'03 luxury rollback short sale in Aliso

This is exactly what happens when the market goes nuts - huge boom, then huge bust, and we're left with an extreme short sale in Aliso Viejo that also happens to be a preforeclosure. Can they save the house?

18 Prescott, 92656
Asking price: $999,900
Previous sales price: $1,645,000
Previous sales date: 12/28/05

Beds:	5
Baths:	5
Sq. Ft.:	4,100
$/Sq. Ft.:	$244
Lot Size:	5,353 Sq. Ft.
Property Type:	Residential, Single Family
Style:	Two Level, Other
View:	Canyon, Hills
Year Built:	2002
Community:	Aliso Viejo
County:	Orange
MLS#:	S603092
Source:	SoCalMLS
Status:	Active This listing is for sale and the sellers are accepting offers.
On Redfin:	2 days

From listing: Stunning Upgraded Estate offers Peaceful Views * Great Floorplan on a Cul-de-Sac Boasts 4 Bedrooms + Loft + Main Floor Office + Play/Hobby Room * Formal Living & Dining Rooms * Gourmet Kitchen w/ Island + Bar Seating, Large Morning Room, Walk-In Pantry, Butlers Pantry, Wine Cellar, & Upgrades including Granite Counters, Rich Mocha Cabinetry, & Stainless Steel Appl. * Spacious Family Room w/ Custom Brick Fireplace & Built-In Media Center * Great Backyard w/ Covered Patio & Awesome Views * Luxurious Master Suite w/ Retreat Features Slate Fireplace & Viewing Balcony + Walk-In Closet * Master Bath Features Slate Accents, Dual Vanities +Oversized Tub +Separate Shower Stall * 2 Secondary Upstairs Bdrm + Spacious Loft w/ Built-Ins (Could be converted to 5th Bdrm) * Main Flr Bedroom Suite w/ Private Bthrm * Main Flr Office w/ Private Bthrm (Could be converted to 6th Bdrm) * Exquisite Upgrades Include Rich Hardwood Flring, Upgraded Carpet, Designer Paint, Crown Molding, Shutters & Rich Designer Touches Thru-out

Whew ... that is one heck of a run-on sentence up there.

What does Redfin have to say about this situation? Here's what it says on the right side of the listing: "This home is flagged as a short sale. We're sorry, we don't tour or write offers on short sales because of the slim chance that you'll get the home."

Public records say this property sold for $992,000 in mid-2003 and then for $1.645 million in 2005 ... an increase in value of 66% in about two and a half years. Sound reasonable to you?

Now, assuming the property can sell for the current short sale price, it would mean a decline of about 40%.

Apart ... err.... condo REO in Aliso

Do you remember when 2-bedroom apartments-turned condos went for nearly $350 per square foot in Aliso Viejo. Believe it!

23412 Pacific Park Unit 35h, 92656
Asking price: $309,900
Previous bank price: $355,200
Purchase date: 5/26/09

Beds:	2
Baths:	2
Sq. Ft.:	1,200
$/Sq. Ft.:	$258
Lot Size:	-
Property Type:	Condominium
Style:	Contemporary/Modern
Stories:	1
Floor:	2
Year Built:	2006
Community:	Aliso Viejo
County:	Orange
MLS#:	F1823093
Source:	SoCalMLS
Status:	Active
On Redfin:	4 days

From listing: REO/Bank Owned. 2 bedrooms 2 baths, central heat and air. Priced to sell fast. o This is a Fannie Mae HomePath property. o Purchase this property for as little as 3% down! o This property is approved for HomePath Mortgage Financing.

So all you have to do is put $9,297 down and you can buy this lovely REO condo using HomePath Mortage Financing. What is HomePath financing? Well, it includes "no mortgage insurance, no appraisal, low down payments, and contributions up to 6% of the purchase price."

Assuming you put just the 3% down, and you can get an interest rate of 4.75%, your payments would be around $1,565 per month. Of course, that's just the payment on the loan and is before association dues, mello roos, and lots of other home-related considerations. Check out the IHB for a nifty calculator.

It's hard to believe now, but this property sold for $419,000 just four years ago. Now, assuming the property will sell for its full asking price, it means the condo has shed 26% of its value.

Four-in-one short sale

There's an interesting potential feat going on in the Cantora neighborhood of Aliso Viejo - four short sale properties are currently in the "accepting backup offers" stage...

31 Mayfair has 3 beds, 2 baths and about 1,600 sq ft. The last asking price of $399,000 was nearly $200,000 below the bubble price of $595,000.

107 Mayfair has 2 beds and about 1,100 square feet. The previous sales price in 2005 was $517,500! Prevous asking price: $325,000, which was below the 2003 price. Potential depreciation of 37%, assuming property sells for full asking price.

136 Mayfair (pictured at the top of the post) has 3 beds, 2 baths and is 1,729 sq ft. Last asking price of $399,000 means the potential buyer is getting an end unit with more square footage than 31 Mayfair for the same price. Bubble previous sales price was $645,000.

53 Meadowbrook has 3 beds and around 1,550 square feet. It sold for $499,000, but the last asking price this time around was $397,000.

All told, the lenders behind these possible short sales need to decide whether $600,000 will be lost by letting the houses sell for less than the previous sales prices. And, that doesn't include any borrowing above and beyond the original mortgages. As we know, that did happen plenty in South OC.

