pem,
$850K is still my cutoff for a good market and I am actually less bearish on them this year. My point about under $700K is that price range will be an absolute circus. Between $700 and 850 the market will be healthy for good homes in good locations. Above that it will be tough.

AS for the LCO homes you posted. Those are the table scraps of LC Oaks. By far the worst locations bordering RSF Rd, smallest, lowest quality homes on smallest lots. These Khov homes will always struggle and are not a good Barometer of the market in LCO. The same goes for the awkwardly designed Warmington homes. Both were very tough to sell for the builder which is part of the problem. I think they through in lots on incentives and used an in-house lender to do shaky loans (probably paid a few points for borrowers also) to get them sold. That is probably why the distress in these two tracts is abnormally high. Across the way there is still a healthy appetite for nicer LCO homes (Centex, Davidson, Shea)up to about $1M in good locations. The Pulte big bombers are stuck in the $1M+ category and dont move easily. Above $1M there is not much of a market there right now unless the house is spectacular.

FWIW, One of my clients is in escrow on a nice LCO home right now. It was priced to move and sold about $60K below the comps with seven offers on it.