Short sale + rental parity in Coto?

In case you haven't already, check out our friends at the Coto Housing Blog. It's all Coto all the time...plus a bunch of good insight into that market. Today we're looking at one of those properties behind the pearly gates of Coto. Is it a good deal? It likely is given the right circumstances, as we'll show below...

25 Spoon Lane, 92679
Asking price: $400,000

Beds:	3
Baths:	3
Sq. Ft.:	1,592
$/Sq. Ft.:	$251
Lot Size:	-
Property Type:	Condominium
Style:	Other
Stories:	2
Floor:	1
Year Built:	1997
Community:	Coto De Caza
County:	Orange
MLS#:	S587795
Source:	SoCalMLS
Status:	Active
On Redfin:	15 days

From listing: Come and live in one of the most desired areas in Souther California... Coto de Casa. Very Nice and attractive home with 3 bedrooms with 2 1/2 baths. Spacious family and living areas with a great backyard with built in BBQ for the summer nights. Great home for a family! Its a MUST SEE! GO DIRECT. SHORT SALE FULLY APPROVED AT $400,000.00!!! NO WAIT ! Submit offers to ...

Previous sales price: $645,000
Previous sales date: 6/27/06

The description does go on to list a fax number and e-mail address...so what are you waiting for? We're guessing the wait comes when the bank has to sort through the offers. We like to see this kind of situation because it tells us a lot about what's going on in the field.

The bank has approved the short sale at $400,000, meaning a huge loss is pending - the lender/the current owner are going to lose a total of $245,000 before sales costs to get this deal done.

So is the $400,000 approved short sale price a good deal? We checked available rental properties, and found 35 Spoon Lane is available for rent asking $2,650 per month. That property has the same number of bedrooms and bathrooms, but is about 300 square feet bigger. So, we'll go out on a bit of a limb and assume that our subject property can be rented for $2,500 per month.

If we were to use a target Gross Rent Multiplier of 160 for an owner-occupant, that would mean the property "should" sell for $400,000. That's right, the asking price is the same as our target buy price. Of course, there are other factors to consider - the $413 monthly Coto HOA dues are high, so they likely push the monthly costs out of line with rental parity a bit.

But, it's nice to see prices continue to inch closer to rental parity in South OC.