What high end in Aliso?

Perhaps some of the lower-end is nearing a price bottom in South OC - at least one would think so considering there are properties out there already that appear to be well on the way to surpassing rental breakeven.

But we believe the high end still has a ways to go. Case in point: Endless Vis in Aliso Viejo (the Oakview tract of Westridge). Three years ago these properties were going for well over $1 million, and one sold for $1.225 million that August.

Today, different story.

We noticed Straight Digs recently had this to say about the high-end in Aliso Viejo (their emphasis): "Finally, the million dollar market in Aliso Viejo has suffered the most in the last couple of years. Neither October 2007 nor October 2008 saw a home sell for over $1.0 million in the city. In October 2008 the highest sale was $810,000."

Five properties on this street are active and for sale in the MLS. Four of these five are short sales. Two of those are going through foreclosure. The fifth is an REO.

Here is a breakdown of what's active and for sale:

63 Endless Vis (pictured at top)
Status: Short sale, notice of trustee sale recorded in September. Auction date in early December.
Asking price: $855,000
Original asking price: $1,075,000
Previous sales price: $462,500
Sale date: 8/24/00
Note: Repeat refinancing is the problem here. There was $950,000 worth of debt on the property in 2006. NTS amount is for significantly more than the original loan balance.

71 Endless Vis
Status: Going through foreclosure, notice of trustee sale recorded in October. Scheduled for auction in late December.
Asking price: $950,000
Original asking price: $875,000
Previous sales price: $1,225,000
Sale date: 8/8/05
Note: The current owner used 95% financing to purchase the home during the bubble and then proceeded to add on more debt. There was $1.24 million in loans against this property by September 2006.

78 Endless Vis
Status: Short sale
Asking price: $870,000
Original asking price: $1,299,000
Previous sales price: $1,150,000
Sale date: 4/7/05
Note: A successful sale at this price would mean a loss of $332,200, including 6% sales costs.

81 Endless Vis
Status: Short sale
Asking price: $1,000,000
Original asking price: $1,189,000
Previous sales price: $550,500
Sale date: 12/6/00
Note: It's obvious that there was some major refinancing here - otherwise the owner(s) would have been completely fine since they purchased back in 2000.

109 Endless Vis
Status: REO
Asking price: $650,000
Original asking price: $650,000
Previous sales price: $1,021,677 (back to the bank at auction)
Sale date: 9/8/08
Note: Not to sound like a broken record, but repeat refinancing did the trick. The previous owners bought in 2000 using a loan around $400,000, but ended up with $1.139 million in loans from Wells Fargo by early 2007.

What's perhaps most scary about this situation? Notice the previous sales prices (the REO sales price is just the property transferring to the bank at auction).

Three of the five were purchased back in 2000, when this was a new community. There is no reason they should have ended up as they did, except the allure of "free money" was too strong. Not only are these borrowers in serious danger of losing their homes, they're taking down neighborhood values along with them.

Space and more space in Aliso Viejo

So property values are down the tubes in South County...and today via the OC Register we also find out office vacancy here is the highest in the county at 17.9% - but it's an even more abysmal 26.3% "if you include tenants trying to sublease their own space." Wow.

What...all that new office space in Aliso Viejo near Vantis doesn't have a waiting list? Wonder how the Renaissance Club Sport is doing.

Don't get us wrong - we really like Aliso and think it's a good place to live. Except for the fact that the high school football team is abysmal this year.

That being said, though, let us return to the saga of Canyon Villas. These used to be apartments but were converted by SARES*REGIS right around the peak of the market. The desperation to get these properties unloaded was mounting earlier this year, as we detailed.

As we posted in March, these were the general prices when the condos were introduced:

• One-bedroom units started at $310,000; bigger one-bedroom units were about $340,000
• Two-bed, two-bath units started at $416,000

Here's a sample of where things stand today. First, among the units currently listed for sale:

• 23412 Pacific Park Dr #13D - listed for $229,900. A 1 bed, 1 bath, 543 sq ft REO that sold for $289,000 in 2006. That buyer used 99.9% financing. Back to the bank in October. Asking price is "just" 20% below the original sale.
  
  
• 23412 Pacific Park Dr #18E - listed for $309,000. This one has 2 beds, 2 baths and 1,145 sq ft. Previous sale of $459,500 makes this one at least a 33% rollback. "Motivated seller will review all offers!"
  
  
• 23412 Pacific Park Dr #24J - listed for $290,000. Features 2 beds, 2 baths, 1,127 sq ft. Lowest asking price/sq ft we could find at $257. Previous sale was $398,000 in late 2006. This property first was listed for $439,000 in June but has undergone 7 price reductions.

Now, some recent sales:

• Unit 33E: An REO that is the same size as Unit 18E above. Sales price was $310,000 on Oct. 2. The 2006 price was $449,500. That's a discount of 31%.
  
  
• Unit 21F: Same size as the last one. Sold for $339,000.
  
  
• Unit 8B: This is the 543 sq ft model. Sales price was $225,000 in September.

Let's say you want to buy unit 18E because you have a feeling prices are nearing rental parity and you don't mind owning long-term here. Is it a good financial move? NOTE: The below calculations are not meant to be perfect nor exhaustive - they are a general estimation only.

