Straight crash, home-y

What more can we say? There's been a flat-out crash in these parts. Are we well past the bottom? Nobody knows for sure, but we do know it's going to be an interesting year following local real estate. If you need some additional proof, try this Lake Forest condo on for size.

25206 Chestnutwood, Lake Forest 92630
Asking price: $309,900
Previous sales price: $529,853 (bank)
Previous sales date: 11/25/09

Beds:	3
Baths:	2.5
Sq. Ft.:	1,746
$/Sq. Ft.:	$177
Lot Size:	-
Property Type:	Residential, Condominium, Townhouse
Style:	Two Level
Year Built:	1983
Community:	Lake Forest North
County:	Orange
MLS#:	S600776
Source:	SoCalMLS
Status:	Active This listing is for sale and the sellers are accepting offers.
On Redfin:	13 days

From listing: Charming Townhouse style condo located in the Smoketree neighborhood in lovely Lake Forest. Spacious floorplan features 3 great size bedrooms and 2.5 baths. Large living room with brick fireplace, kitchen has a breakfast nook and bar, formal dining room and family room. Come and see this great property!

Excuse us while we choke at the thought that this property sold for $510,000 in 2005. Was the stainless steel range the part that brought it over the $500k mark? It couldn't have been those lovely "vintage" kitchen cabinets and tile counters, now could it?

Seriously though, that's a price of $292 per square foot. Today, for new construction in South OC, expect on average to find builders' asking prices around $260-$295, depending on the development and location.

In 2000, our subject property also sold for $219,500. So, if we were to assume the bank could unload this property at the current price, it would mean a decade's worth of appreciation of $90,400 or 41% over the total span. Sound like a lot? Well, how does 3.5% average appreciation per year over a decade sound... 'cause that's all that happened for this property when all's said and done.

Rain rain, go away

Is this Southern California or Seattle? It seems like this week is lost to the rain. Never fear, though, we're back with a new property to profile today in Ladera Ranch:

40 Lewiston Court, 92694
Asking price: $1,100,000
Previous sales price: $1,200,000
Previous sales date: 12/4/09

Beds:	5
Baths:	5.5
Sq. Ft.:	5,118
$/Sq. Ft.:	$215
Lot Size:	0.3 Acres
Property Type:	Residential, Single Family
Style:	Two Level, Traditional
Year Built:	2002
Community:	Ladera Ranch
County:	Orange
MLS#:	S601257
Source:	SoCalMLS
Status:	Active This listing is for sale and the sellers are accepting offers.
On Redfin:	7days

From listing: Need some room to grow? This Clifton Heights home has it all! 5 nice sized Bedrooms w/ 5.5 baths. Casita suite above garage and an entertainer's back yard are just a couple features which make this house a home! Dream kitchen and Master which is jaw dropping! To much to list!! Hurry as this property will not last!!

From what we can tell, this property has had a terrific seasaw ride since it was built about 8 years ago. Consider the following from Redfin:

Jun 19, 2003: $1,012,000
Mar 01, 2006: $2,200,000
Dec 04, 2009: $1,200,000 (back to the bank)

Between 2003 and 2006, the property shot up by $1,188,000. If we were to assume that the current asking price is the property's "legitimate" value today, that means it would actually be worth only $88,000 more than it sold for in mid 2003.

Down and Out in Lake Forest

This Lake Forest property was once sold for almost $700,000. Now, it's a vacant REO that's seen better days. The street name is fairly appropriate for this one considering its sorry state....

22271 Cripple Creek, 92630
Asking price: $440,550
Previous sales price: $675,000
Previous sales date: 12/6/05

Beds:	4
Baths:	1.75
Sq. Ft.:	1,674
$/Sq. Ft.:	$263
Lot Size:	6,600 Sq. Ft.
Property Type:	Residential, Single Family
Style:	One Level, Ranch
Year Built:	1979
Community:	Lake Forest North
County:	Orange
MLS#:	S595068
Source:	CARETS
Status:	Active This listing is for sale and the sellers are accepting offers.
On Redfin:	3 days

From listing: Great Value! End of the cul-de-sac, single level home with four bedrooms. Kitchen has a breakfast area. The living and dining rooms are combined. Two car garage with a driveway. The house needs someone to come in and bring it back to its former glory.

