In the Puget Sound area there are all manner of issues that can affect apples, depending on variety. Anthracnose and scab tend to be very common, especially with older trees and those not selected for disease resistance or climate suitability. And trees that have been neglected for a period of time (no spraying, no pruning, etc.) can develop increased issues compared to those tended with more care. Powdery mildew with apples is also common, again depending on variety. And tends to show up earlier in the season on apples than on most other plants. It is more a cosmetic concern than anything seriously harmful, although you may notice some early leaf drop. I'd suggest you take a sample into your local nursery - Swanson's in Ballard is an excellent resource - for a correct diagnosis. It is a bit late in the season to do much correction but they can recommend a proper course of treatment going forward and guide you to pruning resources. Anthracnose (aka perennial canker) is the most serious issue......it generally denotes a steady downward decline although the tree may still live for many years. Just not attractively or productively. Sometimes it is best to know when to cut your losses :-)

I even tried doing a bit of research for you to be able to tell you exactly what was wrong but leaves turning red in the summer seems like mostly an indication of a plant that is stressed and unhappy in some way. It could maybe be a nutrient deficiency but I don't think I'd fertilize it right now, at least without knowing for sure it is nutrient deficient. (You don't really want to fertilize something close to dormancy. The tree/plant gets competing signals of grow! and shut-down! It gets unhappy.). Maybe a gentle compost feeding, though? That couldn't hurt and might help. Also (and sorry to bring this up) but apples don't grow true from seeds. You might have any apple tree there. Not sure where you're in zone 8b, but it could be possible down the line that the apple might really struggle with the heat and humidity of the Deep South, or if you're in the PNW, it might not like the cool, rainy summers. All you can do now that I can think of is plant it in the ground, don't over or under water it, maybe get a soil test just to be sure it is good for your apple, and cross your fingers. ETA: If you are very invested in your apple tree (and it seems like you are) I might call my local extension office and ask them if I could bring the tree in to take a look at. They might be able to tell exactly what's wrong from doing a thorough inspection, as well as giving you specific advice, based on where you are, for what exactly they'd recommend for this tree, both now and in the future. (Apples typically require more care than "set it and forget it" as they get older to maintain optimum health.) Good luck!

Recently planted trees all require regular supplemental water for the first 2 years of their life. The idea is to trail off to the their normal requirement. Apples, after they're established ( requires 2 to 3 years), need a healthy dose of water (rain or irrigation) monthly. In my climate (the northwest) that means I must water through our dry summer months.) Regularly watering the lawn is NOT enough for any tree.

new pix??? for the third time.. i will stress tree time.. its counted in decades .. your expectation that your tree will recover in a month or two.. is very high.. and you will be let down because its just not going to happen any faster.. dead is dead.. keep removing all dead material.. leave no stubs... and lets see what happens in the next year or two.. OR!!!! .. just get rid of it.. and plant a new tree.. which will be much more vigorous... just cut the trunk flush to the ground.. apply a stump killer.. and plnt the new tree a few feet any any direction other than that exact spot.. basically just far enough away where you can dig a hole for all the roots of the dead tree... btw... if your crab starts suckering from around ground level.. its a good indication the tree is in severe decline.. and at that point.. imo... just divest yourself of it.. i call it.. putting it out of your misery ... on my 5 acres.. if this was out back.. and i saw it once a month when i mowed out there.. i would give it 5 to 7 years.. and just watch what happened.. but if it was out my front door.. and i had to look at it every single day. and it spiked my blood pressure every time i went up and down the driveway.. it would probably be gone by fall.. lifes too short to be stressed by your trees.. ken