We assume you are willing to pay the full asking price of $309,000, and that the sale can go through. We'll estimate your mortgage payment (principal and interest) at $1522 per month, using a 30-year fixed loan with a 6.25% interest rate and a 20% downpayment. We estimate HOA dues conservatively at $210 per month. Mello roos are $64 per month, according to the property tax bill. Your property taxes would begin at $258 per month (1% of your purchase price, $309,000).

For simplicity, we'll not include any insurance. You could benefit from the mortgage interest deduction, but you also have the opportunity cost of your "lost" downypament, since it is not earning you interest. We'll assume the benefit of the deduction cancels out these and other issues.

That means our back-of-the-napkin calculations say you would be paying around $2,000 per month to own here.

Looking at properties for rent in the complex, we find two that are the same model: one is asking $1,795 per month and the other is trying to get $1,800 per month.

This tells us we're not at rental parity yet.

'03 rollback REO in Aliso

We'd been waiting for this Aliso Viejo property to come onto the market ever since it went REO in late July because we had a feeling it would turn into a comp killer.

We were right. Considering a smaller house in this neighborhood sold for $592,000 at the peak in 2006, and a beat-up, four-bedroom REO with a driveway was down to $525,000 last year, this latest property is another leg down for the surrounding market.

1 Welbury, 92656
Asking price: $465,500
Asking price/ sq ft: $259
Bank purchase price: $423,035
Bank purchase date: 7/29/08
Size: 4 beds, 3 baths, 1,900 sq ft (built in 1997)
MLS: S544076 ( 5 days on Redfin)
Zillow Zestimate: $472,500
HOA dues: $105
Type: Condominium
Style: Mediterranean
Stories: 2 Levels
Lot size: 3,500 sq ft
From listing: GREAT OPPORTUNITY TO PURCHASE THIS DETACHED HOME IN THE GATED VICTORIA COMMUNITY. LARGE OPEN FLOORPLAN W/PERGO FLOORING DOWNSTAIRS. LIVING ROOM W/FIREPLACE, KITCHEN W/BREAKFAST NOOK. GREAT LOCATION AT END OF CUL DE SAC. UPSTAIRS LALUNDRY, TWO CAR ATTACHED GARAGE W/DIRECT ACCESS

Customized financial info:
Minimum Income Requirement (using 30Y Fixed): $114,000, assumes no other debt/obligations.
Down payment needed: $13,950
Monthly Payment on 30Y Fixed at 6.875% with property taxes and mortgage insurance estimated: $3,785.08
Minimum Income Requirement (using 5Y fixed): $109,200, assumes no other debt/obligations.
Monthly Payment on 5Y fixed at 6.375% with property taxes and mortgage insurance estimated: $3,635.97
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.

The previous owners purchased the property during the bubble in 2005 for $620,000. They didn't even have to use a downpayment - First Magnus Financial Corp plucked down the entire sum in two loans - a $496,000 (80%) first and a $124,000 (20%) second.

The first loan was in default in February 2008. The notice of trustee sale amount was more than $525,000, but the property was discounted by more than $100,000 at auction. No takers so the home went back to the bank.

If the property can sell for the current asking price, it would be $154,500 or 25% off the 2005 price, not including any sales costs. It also would be $19,500 below the September 2003 price of $485,000.

Here are the July sales stats for South OC, as reported in the OC Register via DataQuick. Same you-know-what, different day: Volumes showing signs of life but only after humongous median price retractions.

"Gorgeous and elegant" Aliso REO

Perhaps you thought we were kidding when, in a recent post, we showed that a number of 2003 rollbacks are coming on to the market in South OC.

This REO in Aliso Viejo is tough to ignore. It's fresh on the MLS for more than 40% off the 2006 price. How many offers do you think this one will receive?

12 Los Palos, 92656
Asking price: $472,900
Asking price/ sq ft: $236
Income requirement: $118,225
FB purchase price: $825,000
FB purchase date: 9/20/06
Size: 3 beds, 3 baths, 2,000 sq ft (built in 1997)
MLS: S537806 (2 days on Redfin)
Zillow Zestimate: $599,000
2007 property tax: $10,170
HOA dues: $55
Type: Condominium
Style: Contemporary/Modern
Stories: 2 Levels
From listing: Gorgeous and Elegant two story 3 bedroom, 2.5 bath condo. Full custom features throughout entire home. Beautiful marble floors and cozy fireplace in living room. Upgarded kitchen with black granite counter tops and black GE appliances. Wrought iron stair railing leads to upstairs bedroom. Nice paronamic canyon and mountain views. Beautiful front and rear yards with custom landscaping.


View Larger Map

By our rough estimate using a form of Case-Shiller methodology, this property's asking price makes it a mid-2003 rollback.

The previous owner used 100% financing from a lil' old company called Countrywide when they "purchased" the property in 2006. The property went into default and eventually went back to the bank in April for $510,000.

Like yesterday's property, this was not the former owner's primary residence.

The property is priced aggressively - for comparison, 2 Leon is asking $639,900, and 4 Alegre is trying to get $615,000 even though it's smaller. Today's listing should complicate things a bit.

Assuming the property is (only) sold for the full asking price, it would mean a depreciation of $352,100 or 43% in less than two years. It also would be $296,100 or 39% less than the 2004 price. That would effectively wipe out the majority of bubble appreciation.