As you can see, this house previously sold for $675,000. If you were to put 20% down in 2005 (chuckle), and you got a 5% interest rate with a 30-year fixed-rate loan (chuckle again), your monthly mortgage payment would have been $2,899. There's also the little matter of having $135,000 laying around as a 20% downpayment.

Currently, if you were to put 20% down and got an interest rate of 5%, your mortgage payment would be about $1,892 per month. You would "only" have to come up with $88,110 for a downpayment. Chump change!

Assuming the property sells for the current asking price, it represents a 35% decline in value in about 4 years. A few years ago, that would have seemed unfathomable. Today, it's not too surprising.

Welcome to Lake Forest

"WELCOME HOME TO THE CITY OF LAKE FOREST," the listing description shouts. We say, welcome home to your new bank-owned apart-condo. If there's any risk that the market will stay bottomed out and you'd be stuck living in this type of property for the next 7-10 years, is there any reason to jump in now?


20702 El Toro Rd #240, 92679
Asking price: $192,500
Previous sales price (bank): $222,304
Purchase date: 9/24/09

Beds:	2
Baths:	2
Sq. Ft.:	950
$/Sq. Ft.:	$203
Lot Size:	-
Property Type:	Condominium
Style:	Contemporary
Stories:	1
Floor:	2
View:	Greenbelt
Year Built:	1980
Community:	Lake Forest North
County:	Orange
MLS#:	U9004575
Source:	SoCalMLS
Status:	Active
On Redfin:	5 days

From listing: WELCOME HOME TO THE CITY OF LAKE FOREST. THIS MAY BE ONE OF THE BEST LOCATIONS IN THE CITY, AND WE THINK ONE OF THE BEST ASSOCIATIONS IN THE AREA. THE PROPERTY IS A TWO BEDROOM TWO BATHROOM CONDO THAT FEATURES CLOSE TO 950 SQUARE FEET OF INTERIOR LIVING SPACE. THE ASSOCIATION IS FANTASTIC, IT HAS WATER FEATURES RUNNING THROUGHOUT THE COMPLEX WHICH CREATE THE FEELING OF LIVING IN A MOUNTAIN RESORT. YOU WILL ENJOY THE H.O.A POOL, AND SPA, TENNIS AND BASKETBALL. SO COME HOME TO LAKE FOREST AND START TO ENJOY THE BEST OF ORANGE COUNTY TODAY.

On the positive side, it's good to see that a property like this appears to have quickly moved through the foreclosure pipeline and that it's going to probably be unloaded quickly to a new owner. Hopefully one that doesn't pay $368,000 for this shoebox.

To give you an idea of how crazy that is, we estimate your monthly housing expense at about $2,700 per month (after mortgage principle and interest, HOA dues and property taxes and before the mortgage interest deduction, assuming 3% down with an interest rate of 5% and no PMI). After the generous government benefits to owning, your total monthly cost of ownership would be somewhere around $1,950. Really, $1,950 to live in this place?! Well, if you actually bought the property when the previous owners did, you probably used an exotic loan product to lower the monthly cost.

What few rental properties we saw offered on the MLS in this city, at this size, seem to say this property is probably rentable at about $1,300-$1,400 per month. Our back-of-the-napkin calculation with a 160 GRM target for an owner-occupant tells us this property is "worth" about $200,000. So as you can see, we're at rental parity...if you would actually consider owning this as a long-term solution. We would argue the actual GRM should be much lower, or it should be an investor who purchases this and holds and rents.

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.

REO head scratcher

REOs are popular - particularly if you're a buyer with a whole lot of cash who can outbid the other prospective buyers. But it doesn't necessarily mean that REOs are a good deal. Take this example in San Clemente...

137 Avenida Adobe, 92672
Asking price: $389,000
Previous sales price: $44,687 (bank)
Previous sales date: 6/9/09

Beds:	2
Baths:	2
Sq. Ft.:	1,190
$/Sq. Ft.:	$327
Lot Size:	1,199 Sq. Ft.
Property Type:	Condominium
Style:	Contemporary/Modern
Stories:	2
Floor:	1
View:	Ocean
Year Built:	1973
Community:	San Clemente Southeast
County:	Orange
MLS#:	F1814687
Source:	SoCalMLS
Status:	Active
On Redfin:	83 days

From listing: REO/Bank Owned. Incredible location, ocean view from private balcony. Property features new paint and new carpet.

