1,102,000.

The first loan of $952,000 is in trouble. A notice of default in the amount of $28,978 was file in March. As you can see, the current asking price is significantly less than the amount owed to the bank.

Assuming the property can actually be sold for the current asking price, it would mean a depreciation of $340,000, or 29% in about two years, not including any sales costs. The owners would lose their meager downpayment, and the lender would be stuck with the rest of the loss.