No bottom on pricing yet...

60% off in Aliso Viejo

Asking prices for "lower-end" properties in Orange County continue to decline. Here's an Aliso Viejo REO that blew the doors off of aggressive pricing, and is now pending sale.

It looks like we have another 2002 rollback on our hands.

23593 Los Adornos, 92656
Asking price: $185,000
Asking price/ sq ft: $148
Income requirement: $46,250
FB purchase price: $468,000
FB purchase date: 12/9/05
Bank purchase price: $210,000
Bank purchase date: 4/3/08
Size: 3 beds, 2 baths, 1,246 sq ft (built in 1971)
MLS: S533952 (on market 5/29; pending 6/5)
Zillow Zestimate: $299,000
2007 property tax: $4,854
Lot size: 2,351 sq ft
From listing: Single Story 3 Bedroom, 2 Bath Townhouse With Enclosed Patio. Walking Distance To Association Pool. Close To Schools, Freeways , Shopping And Schools.

Looking at the previous sale (before the home went back to the bank at auction), it's easy to see how the "investment" was doomed from the start. The buyer received 100% (80/20) financing from Freemont Investment & Loan. They fell behind on payments on the first loan and received a notice of default in December 2007.

The NTS was for $394,246 in March, yet the lender discounted significantly to try and get this place sold at auction. It didn't work, and the property went back to the bank for $210,000 in early April. As you can see by the asking price, when the property came on to the market as an REO the bank wasn't messing around. If all banks discounted like this, we would be at the bottom in pricing in no time.

We estimate you could probably rent this property out for about $1,800 per month. So, that would make the target price $288,000 for an owner-occupant, using a GRM of 160. The asking price puts the property at a GRM of about 103. From here, this looks like an excellent deal.

One thing to be careful of is foreclosures. There are four other properties on the same street that are in some stage of preforeclosure right now, which could help keep prices depressed or even make them fall a bit lower, despite the fact that we are already well below rental parity.

Assuming the property closes for the full asking price (considering how low this property was priced, the final sales price could easily be higher), it would signal a depreciation of $283,000, or 60% off the 2005 price (not adjusting for any sales costs).

It also would be $60,000, or 24% below the December 2002 price of $245,000.

More 2003 pricing in Aliso

We had already begun to notice some instances of 2003 pricing in Aliso Viejo, and this property - new to the market this past week - is another example.

14 Trofello Lane, 92656
Asking price: $400,000
Asking price/ sq ft: $238
Income requirement: $100,000
Purchase price: $425,500
Purchase date: 11/14/03
Size: 3 beds, 3 baths, 1,680 sq ft (built in 1998)
MLS: P639476 (3 days on Redfin)
Zillow Zestimate: $471,000
2007 property tax: $5,779
HOA dues: $242
Type: Condominium
Style: Mediterranean, Townhouse
Stories: 2 Levels
From listing: Turnkey property in the prestigious community of Alivo Viejo. This home is located in a gated community. Entry into large family room with a fireplace which opens to dining room and kitchen. 3 bedrooms all upstairs. There is very large loft which could be an additional bedroom/office or gameroom. Surround sound throughout, fire sprinklers, recessed lighting, A/C & heating, Inside laundry + 2-CAR attached garage with direct access! One of four full sized concrete driveway. This is a great opportunity to own your own home in a beautiful city, close to freeway access and shopping galore. Just minutes away from beautiful Laguna Beach. This home awaits your moving van! You will love it here! This is a home that won't last long.

A good variety of photos with the listing - but unfortunately a couple of them are sideways. If you take a look at them on Redfin, you can see the MLS logo is right side up, meaning whomever put them into the system is to blame, and not Redfin for somehow accidentally rotating the images.

Also, they might want to re-check to make sure they've spelled the name of the city right in the listing description. "Alivo Viejo?" Very amateurish.

According to public records, the current owners bought in 2003, and have priced this one to sell immediately - even at the risk of opening the listing with a price $25,500 below what they paid. The listing does not carry the all-too-comon "short sale" label, so if this is correct we're assuming that either the owner has enough equity in the property to absorb the hit, or they are going to have to bring some money to the closing table to make the sale happen. Props to them for pricing the property aggressively. It should sell soon.

We conservatively estimate this property could rent for about $2,400 per month. So, the target price for an owner-occupant using a GRM of 160 would be $384,000 - close to the asking price and also close to receiving our seal of approval as a good real estate buy.

This should also prove to be a comp killer for 18 Trofello - that property has only two bedrooms but is asking $399,900. There is another property for sale - 45 Trofello - that is three bedrooms and also is priced at $399,900. And, 34 Trofello is the largest of the bunch but is by far the most expensive at $475,000.

Assuming our subject property sells for the full asking price, it would equate to a loss of $49,500, including 6% sales costs. All that bubble equity that so many prospered off of? Gone.

A sale would also mean the property would have depreciated by about 6% (not including sales costs) over the course of around four-and-a-half years. Worthwhile investment?

Massive REO price slashing continues

We're in Aliso Viejo today to see another heavily discounted foreclosure property. How long will it take the market and its new-found "strength" to knock this home off the market?