There is only one photo with the listing. The previous sales price prior to the bank repo was $500,000 in 2007 - in other words, $420 per square foot for the 25-year-old condo. Obviously, that sales price was not sustainable and now the bank is asking $111,000 below the sales price from two years ago.

But is the current asking price actually a good deal at $389,000? We seem to be programmed here in So Cal, particularly Orange County, to assume that anything below $400k is "cheap" by comparison to the many expensive properties.

But let's look at the 1999 sales price - a decade ago, this property sold for $157,000.You might believe real estate was at least a bit overpriced then, which is a fair argument. But for our sake here, we're going to assume that sales price was a totally fair price back then. For the current asking price of $389,000 to be the "true" value of the property today, the property would have had to appreciate by about 9.5% per year, every year in the past decade from 1999-2009.

Bubble or no bubble, nearly 10% per year is incredibly high. Still, we wouldn't be surprised if someone eventually steps up to buy it for (almost) that price.

Big fat asterisk in Capo Beach

Would you like this REO and 2003 rollback in Capo Beach (Dana Point)? How a out if you knew it could potentially be a huge money pit?

27052 Calle Dolores, 92624
Asking price: $575,000
Previous sales price: $587,710
Previous sales date: 8/17/09

Beds:	2
Baths:	2
Sq. Ft.:	2,291
$/Sq. Ft.:	$251
Lot Size:	4,725 Sq. Ft.
Property Type:	Single Family Residence
Style:	Cape Cod
Stories:	3+
Year Built:	1978
Community:	Capistrano Beach
County:	Orange
MLS#:	U9004239
Source:	SoCalMLS
Status:	Active
On Redfin:	1 day

From description: THE SURF IS UP, BUT THE PRICE IS DOWN HERE AT CAPO BEACH ! WELCOME HOME TO ONE OF THE VERY BEST VALUES ON THE ORANGE COAST. THIS IS THE CITY OF DANA POINT, THE HOME TO THE WHALE FESTIVAL, THE HARBOR, AND SOME GREAT SURFING. THE PROPERTY IS A TWO BEDROOM TWO BATHROOM SINGLE FAMILY HOME THAT FEATURES CLOSE TO 2,291 SQUARE FEET OF INTERIOR LIVING SPACE, AND A LOT OF ALMOST 4,725 FEET. THE LOCATION IS GREAT, YOU ARE CLOSE TO ALL THE GREAT THINGS DANA POINT; THE BEACH, THE HARBOR, SCHOOLS, PARKS, AND SO MUCH MORE. SO COME HOME TO CAPO BEACH, AND START LIVING THE BEACH LIFESTYLE TODAY. DUE TO THE CONDITION OF THE HOME, THE BUYER SHOULD INVESTIGATE THE PROPERTY WITH PROFESSIONAL INSPECTORS. THE PROPERTY MAY, OR MAY HAVE BEEN RENOVATED OR REPAIRED DURING THE LISTING PERIOD. THE BUYER SHOULD REQUEST THE SCOPE OF WORK FROM THEIR AGENT

Is this Capo Beach or CAP-o Beach? Bad joke. But seriously, our eyes are hurting from reading the listing description. Let's take a look at some of the notes on the Redfin listing:

• Additions/Alterations
• Sold As Is
• Fixer Upper
• Rehab Potential
• Cosmetic Repairs
• Major Repairs Needed

As you probably noticed, the house went back to the bank in August and it's already back on the market. Before that, the house sold for $667,000 in August 2003. The asking price today is almost $100,000 less than it sold for six years ago. The actual amount of repairs is a coin flip - better be sure you "INVESTIGATE THE PROPERTY WITH PROFESSIONAL INSPECTORS" to see whether you consider this to be an opportunity or a train wreck.

