Omakase

The good news: I'm going to Tokyo!

The bad news: No RE in the LBC posts for two weeks.

I'll try to drop in and update you with my assorted shenanigans. And a special thanks for those of you that wrote in with tips. I'm going to do my best to see and do as much as I possibly can.


Best Wishes,

-el bee

Daily Nut Job

4422 East 2ND St, 90803
Price: $809,500
Beds: 2
Baths: 1.75
Sq. Ft.: 1,737
$/Sq. Ft.: $466
Lot Size: 4,373 Sq. Ft.
Year Built: 1954
MLS#: P702474
Source: CARETS
Status: Active
On Redfin: 56 days
Down Payment: $162,000
Income Requirement: $231,000
Monthly Nut: $4,400
Description: Great Belmont Shore/ edge of Heights Home! Original Hardwood floors throughout! Great floor plan with open living room that leads to dining room. Plus large Den that could be used as office or extra living room! Separate laundry room easily accesible off of kitchen. Covered patio with spa with plenty of backyard to spare. Additional side yard great for dog retreat or any retreat for that matter! Plantation shutters in living room with fireplace. Bedrooms are extremely spacious. Keep as one story home or add second story for full view of the shore and the ocean. Location is ideal; end of 2nd street while at the edge of gorgeous Belmont Heights!

You know what, for once I think this seller can get away with calling it "Belmont Shore." Most sellers try in vain to claim the nearest nicer neighborhood, attempting to glom off the higher values--but I think this guy is being unecessarily precise with the "edge of Heights" thing. Dude, you can claim the Shore. It's okay.

Whether it's the Heights or the Shore or whatever, there is little debate that this is a prime neighborhood. Which begs the question: If the nabe is so wonderful, then why the Ghetto Gate (to borrow a term from FreedomCM) on the front door?

Yikes! Judging by the absurd asking price of $809,000 for this dump, I'd say it's not so much to keep undesirables out, but to keep the batshit crazies in.

Let me just say, unequivocally, that there is not enough government intervention or free ponies in the world to make this a good deal. Sorry. It doesn't matter how great the "Belmont Shore/ edge of Heights" area is, the lot is horribly, horribly located.

Check out the Aerial View on the listing and marvel at how the property not only sits right atop busy-ass Livingston, but ALSO gets the noise of the 2nd Street/Ximeno four-way stop (two of which are downhill, requiring harder stops)!

Ass-loads of traffic noise + weirdly shaped lot + no yard to speak of = Mondo Undesirable.

On top of that, when I went by last night I noticed it's flanked by two, two-story apartment buildings on either side.

Plus, IT'S ONLY A TWO-BEDROOM! For $810,000?! Really?

Hell, not even the pollyana uber-optimist dreamweavers at Zillow.com can muster up the strength:

$598,080(low); $712,000 (estimate); $776,080 (high)

Even their "high" estimate, which connotes a truly amazing property that's in spectacular shape and fully upgraded, is $33,420 lower than this nutter's asking price.

Does this look "truly amazing," "in spectacular shape," or "fully upgraded" to you?

What a fucking joke!

Speaking of jokes, here's a little listing history for that ass:

Sep 09, 2009 - Listed $809,500
Aug 15, 2001 - Sold $460,000 (+17.3%/yr)
Oct 28, 1999 - Sold $345,000 (+15.4%/yr)
Apr 26, 1996 - Sold $209,000

Look how dirt cheap this joint was during the last housing bottom! And anyone who needed proof that the bubble started before 2001 should take a gander at the difference between the 1996/1999 and 1999/2001 sales prices. Boo-ya!

So, considering our seller purchased for $460,000 eight years ago and the deplorable condition of the house, just how the hell did he come up with an asking price $349,500 more than what he paid?

The same reason people hoard cats, I would imagine.

Because even assuming this hovel appreciated at a (very generous) 4% per year since purchase, this dusty dung button would be worth--at most--$629,500 today.

And considering not one dime went into upgrades, I simply fail to see how this asking price is justified. I guess someone might be interested in it as a teardown, but the lot price is too expensive. I mean, take another look at the interior!

Halloween's over, guy. Stop scaring the kiddies!