7 El Caserio, 92656
Asking price: $460,900
Asking price/ sq ft: $261
Income requirement: $115,225
Bank purchase price: $560,250
Purchase date: 12/12/07
Size: 3 beds, 2.5 baths, 1,766 sq ft (built in 1999)
MLS: P635833 (2 days on Redfin)
Zillow Zestimate: $606,500
2007 property tax: $8,892
HOA dues: $30/mo; $70/qtr
Type: Single Family Residence
Style: Contemporary/Modern
Stories: 2 Levels
From listing: Beautiful Home in Talavera gated community, home features 3 bedrooms, 2 1/2 bathrooms, with a laundry room upstairs, a very light and bright kitchen with pantry and dining area, a spacious living room with a fireplace that separates the family room as well, 2 car direct access garage, elegant master suite, nice sized backyard

The bank has priced this property aggressively. It is $193,100, or about 30%, off the 2004 price - not including any sales costs.

This home is a good deal - at least by today's standards. But is it at or near rental parity, thus making it a more viable financial option than renting?

By surveying comparable properties in Aliso Viejo that are currently for rent, we estimate this property would comfortably fetch about $2,600 per month.

That would value this property at about $416,000 for an owner-occupant, using a GRM of 160. So, we're not going to label this one as an excellent real estate purchase quite yet, but we're certainly getting closer to the point where these types of deals could become available.

And, thanks to a slew of continued price declines, that day could be sooner than we had originally expected.

High-end loss in Aliso (update)

This property in Aliso Viejo, which we first posted on back in September, is of the million-dollar variety. As you will see, the amount of debt coupled with a declining market is making it very hard for the current owners to get out cleanly. It's still on the market and is now a preforeclosure.

36 Endless Vis, 92656
Asking price: $1,099,000
Asking price/ sq ft: $306
Income requirement: $274,750
Purchase price: $1,350,000
Purchase date: 1/31/06
Size: 5 beds, 5 baths, 3,600 sq ft (built in 2000)
MLS: S501452 (257 days on Redfin)
ZipRealty price tracker: Price Reduced: 9/29/07 -- $1,349,900 to $1,274,900
Price Reduced: 10/11/07 -- $1,274,900 to $1,100,000
Price Reduced: 1/10/08 -- $1,279,000 to $1,199,000
Price Reduced: 2/16/08 -- $1,199,000 to $1,099,900
Zillow Zestimate: $1,109,000
2007 property tax: $11,779
HOA dues: $96 + $41
Type: Single Family Residence
Stories: Two Levels
Lot size: 6,600 sq ft
From listing: Huge Price Reduction!! Best Value in Aliso! Fabulous Estate Home in the Exclusive Gated Oak View Enclave. Luxurious Interiors * Elegant Long Driveway * Large Living Room with Soaring Ceilings + Fireplace * Elegant Dining Room with French Doors * Gourmet Kitchen with Island + Stainless Steel Appliances * Family Room with Fireplace * Pool Sized Yard with Built-In BBQ with Tons of Privacy * 5 Bedrooms + Large Loft(could be converted to 6th Bedroom) * Mainfloor Bedroom with Private Bath * Master Suite with Dual Walk-In Closets with Custom Built-Ins. Truly a Must See!

The current owners bought at the peak in early 2006 for $1.35 million, using 90% financing (80/10) from Washington Mutual. The couple who sold them the property truly struck real estate gold, as they made $520,000 in profit, before sales costs and other expenditures, simply by holding the home for less than three years.

A little less than a year later, our new owners re-fied into a $1 million first loan and a $235,000 2nd. A month after that, a $276,500 line of credit was added from National City Bank.

Six months later, the owners decided to place their home on the market. They listed for $1,349,900 - essentially the same price they had paid. But the market had already begun to turn, and there were no takers.

The $1 million loan from WaMu went delinquent, and a notice of default was filed in early March in the amount of $24,916. The property is still on the market, though the price has been lowered four times to $1,099,000. - that's a total reduction of $250,000.

Assuming the property is (somehow) sold for the current asking price, the loss would now be $316,940, including 6% sales costs. It also would mean a depreciation of about 19%, not including any transaction costs.

Neighborhood on sale: The Hamptons

The Hamptons in Aliso Viejo is a neighborhood of detached condos that was built right around the bottom of the 1990s real estate downturn in Orange County. The original owners paid anywhere from about $145,000 to $175,000 to buy in when these properties were offered new.

The upsides of the tract include the fact that many of the houses are visually appealing from the exterior, and they feel like single family homes even though they are officially classified as detached condos.

Downsides are the lack of driveways, and the development's narrow streets; typical Aliso Viejo packed-in feel as well in parts. And, the address numbering system is a joke (what is with the 1 Ryley Ct #15 thing?) . We've actually asked real estate agents before about this, and some aren't even sure what the deal is, other than it is the way the addresses were legally numbered. Soleil - also in Aliso Viejo - is guilty of this awkward system as well.

As with just about every neighborhood in the area, this one saw some extraordinarily high appreciation and turned in some high-priced sales during the bubble years, including these:

• 8 Avon Ct - 3 beds, 2.5 baths, 1,300 sq ft, sold for $494,000 on 9/1/04 ($380/sq ft)
  
• 4 Ashbury Ct - 3 beds, 2.5 baths, 1,400 sq ft, sold for $572,500 on 10/18/05 ($409/sq ft).
  