Holiday time in Dana Point

We're on the precipice of a Labor Day weekend holiday! How are you going to celebrate? Today's property is an example of an REO in Dana Point that we like a lot. Only one problem...

38 San Raphael, 92629
Asking price: $737,900

Beds:	3
Baths:	3
Sq. Ft.:	2,050
$/Sq. Ft.:	$360
Lot Size:	6,924 Sq. Ft.
Property Type:	Single Family Residence
Style:	Mediterranean
Stories:	2
Year Built:	1991
Community:	Monarch Beach
County:	Orange
MLS#:	S582130
Source:	SoCalMLS
Status:	Active
On Redfin:	49 days

From description: Located in private, gate guarded community of Ritz Pointe! Down stairs master bedroom. Two bedrooms upstairs. Cathedral ceilings! Travertine flooring,cherry wood floors, Marble counter tops, dual oven. Epoxy flooring in garage. Relax in your lush landscaped backyard with private spa and rock waterfall! Walk to the beach or St. Regis next to the Beaufitul Monarch Beach Golf course!

As we said, we like this property. We like the location (though it might be a little far from the freeway, you're ocean close), the look of the property and, of course, the yard. We like the pool, though we suspect we'd soon think it would be more trouble than it's worth. In fact, we also think it's a nice property for hosting that all-American holiday BBQ.

Our problem? The asking price. From what we can see, we'd like to estimate the property to be worth somewhere in the $600,000 range, based on comparable properties for rent. But when you consider the previous sales price was $1,075,000 in 2007, you have to appreciate how far this property has come down in value. In fact, if it sells for the current asking price, it would represent a 32% decline in value in about two and a half years.

What's the deal?

What an amazingly hot weekend. And, what an amazingly confusing local housing market. Here's an example of an REO in Laguna Hills that normally wouldn't make sense but is all too common these days.

26165 Bridlewood Dr, 92653
Asking price: $1,399,000

Beds:	5
Baths:	4
Sq. Ft.:	5,300
$/Sq. Ft.:	$264
Lot Size:	0.57 Acres
Property Type:	Single Family Residence
Style:	Mediterranean
Stories:	2
Year Built:	1986
Community:	Laguna Hills
County:	Orange
MLS#:	P699016
Source:	SoCalMLS
Status:	Active
On Redfin:	18 days

From listing: GREAT OPPORTUNITY - ESTATE HOME IN NELLIE GALE. Grand formal entrance with dual staircase. Bright interior with spacious rooms and high ceilings. Formal dining room. Gourmet kitchen with granite counters, 2 sub zero refrigerators, 2 dishwashers, dual oven, and lots of room for storage. Fireplace in family room, living room, and master retreat. Master suite with retreat and private balcony. Master bathroom has dual sinks, vanity, spa tub and large shower. Bonus room downstairs - perfect for office/den. Patio area with built in BBQ for entertaining framed by lush landscaping with fountains. Gated circular driveway with porte cochere.

The listing agent probably should go back and figure out how "Nellie Gail" is actually spelled. After all, this is a million-dollar listing.

This property went back to the bank for $1,464,750 in July. It's already back up for sale in August. If all foreclosures moved that fast through the system we'd be on the road to recovery in no time.

Redfin says the previous sale was for $1.15 million in 2001.So, if we can locate a buyer willing to pay the full asking price, then this property would be $249,000, or 22% above the 2001 price.

REO in Nellie Gail

Who knows...perhaps this bank-owned property in Laguna Hills' Nellie Gail will become more common as things go, considering the middle and high ends are showing more distress.

25022 Buckboard Ln, 92653
Asking price: $808,800
Asking price/ sq ft: $270
Bank purchase price: $1,100,000
Bank purchase date: 10/9/08
Size: 5 beds, 3 baths, 3,000 sq ft (built in 1978)
MLS: S574560 (59 days on Redfin)
ZipRealty price tracker: Price Reduced: 06/05/09 -- $844,800 to $827,800
Price Reduced: 07/09/09 -- $827,800 to $808,800
Zillow Zestimate: $996,000
HOA dues: $82
Type: Single Family Residence
Style: Contemporary
Stories: 3+
Lot size: .57 Acres
From listing: This 5 bedrdoom fixer is ready for your ideas. added living space and pool and spa + horse property make this a must see. You won't find a better price in Nellie Gail.