I'm really looking forward to seeing what the inevitable price cut amounts to. This seller has tons of equity (assuming he didn't cash-out refi to the hilt) so he can afford to be aggressive. But I have a funny feeling the voices in his head will convince him his place is "special" and we'll have a LOOOOOONG time to ponder how people still exist that haven't heard about the collapse of the greatest housing bubble in history.

Made in the Shade: UPDATE

The list price was "$995,000" and changed to "$875,000"

Wow! Quite a price reduction!

But before you get too excited and start thinking he suddenly found religion and will start pricing aggressively, it took him four long months to make this much-needed cut. In the grand scheme of things this reduction doesn't mean anything. All it means is the property was $120,000 overpriced.

This jackass is less than a month away from his one-year anniversary on the MLS. That's a scarlet letter ("S" as in "Stale") any seller should fear. You think he'll wake up in time to beat the clock?

Considering it took 340 days to get to a somewhat realistic price, I'm going to go out on a limb and say...

Happy Anniversary, Numbnuts.

*****************************************


16 12Th Pl, 90802
Price: $995,000
Beds: 2
Baths: 3
Sq. Ft.: 2,056
$/Sq. Ft.: $484
Lot Size: 2,915 Sq. Ft. (yikes!)
Year Built: 1904
MLS#: P666834
On Redfin: 254 days
Down Payment: $200,000
Monthly Payment: $6,100 (@ 6.5% jumbo)
Income Requirement: $285,000
Description: $200,000. PRICE ADJUSTMENT!!! This one of a kind Alamitos Beach Bluff home has the location and views you've been wanting! It has an updated kitchen and breakfast bar with top-o-line Starmark European maple cabinets,bamboo flooring,recessed lites and S/S appliances.The large formal dining room and open living room lead to the patio overlooking the beach for your morning coffee or brunch. The large family room with recessed lites and crown moulding leads to your own private rear yard with new hardscape and landscape.The inside laundry room with premium washer, dryer and sink off the kitchen also has a upgraded 1/2 bath. The upper level off the foyer has two large master suites with walk in closets,berber carpet, ocean views, top-o-line Hans Grohe fixtures in the upgraded baths and a sun porch. This home has too many upgrades to mention.... a must see for your fussy clients! CLICK ON MEDIA 21 OR MAIN PICTURE TO ACCESS VIRTUAL TOUR AND PICS.

Boy, for a house "at the water's edge," you would think the realtor would be smart enough to include shots of that glorious ocean view.

Wanna know why she didn't? Because there isn't one.

Weren't you beginning to wonder why the exterior shots looked a bit, um, shady?

Well, it's because this house, with only two bedrooms on a cramped lot, is completely surrounded by enormous apartment buildings and a parking structure. Engulfed might be a better word to describe how deep in the shadows this house is.

Do yourself a favor and click on the Redfin listing and check out the Aerial View. DOH!

And is it just me, or does it seem like every "Cape Cod" homeowner has a graduate degree in Application of Clutter as Home Decoration?

To give you an idea of just how greedy and delusional this seller is, the original listing price in December 2008 was a laughable $1,400,000. After four months with no interest, they relisted in April 2009 (presumably with a different realtor who promised vastly more bubble profits) with an unbelievable $1,700,000 price tag.

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!

Idiot.

They are obviously convinced the proximity to the water is worth big bucks. But I have news for them: With no actual view of the ocean, that's like Rachel Bilson being your girlfriend online.

Or living near the most scenic point of the Grand Canyon--in a windowless mansion.

Great in theory, but about as useless as braille on a Harley Davidson owner's manual.

So, the current asking price of $995,000 represents a $705,000 fall from grace--ERRR, wake up call--ERRR, reality check--ERRR, discount from the highest asking price.

Jul 17, 2009 - Price Changed $995,000
Apr 07, 2009 - Price Changed $1,200,000
Apr 07, 2009 - Relisted ($1,700,000)
Dec 18, 2008 - Delisted
Dec 02, 2008 - Listed $1,400,000
Sep 06, 2002 - Sold $459,000
Oct 20, 1998 - Sold $300,000
Nov 22, 1996 - Sold $255,000

Dang, can you believe this place sold for $255,000 during the last housing downturn? Sheesh.

The crazy thing is, the 2002 purchase price of $459,000 means if this seller just priced realistically, he would walk away with a pallet full of cold, hard cash. Assuming he didn't HELOC himself into the stratosphere, that is.