• 8 Constance Ct - 3 beds, 2.5 baths, 1,600 sq ft, sold for $602,500 on 4/21/06 ($377/sq ft)
• 1 Ryley Ct #15 - a fixer, 3 beds, 2.5 baths, 1,400 sq ft, sold for $542,000 on 7/22/04 ($387/sq ft)
• 3 Haley Ct #31- 4 beds, 2.5 baths, 1,600 sq ft, sold for $600,000 on 4/1/05 ($375/sq ft)
  

So, it looks like on average these properties were going for somewhere around $375-$390 during the bubble years.

The glut of properties that have recently come up for sale in this neighborhood is surprising - and it seems it is still growing. With the addition of another property for sale in the past couple days, we counted at least 10 that are now showing up as available on the MLS, including:

• 3 Sydney Ct - 3 beds, 2.5 baths, 1,533 sq ft, short sale/comp killer asking $399,000-$420,000. Paid $565,000 in 2006. Potential best-case loss of $189,940, including 6% sales costs. Possible 29% decline.
  
• 1 Sherrelwood Ct - 4 beds, 3 baths, 1,550 sq ft. Asking $499,000. Paid $575,000 at the peak. Chasing the market down from original asking price of $519,000. Best-case loss of $105,940. This is the second-highest-priced listing in the tract.
  
• 7 Ryley Ct #18 - 2 beds + loft, 3 baths, 1,300 sq ft, asking $449,900 ($346/sq ft). Previous sale of $310,500 in 2002 - not a short sale, just bad timing. Has chased the market down for 74 days from asking price of $474,900. Potential profit of $112,406.
  
• 11 East Southside Ct - 3 beds, 2.5 baths, 1,300 sq ft. Paid $305,000 in 2002. Asking $469,995, which would translate to a potential profit of $136,795.30.
• 7 Chatham Ct - 3 beds, 2.5 baths, 1,300 sq ft. Asking $449,900. Paid $517,500 in 2005. Offering $3,000 towards buyers closing costs. Potential best-case loss of $94,594.
  

4 Ashbury Court is an interesting one because it is for sale now for $475,000. That asking price is $97,500, or 17%, off the peak.

3 Haley Court is also showing as for sale, asking $519,000, which is $81,000 off the previous price. That would make it the highest-priced listing in the tract. The MLS number isn't showing up in Redfin, though.

Recent sales are few and far between. 6 Astoria Court - a 2-bedroom + loft, 2.5 bath property sold for $467,000 in late 2007 - $14,000 below the 2004 price. And, 3 Soho Court #38 is now taking backup offers. It was asking $430,000, which was (not coincidentally) one of the lower prices in the complex. A successful sale for the full asking price would set the value at 22% below the previous sale.

The relative lack of recent sales makes it hard to determine what types of value declines this neighborhood is witnessing, though it is probably a little more than 20% to this point. With the amount of supply in this neighborhood and relatively meager sales activity, it appears there will be continued downward pressure on prices here in the near future.

On the flip side, though - if you love this neighborhood and feel you want to buy now, you've got plenty of properties to choose from.

Desperation mounting at Canyon Villas

We posted on Canyon Villas in Aliso Viejo not too long ago, but little did we know the builder was planning to come out with this gem of an ad in the Register on Sunday (click on the image above to enlarge).

To sum it up, they are offering: HOA dues, property taxes, FasTrack tolls and gas, all for one year. Anything else they missed? How about utilities? Maid service? Food delivery once a week? 'Cause it's obvious that mutilating the price (or, in reality, pricing the units to market) is still a no-no.

How would you feel if you paid full price for one of these units?

"Hurry! Only 26 homes remaining." After how many years again? Heck, the "big auction" was a year and a half ago. If you click on that Web site, you will see this statement: "Don't miss this opportunity to own your own condominium home!" Chuckle, chuckle.

Do not fear: There's still plenty of time.

It's now an '03 rollback in Aliso

It is becoming undeniable: We are now seeing some 2003 rollbacks that are not small condos in in Lake Forest, RSM and San Juan. Here is a property in Aliso Viejo that fits that description. Its most recent price reduction makes it a 2003 rollback.

35 Baneberry, 92656

Asking price: $575,000

Asking price/ sq ft: $303
Income requirement: $143,750
Purchase price: $575,000
Purchase date: 11/26/03
Size: 3 beds, 3 baths, 1,900 sq ft (built in 1997)

MLS: S520608 (67 days on Redfin)

ZipRealty price tracker:
Price Reduced: 2/12/08 -- $689,000 to $625,000
Price Reduced: 4/12/08 -- $625,000 to $575,000
Zillow Zestimate: $634,000
2007 property tax: $8,026
HOA dues: $100 + $27
Type: Condominium

Style: Traditional

Stories: Two levels
From listing: Former model detached home. Gorgeous, end of cul-de-sac home with 3 bedrooms, 2.5 baths. Large bonus/loft, yard with great view of the park. Nicely upgraded. This beautiful home is in a private, quiet location but is close to all amenities, shopping, freeway, restaurants, schools.

The owner before this one made out like a bandit. Zillow says they purchased the property for $268,500 in 1998 in a comparably balanced real estate market, and then sold well below the peak in 2003 for $575,000 - a profit of $306,500, before sales costs or upgrades, in six years. Can you imagine how much more "easy" money they would have made if they had instead sold in 2004 or 2005?