Sure, you won't find a better price in Nellie Gail, but it's also unlikely you'll find a property there in worse condition than this one. Fixer is right. Take a look at the photos and you will see this property is certainly in need of some sprucing up.

Would you like to spend 4/5 of $1 million on a fixer-upper? It depends how much you want to live in Nellie Gail, and whether you think this is a good opportunity.

The Redfin property records also show this property sold for $690,000 in 2004. Considering there is work to be done now, and assuming that record is correct, do you really think the property has gone up in value since then?

The bank has reduced the asking price by $36,000 so far. Did you also notice the abundance of lucky 8s in the asking price? Perhaps whomever takes possession of this property next will be able to create some of their own luck.

Let the bidding begin in Lake Forest

Three important letters: REO. What are you waiting for....put your bid in for this Lake Forest property before its price hits the stratosphere and you're locked out forever! Or exercise some logic and restraint, and move on...

24832 Glenwood Dr, 92630
Asking price: $499,900
Asking price/ sq ft: $201
Bank purchase price: $513,589
Purchase date: 5/21/09
Size: 4 beds, 3 baths, 2,492 sq ft (built in 1976)
MLS: S579869 (8 days on Redfin)
HOA dues: $140
Type: Single Family Residence
Style: Traditional
Stories: 2
Lot size: 6,975 Sq. Ft.
From listing: Large tri-level home surrounded by eucalyptus trees fully fenced..Wood flooring throughtout..Upgraded baths and kitchen..Very impressive two story livingroom with center fireplace..Rear wrap around deck off the open family room..Main floor bedroom with full bath..You will not be disappointed..

No need to even take a look at the pictures...just send your deposit money in a plain white envelope. Pay no attention to the awful yellow and green interior paint job that is going to need to be redone prior to regular habitation when this property sells.

Speaking of sales, this house last sold for $610,000 in 2004, which makes the current asking price 18% below the sales price more than five years ago. Think about that...half a decade, seriously negative appreciation. And, it's likely to be many years before the house is worth that much again.

We also know that the 2003 sales price was $461,000...so this means the bank's first asking price is $38,900 above the September 2003 sales price. Would you be willing to outbid some others to buy this property and feel confident you got a great deal for half a mil? We'll pass and see what's out there come fall...or winter...or spring 2010...or...

Look out below in Ladera

Some might say this Ladera Ranch REO represents everything that went wrong with the real estate market in previous years: an inflated price, overdone interior with granite and stainless steel in the kitchen, ceramic tile everywhere, exorbitant lender-enabled financing, and then the inevitable foreclosure.

Now, it's back on the market and looking for its next buyer.

65 Laurelhurst Dr, 92694
Asking price: $599,800
Asking price/ sq ft: $255
Bank purchase price: $546,833
Purchase date: 2/13/09
Size: 4 beds, 3 baths, 2,356 sq ft (built in 2000)
MLS: S571242 (45 days on Redfin)
ZipRealty price tracker: Price Reduced: 05/22/09 -- $612,800 to $599,800
Zillow Zestimate: $675,500
HOA dues: $175
Type: Single Family Residence
Style: Contemporary
Stories: 2
Lot size: 6,200 Sq. Ft.
From listing: This home is on a private flag lot offering additional parking and a gated driveway. Perfect for kids play area. Upgraded interior, spacious living areas. Built-in desk and entertainment unit in family room & loft. Walk to park and Oak Knoll Village clubhouse.

The bank already cut the price once by $13,000. The previous owners paid $639,500 in 2003 using 95% financing from Greenpoint Mortgage...which went belly-up in 2007. Not to worry, though, by then they already had refinanced into $924,500 worth of loans through Countrywide in 2005.

Those loans meant a total equity extraction of $285,000 - their $32,000 downpayment plus $253,000. As you can see, the house turned into an extra breadwinner. Things began crumbling a few years later, and the house went into default in 2008.

Assuming this 2003 rollback is sold for the current asking price, it would mean a depreciation of $39,700 off the sales price six years ago. The actual loss though, was so much more.

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.