But given the costs associated with "too many upgrades to mention," all bets are off.

Good Deals

Mike in LBC writes:

El Bee,

Is there anywhere on this blog site, where you throw out a couple steps to follow, for noob real estate dummies like me, to see if a property is a good deal? What steps do you take, when you want to see if a property is a good deal?

And this is just a suggestion, but I would really like to see you find a property that you think IS a good deal, and maybe tell us why, and how to find them.

My permabear permafrost has thawed considerably this year, and I'm not afraid to tell my readers when I think something is approaching a decent buy. The reason I don't feature more "good deals" on this blog is because, frankly, the few that exist don't last long on the market. And for good reason. In fact, sometimes I'll have a finished post in the can only to discover the property sold before I could publish it.

And with all of the government intervention (whatever you think about all the taxpayer cash being dropped from B-2 bombers, you have to admit it seems to be working as far as spreading the pain gradually instead of the precipitous equity-destroying tailspin we saw in 2007-2008) it's even more difficult to determine what the "real" value of a property is.

I think everybody's biggest fear is that they will put all their hard-earned money into purchasing a house, only to watch the value plummet immediately.

But why is being a little bit underwater such a big deal? Sure, nobody likes to think they paid too much for anything (just listen to people brag about the "deals" they get on car purchases and how they "raked that salesman over the coals"--you don't often hear about the people that got home only to realize they got cornholed on the "clear coat protection"), but assuming you bought a house you love (or at least see yourself in for a decade) who really cares about timing the bottom perfectly?

The real question is: If you buy today will you be more than "a little bit" in the red a few years down the road?

I can't tell the future. Anybody who claims they can is certifiably full of it.

But what I can tell you is if the Superbears are waiting for $99 per square foot in coastal Long Beach, you'll be grousing about "unsustainable" home prices until you're living in a home staffed with nurses. I don't want people to hang their hat on a "tsunami" of REO properties flooding the market and crushing prices. I just don't see that happening anymore. What incentive does the government have to force banks to release their inventory?

I also don't want buyers to pin their hopes to rising interest rates bringing values down. First, we don't know for sure that that will happen. The conventional wisdom is that higher rates equal lower values because people can't finance as much, but what if as rates rise more people jump in before rates get out of control, thus raising home prices? Then what? Second, do you really think the goverment is going to let that happen?

Look, I'm still pretty bearish, but I have to say the incessant doom and gloom is getting old (if the Mad Max theorists are correct, our currency will collapse and blogs like this will be pointless. All property without tall gates will become worthless and we'll be scrounging for water and ammo and won't give a crusty crap about granite countertops). Because although some delusional sellers set "Wishing Prices" I think some permabears are holding out for unrealistic prices. Just like those idiot sellers are never going to get $900,000 for that 1 bed/1 bath with ocean views, you're not going to get it for $90,000.

Housing in Southern California is expensive. It always will be. The maintenance alone will ensure that. It's a luxury item, a consumable. And just like there is a reason BMWs cost more than Scions, if you want to own a nice home you're going to pay for it. So please don't let the perfect (price) be the enemy of the good.

If you have to buy and the numbers are "close enough," then buy. Do it. But understand it comes at the cost of being a bit underwater for the next few years--maybe five or more if things really hit the skids. If not getting a "great deal" doesn't bother you (and judging by the sales activity of late, it doesn't seem to be troubling too many) then go for it.

BUT, also don't get in way over your head if the fundamentals aren't right. Sometimes "expensive" things are completely worth it (a Shelby Cobra Mustang costs about twice what a stock GT does, but I'll gladly pay the premium to hear that supercharger whine every day). I realize that people, after being priced out during the last eight years or so, are champing at the bit to buy and "get it over with," but just understand that we're not at a true bottom in coastal Southern California. Prices are still way out of line with incomes.

My guess is that we're in a dead cat bounce right now fueled by government spending and attempts to kick the can down the road (Hell, Fannie Mae today just approved a plan to avoid realizing losses on their disastrous portfolio by allowing deadbeat homeowners to rent their house from FNM at no more than 31% of gross income. Hey shitbrick, don't you think implementing that rule on the mortgages you insure would have avoided this clusterfuck in the first place? Anyhow, there's a bunch of homes that should be REO inventory that won't see the light of day for at least another 12 months. Kick the can, kick the can). But after this temporary re-inflation, we'll continue our gradual decline and scrape along the bottom for a few years. In other words, the idea that we're going to have another monstrous housing bubble and you'll "miss your opportunity" if you don't buy now is a total crock.