There isn't even any true competition for this property - at least not in the immediate vicinity. Another home is for sale at 12 Baneberry, but that's a smaller model. Oh, they're asking more - $595,000. Don't see this other one getting sold at that price, particularly now that our subject property has cut the asking price again.

Assuming a sale at the current asking price, the loss would be $34,500 (because we factored in 6% in sales costs), and essentially means bubble equity amassed during the roaring years of 2003-mid 2006 would have been wiped out.

Back to '03 in Aliso Viejo

Here is an Aliso Viejo single family house - not a small condo, not in San Juan or Lake Forest - that has virtually reverted to the price paid in late 2003. Is this the bottom, or will values in general here continue to slide?

Keep an eye on foreclosure numbers, because as long as they continue to remain at high levels, there will be downward pressure on prices.

9 Tanglewood, Aliso Viejo, 92656

Asking price: $650,000

Asking price/ sq ft: $295
Income requirement: $162,500
Purchase price: $641,500
Purchase date: 12/1/03
Size: 4 beds, 3 baths, 2,200 sq ft (built in 1990)

MLS: S522125 (23 days on Redfin)

ZipRealty price tracker: Price Reduced: 3/12/08 -- $699,000 to $650,000
Zillow Zestimate: $736,500
2007 property tax: $8,752
HOA dues: $83
Type: Single Family Residence

Style: Spanish

Stories: Two Levels
Lot size: 4,000 sq ft
From listing: Panoramic View from Backyard and Master Bedroom! Large Master Bathroom with Separate Tub and Shower. Walk-in Closet in Master. 4 Bedrooms all upstairs. 3rd Car Garage Built Out as Office. Could easily be converted back to garage if needed. Inside separate laundry room.

See if you can figure out what is on the TV in this picture. Golf tournament? Huge hunk of mold?

The backyard appears to be a minus, since the picture makes it look like all you would get is a thin slab of concrete.

Assuming a sale at the current asking price, minus 6% in sales costs, the loss would be $30,500. Of course, this does not include any improvements. There is a solid chance the current owners were the ones responsible for converting the garage, and that obviously would have cost some money.

How does this compare to nearby homes for sale?

• 25 Tanglewood is a bit bigger model, and is asking $844,500. Days on Redfin: 66.
  
  
• 1 Heatherwood has only 3 bedrooms, but is on a bigger lot, and is asking $779,000. Days on Redfin: 7
  
  
• 43 Coppercrest is a bit smaller, but also is on a bigger lot. Asking price is $772,000, and the time on Redfin is 101 days.
  

Canyon Villas: Then and now

Here's a promotional video from YouTube that was posted last August featuring Canyon Villas in Aliso Viejo.



You may have heard of this 344-unit condo complex, which was built in 1992 during the previous downturn as a condo neighborhood, but instead was rented out before being re-conditioned a couple years ago back into condos and sold just as the real estate market started to shift.

These are located off of Pacific Park Drive, right near Aliso Niguel High and the big Aliso Viejo town center.

Apparently they were having some trouble selling the condos off, and there was an auction in October 2006 to unload 34 units.

Here are the prices mentioned in the video (not sure when it was shot, but obviously before August 2007), along with a check of how similar units are priced now:

• One-bedroom units started at $310,000; bigger one-bedroom units were about $340,000 (a small one-bedroom is asking $249,900-$279,900 and has been on the market for a little more than two months now despite price reductions)
  
• Two-bed, two-bath units started at $416,000 (a 2/2 just came onto the market for $385,000; a 2/2 recently came off the market that was asking $350,000)
  

'03 rollback/comp killer in Aliso Viejo

More and more 2003 rollbacks seem to be popping up in South OC, but the majority tend to be small, older condos at the lower end of the price spectrum. Here's a rollback and potential comp killer of a different sort in Aliso Viejo...

38 Sandbridge, 92656

Asking price: $650,000

Asking price/ sq ft: $295
Income requirement: $162,500
Purchase price: $949,000
Purchase date: 9/2/2005
Size: 4 beds, 3 baths, 2,200 sq ft (built in 1991)

MLS: M109019 (just listed on Redfin)

2006 property tax: $11,901
HOA dues: $82
Type: Single Family Residence
Stories: Two Levels
Lot size: 4,500 sq ft
From listing: ROCK POOL & SPA W/ 2 WATERFALLS. UPGRADED FLOORS. MASTER BEDROOM RETREAT.

Note: Photos of this property are not yet in the system. So, the images are from back in 2005, when the property was last listed for sale. Who knows what the current owners have decided to change.

Comp blowup watch: 38 Sandbridge, with a bigger lot, is asking $834,900. 32 Sandbridge, which appears to be a bit smaller in terms of square footage, is asking $799,000. Despite the differences it seems pretty apparent this property would blow the other two out of the water, if in fact it successfully sells.

Assuming a sale at the current asking price (and that if it's a short sale, the lender would sign off), the loss would be a staggering $338,000, including 6% sales costs - roughly an $11,600 deterioration per month of ownership.

Not including transaction costs, this represents a depreciation of 32%. The sale also would be $25,000 below the August 2003 price of $675,000.