Memorial Day madness

Happy Memorial Day! We hope you're having a great weekend with friends and family, and taking some time out to recognize the brave men and women who protect our country.

Above is a screen grab of the foreclosure situation in San Clemente just south of Pico. One of those red dots is this bank-owned property...


110 W Avenida Valencia, 92672
Asking price: $824,500
Asking price/ sq ft: $392
Purchase price: $781,000
Purchase date: 1/30/09
Size: 3 beds, 3 baths, 2,105 sq ft (built in 1950)
MLS: S567911 (66 days on Redfin)
Type: Single Family Residence
Style: Cottage
Stories: 2
Lot size: 4,500 Sq. Ft.
From listing: Totally remodeled recently. Southwest san clemente ocean view home-3 blks to the beach. Great room/living room, formal dining room, custom mantle fireplace, gourmet kitchen w/ island, top of the line counter tops, cabinets, & spacious dining alcove. Master bedroom with balcony, fireplace, retreat/office, elegant bath and walk-in closets. Upstairs familyroom/tv room. Back- w/deck & 'old fashioned front porch' no mello roos.

The previous sales price above is actually the property going back to the bank. The last "real" sale was in August 2005 for $1,015,000. The previous owner used 90% financing from Countrywide to buy the house. That wasn't all.

By 2007, there were $1.24 million worth of loans against the property thanks to Lehman Bros. So much for the downpayment. The property went into default in 2008, and eventually was a foreclosure casualty.

Assuming this house can be sold for the current asking price, it would be a 19% decline off the 2005 peak.

New ride or used REO?

What will it be - Mercedes S550 or a South Orange County condo in San Juan? Both can be yours for a little less than $100,000...


32325 Paseo Carolina Unit 135c, 92675
Asking price: $95,000
Asking price/ sq ft: $114
Bank purchase price: $146,475
Purchase date: 12/3/08
Size: 2 beds, 1 bath, 834 sq ft (built in 1972)
MLS: I09043701 (4 days on Redfin)
Zillow Zestimate: $259,500
HOA dues: $230
Type: Condominium
Stories: 2
From listing: BANK OWNED - REO SALE - PROPERTY SOLD AS-IS WITHOUT REPAIR OR WARRANTY.


View Larger Map
What exactly does this property look like on the inside? If there is any semblance of an interior left, it will likely sell before too long. Foreclosures are all the rage these days, don't you know.

The previous owner paid a laughable $320,000 in 2005. That's $384 per square foot for a small, old condo in not-the-greatest part of town. So much for the bubble days. Assuming the property moves for the full asking price - though there is a decent chance it will go for above list - it would represent an astounding 70% decline from the peak three and a half years ago.

Or, put another way, it would be just $20,500 (28%) higher than the 1989 price of $74,500.

For sale again in Dana Point

The financing mistakes of 2007 are already back on the market as REOs, pushing prices lower. Today we're looking at a bank-owned house in Dana Point (Capo Beach).

26836 Calle Juanita, 92624
Asking price: $479,900
Asking price/ sq ft: $267
Bank purchase price: $569,180
Purchase date: 1/21/09
Size: 4 beds, 2.75 baths, 1,800 sq ft (built in 1974)
MLS: P683765 (1 day on Redfin)
Zillow Zestimate: $589,500
Type: Single Family Residence
Style: Cape Cod
Stories: 2
Lot size: 2,500 Sq. Ft.
From listing: Charming...4 Bedroom 2.75 Bath home near Sunset Park. Fresh paint, carpet. upgraded baths and kitchen. Minutes from Dana Point Harbor, beaches. Priced to sell fast ! ! !

No need for much of a description...price is the main selling point for this property. Just down the street is another REO that's asking $464,900 and is in escrow.

The previous owner paid $710,000 in January 2007. She didn't even have to use any of her own money. The property was in default in mid 2008 before going back to the bank a few months ago. Assuming the current asking price also becomes the sales price - coincidentally, it's the exact same beginning asking price as the other REO we mentioned, and both are for sale by the same real estate brokerage - it would mean a depreciation of 32% in a little more than two years.

The good and the bad in RSM

This REO in Rancho Santa Margarita features plenty of good news as well as bad news. We'll share it all with you in today's post.

