Luxury REO in LN 1/4 off

We're interested to see if this REO in Laguna Niguel continues to sit on the market. It's indicative of the type of property some are expecting will become far more common later this year - an expensive property in a nice area that sold at an inflated price during the bubble and has now worked its way through the foreclosure system.

The question is: How many buyers out there who can afford this type of property are ready to jump on one?

27802 Homestead Rd, 92677
Asking price: $819,900
Asking price/ sq ft: $262
Bank purchase price: $802,544
Purchase date: 2/20/09
Size: 4 beds, 4 baths, 3,128 sq ft (built in 1998)
MLS: S571761 (36 days on Redfin)
ZipRealty price tracker: Price Reduced: 5/22/09 -- $859,900 to $819,900
Zillow Zestimate: $842,500
HOA dues: $165
Type: Single Family Residence
Style: Spanish
Stories: 2
Lot size: 4,199 Sq. Ft.
From listing: Beautiful Home in the prestigious Guard Gated Community of San Joaquin Hills. This 4 Bedroom Home has a Bonus Room on the main floor, Family Room with fireplace, extra Eating Room off Kitchen, and Living / Dining Room Combo. Laundry Room, 3 Car Garage with plenty of built-in cabinets.

This house previously sold for $1.1 million in mid-2005. That was essentially a doubling in value from 1999, when it went for $560,000. The previous owners used 90% financing in the form of two loans from Indymac Bank to buy the house.

Three months later, a $236,500 lien showed up on the property from Citibank. The property went into default in late 2008, and eventually found its way back to the bank earlier this year.

Assuming the house can be sold at the current asking price, it would mean a decline of or $280,100 or 25% off the previous purchase price, not including sales costs.