Asking 22% below previous sale...and not budging

This Aliso Viejo house is priced $176,000 below the peak 2005 price, and it's staying that way. The property has been on Redfin for 110 days now with one $30,000 price reduction - in late October - and cannot seem to locate a buyer.

4 Laurelwood Drive, 92656

Asking price: $619,000

Asking price/ sq ft: $295
Income requirement: $154,750
Purchase price: $795,000
Purchase date: 7/1/2005
Size: 5 beds, 3 baths, 2,100 sq ft (built in 1996)
MLS: S508220 (110 days on Redfin)

ZipRealty price tracker: Price Reduced: 10/30/07 -- $649,000 to $619,000
2006 property tax: $10,207
HOA dues: $40
Type: Single Family Residence

Style: Contemporary

Stories: Two Levels
Lot size: 4,500 sq ft
From listing: 5 bed 3 bath, 2100 sq ft. View home!!!Located in the wonderful family neighborhood of california summit!!!!Awesome floor plan with a main floor bedroom and full bath downstairs!!!Neutral colors with family style island kitchen!!!!!Large family room with fireplace and formal dining room!!!All of this with a panoramic city lights view!!!

There are 21 exclamation points in the listing. Yes, I counted.

It seems as if either the market may have long since passed this asking price by on its way down, or the asking price is impossible because the lender won't allow the transaction, if this is a short sale. Of course, the real reason for no sale could be a combination of these two factors or something completely else.

Assuming a sale for the asking price (highly unlikely considering it's been sitting on the market at this price for almost three months), the loss would be $213,140, including 6% sales costs. It also would have declined 22% from the peak in July 2005 - not including transaction costs.

Aliso Viejo looking to get realtors on its side against USPS

Straight Digs recently posted about how the city of Aliso Viejo is trying to recruit OC realtors to take up its cause against the US Postal Service, which is planning to build a mail-processing facility within city limits. The USPS has apparently proposed a smaller facility than was initially discussed, but Aliso is still not happy about the situation.

Some snippets from the letter:

"The City of Aliso Viejo strongly opposes the U.S. Postal Service’s plan to build an enormous mail-processing facility on a 25-acre site near homes, a religious facility, preschool, teen center and proposed affordable senior-housing development – despite public claims from the USPS’ that state otherwise. Statements by the USPS to the media, residents and business professionals claim that the new slightly smaller proposal stems from discussions with the City, which is not the case. ...

"At least three neighboring cities would likely suffer from through-truck traffic that would alter the traffic patterns on their city streets. The Postal Service has continually failed to publicly acknowledge or address the surrounding sensitive uses near the site and instead only identifies commercial uses in its written materials. ...

"As political and public opposition to the project has continued to skyrocket, the USPS continues to disregard the concerns of the City, its residents and surrounding communities about this regional issue."

Here is a link to the blog post and the letter in its entirety.

Near 2002 rollback in AV

Was it only a matter of time before we started seeing major price cuts here similar to the ones already underway in the Inland Empire? This listing provides some anecdotal evidence that it's very possible. Check out this 2-bedroom condo in Aliso Viejo with an asking price very close to its 2002 sales price...

46 Carlsbad Lane, 92656

Asking price: $299,000

Asking price/ sq ft: $272
Income requirement: $74,750
Purchase price: $419,418
Purchase date: 11/09/2006
Peak purchase price: $490,000
Peak purchase date: 5/13/2005
2002 purchase price: $277,500
Size: 2 beds, 2.5 baths, 1,100 sq ft (built in 1996)

MLS: P616077 (3 days on Redfin)

2006 property tax: $6,210
HOA dues: $229
Type: Condominium

Style: Contemporary/Modern

Stories: Two Levels
From listing: WHAT A BUY! 2 BEDROOM TOWNHOME WITH 2.5 BATHS, DIRECT ACCESS TO TWO CAR GARAGE FOR UNDER #300,000 ! ! ! This one won't last. .. .

"This one won't last" - famous last words. Actually, I do believe this one has a legitimate shot of selling, unlike many other hapless listings that are clogging up the market.

My gut tells me this will turn into a workable starter home for an individual or family (with good credit, obviously) that doesn't know too much about the real estate market and is pleasantly surprised that their income is suddenly allowing them to get into this property.

Let's hope they use a traditional loan.

There is a chance, of course, that the market could pass even this listing by on the way down, and the price may need to be reduced for a sale. We will follow it and see what happens. There is also a real possibility that this is a short sale with no hope of approval from the lender.

The neighborhood competition can't be too happy about this development. But considering many have been on the market a long time, it suggests they aren't very motivated anyway. Here are the three other 2-bedroom properties for sale in the Coronado tract that are being undercut by our subject condo:

41 Coronado Cay Lane - asking $340,000. Days on Redfin: 24
85 Coronado Cay Lane - asking $385,000. Days on Redfin: 53
109 Breakers Lane - asking $389,000. Days on Redfin: 69

Assuming a sale at the current asking price, there will be a $138,358 loss on this property, including sales costs. This also would represent a 39% decline from the peak. The purchase price would be a mere $21,500 higher than the October 2002 sales price.

The scary thing would be that even if the owner who bought in 2002 held the property until now and had to sell for the current asking price, they would net a paltry $3,560, assuming 6% transaction costs. Essentially, this means the total appreciation over the past five years has already been reduced to virtually nothing.