16 Calle Bieldo, 92688
Asking price: $449,000
Asking price/ sq ft: $282
Bank purchase price: $74,297
Purchase date: 2/11/09
Size: 4 beds, 2.5 baths, 1,591 sq ft (built in 1988)
MLS: Y901317 (32 days on Redfin)
Zillow Zestimate: $470,000
HOA dues: $55
Type: Single Family Residence
Stories: 2
Lot size: 4,220 Sq. Ft.
From listing: This is a must see!! Highly upgraded with expanded luxury master bath. Extensive use of granite, custom cabinetry, wainscotting and crown mouldings. That's the good news. The bad news is that this is an REO with missing items i.e. light fixtures, 2 toilets, dishwasher and stove. The former owner poured literally thousands into this home and with a little effort it can become a jewel again.

This property is currently accepting backup offers. The previous owner used 100% financing to buy the property for $305,000 in 2000. The problem came when the two loans they later took out - totaling $450,000 - both went into default in October 2008.

Let's look at some of the positives:

• Since it's an REO, we know the property can actually be sold.
• The listing description tells us there is "extensive use of granite, custom cabinetry, wainscotting and crown mouldings...The former owner poured literally thousands into this home..."
• The asking price was $449,000. Houses on this street were going for $530,000+ in 2004, making us believe this is a 2003 rollback. Instant equity! (Just kidding)

But the listing description also tells us the bad news: "...this is an REO with missing items i.e. light fixtures, 2 toilets, dishwasher and stove." They took the stinking toilets?

This is an interesting property to us - indicative of the current real estate market. Here we have a property that's well above rental parity (if we generously assume this property can rent for $2,500 per month, it should be valued by an owner-occupant at $400,000 assuming a GRM of 160) and in serious need of money-costing repairs.

If one were to simply run the numbers, it's obvious this is not an amazing deal by any stretch. Yet, the bank still apparently had no trouble finding a buyer. Looks like the knife catchers are still out there.

REO in Dove Canyon

What do REOs in Dove Canyon look like these days? Here's an example of yet another home in South OC that once was a million-dollar property.

22 Thorn Oak, 92679
Asking price: $838,800
Asking price/ sq ft: $242
Bank purchase price: $1,020,772
Purchase date: 2/13/09
Size: 4 beds, 3.5 baths, 3,467 sq ft (built in 1991)
MLS: S568497 (7 days on Redfin)
HOA dues: $162
Type: Single Family Residence
Style: Spanish
Stories: 2
Lot size: 6,414 Sq. Ft.
From listing: Remodeled Open Floor Plan with 25-Foot Soaring Ceilings in the Formal Living and Dining Room, Designed with Custom Stone Walls and Baseboards, and a Built-In Hutch, Raised Marble Foyer, w/ a Circular, Iron Staircase, 4 Fireplaces, Kitchen with Large Breakfast Nook, Surrounded by Tall, Beautiful Windows, and Spacious Kitchen Island, Huge, Custom Master Suite, Appointed with a Dual-Sided Fireplace to Enjoy the Luxurious Master Bath Complete with His and Hers Walk-in Showers, and Oversized Bathtub. More Designer Features in this Lovely Home Include Recessed Lighting, Custom Closet Organizers, Built-In Computer Center, Built-In Bookcases, and Leaded Windows. Enjoy Breathtaking, Panoramic Views from the Incredible Entertainer s Backyard, Designed with Outdoor Fireplace and Built-In BBQ. Exclusively Located on a Single-Loaded Street in a 24-Hour Guard-Gated Community with Country Club and Golf Course Privileges, this Amazing Home Won t Last Long!

The title case listing as it appears on Redfin is annoying to read. To sum up: This is a nice house with lots of features. It is "Amazing" and it "Wont Last Long!"

The previous owners bought in December 2005 for $1,125,000. They used 90% financing from Greenpoint Mortgage Funding, Capital One's now-defunct Alt-A specialist. So, that means they lost out on their $123,800 downpayment.

Assuming the property sells for the current asking price, it would represent a depreciation of $286,200 or 25% off the peak value.

REO Laguna cottage

How would you like to pay $850 per square foot to own a small renovated cottage in Laguna Beach? We know, it's all about location.

The bank was hoping to get $999 per square foot up until recently, so consider today's price a deal!

1641 Glenneyre St, 92651
Asking price: $849,900
Asking price/ sq ft: $850
Purchase price: $1,162,906
Purchase date: 12/12/08
Size: 2 beds, 2 baths, 1,000 sq ft (built in 1922)
MLS: P676524 (32 days on Redfin)
ZipRealty price tracker: Price Reduced: 03/09/09 -- $999,000 to $849,900
Zillow Zestimate: $1,066,545
Type: Single Family Residence
Style: Cottage
Stories: 1
Lot size: 2,500 Sq. Ft.
From listing: PICTURE PERFECT BEACH COTTAGE with a peek a boo view! Extensively remodeled top to bottom! Gorgeous private courtyard with custom fireplace, landscaped with lighting and water fountain. Covered patio area that has a built in ladder to climb and sit to enjoy the Ocean View! Remodel includes: distressed hickory hardwood floors, master bedroom and bathroom with private entrance. Master bath with drop in spa tub and skylight, 2nd bath has frameless glass doors with travertine shower and granite sink top. Gorgeous! Gourmet kitchen with granite counters, breakfast bar, micro/convection oven, stainless Range & appliances. Seperate Breakfast Nook. New Furnace & A/C. Over 1500 Sq. Ft of inside/outside living space! Ocean & Catalina Sunset rooftop views!


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The remodel appears to have turned out very well. We're trying to picture the type of person who would have the money and the desire to buy this property: Empty nesters who want to settle on the beach? Successful bachelor/bachelorette who doesn't need very much space and wants a ready-to-move in property close to the water?

The previous owner - whose primary residence is in another South OC city - paid $1,107,000 in 2005 using 100% financing from American Home Equity Corporation in Irvine. He later refinanced into about $1.25 million worth of loans in July 2006.

By late 2007, the parade of notice of defaults began. The house went back to the bank in December 2008.

Assuming the property sells for the current asking price, it would represent a decline of $257,100, or 23% off the 2005 bubble price.

More than 50% off in RSM

This Santa Margarita property-turned REO proved to be poison for its previous owner. The street name, Hemlock, also happens to be the name of a deadly plant. Odd coincidence, or cruel twist of fate?

15 Hemlock #199, 92688
Asking price: $193,900
Asking price/ sq ft: $194
Bank purchase price: $251,121
Purchase date: 1/16/09
Size: 2 beds, 2 baths, 1,001 sq ft (built in 1987)
MLS: S565997 (1 day on Redfin)
Zillow Zestimate: $238,500
HOA dues: $247
Type: Condominium
Style: Contemporary
Stories: 1
From listing: Gorgeous! End unit, bright interior, Priced to SELL! 2 bedroom, 2 bath, wood floors, fresh white wood blinds, custom paint, Large enclosed patio with high fence. Detached one car garage with built-in work bench and storage shelving. Close to RSM beach club,lake and shopping center.

The lower end has really been clobbered, and by this point we are guessing most of the drastic price declines are over for this subset of housing.

We'll estimate you could rent this out for about $1,400 a month. An owner-occupant looking for a general breakeven point would want to pay about $224,000, assuming a GRM of 160. Since the asking price is below that threshold, on the surface we would say it achieves rental partity.

However, it is unlikely this quasi-apartment would be a long-term living solution. We could see an investor becoming interested if the price were low enough, and it doesn't appear to be there yet for this type of property in a location that is far from major job centers.

The previous owner paid $400,000 in 2005 using 90% financing from Expanded Mortgage Credit Wholesale. This lender - now defunct - did a lot of subprime and Alt-A. In late 2006, he liberated $29,150 of his downpayment with a $389,000 refinancing through First Franklin. We've seen many more egregious examples of re-fi abuse than this, so we'll let it pass in this case without too much criticism.

The property went into default in mid-2008, and went back to the bank earlier this year.

Assuming the condo sells for the full asking price, it would mean 52% off the bubble price of $400,000, and 41% off the 2004 price of $330,000. Those are some serious discounts.