I simply don't see dangerously loose lending practices or massive statewide wage increases on the horizon to support increasing prices (but I do see significantly rising taxes, which will put a dent in housing budgets. How did you think we were going to pay for the California budget deficits, housing tax credits, and financial bailouts?).

To answer your core question, Mike, here is how I determine whether a primary residence is a good deal:

1) It's as nice or nicer than your rental, and the cost is roughly the same (if your monthly PITI is less than your rental rate, that is a SMOKING deal). If you get in trouble and have to move, and renting it out will cover your monthly payment, you got a good deal.
2) You're proud to show it off, yet the purchase price is only 3.5 times your annual income (4x income, although riskier, seems to be what most Californians are comfortable with, but we're talking about what makes a "good deal")
3) You are spending no more than 31% - 33% of your gross monthly income on housing--including principal, interest, HOA, taxes and maintenance (that's not my number--that's the "safe" number determined by mortgage lenders before they took crazy pills. For fuck's sake, EVEN FANNIE MAE IS NOW ADMITTING THAT 31% IS THE MAXIMUM AMOUNT THAT PEOPLE CAN PAY FOR HOUSING AND REASONABLY EXPECT TO MAKE THE PAYMENTS!).
4) You can afford it without stretching too far, while simultaneously being able to afford to live a good life.
5) You're buying it to live in and not as an "investment." If it's an investment, it will never seem like a good deal because the constant flow of money you'll be putting into maintenance and taxes will be little red daggers on an Excel sheet and not the trade off for homeowner pride. If it's a home, that stuff won't matter.

But really, #1 is the most reliable. And that's because rents are tied DIRECTLY to income. Since there is no way to finance your rent, your monthly payment comes only out of the money you take home each month. Simple, right?

I don't know if I answered your question, but those are my coffee-addled thoughts.

The Terrible Twos

Today's featured seller is yet another 2007 buyer who, after finding herself underwater just two years after purchasing, is scrambling to abandon ship before her terribly timed investment blows up in her face like an IED.

Will she find the comfort of a buyer's life raft in time, or is she just rearranging the deck chairs on the Titanic?

370 WISCONSIN Ave #304, 90814
Price: $348,000
Beds: 2
Baths: 1
Sq. Ft.: 957
$/Sq. Ft.: $364
Year Built: 1967
MLS#: P709366
On Redfin: 2 days
HOA: $187
Down Payment: $69,600 ($12,180 FHA)
Income Requirement: $99,000
Monthly Nut: $2,000 ($2,400 FHA)
Description: Remodeled 2-BD Belmont Heights condo. Secluded Top, Back, Corner unit is in the Best Location in the building! Enjoy great views from the living room picture window. Spacious, open floor plan includes oversize bedrooms with large closets (with closet organizers), Bamboo flooring and dual pane vinyl windows (with nice blinds). Beautiful Kitchen has Silestone counters and ceramic tile floors. Large bathroom features both a shower and a soaking tub. Contemporary colors throughout. 2 deeded parking spaces with 4 large storage lockers! Attractive building has a sparkling lap pool, a nice BBQ area, a community garden and is pet friendly. Walking distance to trendy Portfolio coffee house and retro row on 4th St. Close to Belmont Shore & Pine Ave.

Egregious Title Case abuse aside, that is a fairly good listing description.

I think it's funny to refer to anything in a 957 square foot apartment "oversize," but considering there's only ONE bathroom, perhaps there is a bit more available square footage to play with.

Yuck, nice Pepto-Dismal countertops.

The nabe is pretty good and the (awful looking) building is well insulated from busy 4th Street.

And browsing through the photos, I'm pretty impressed with this interior. Nothing spectacular, but very clean and simple.


Furthermore, the $187 HOA fee actually gets you a pool! When was the last time you saw that?

The problem, as per usual, is price.

First, this matchbox is one of the most expensive in the area (although to be fair, it's nicer inside than the competition).

Second, the comps are playing for the Bad News Bears:

$350,000 2500 E 4th St Apt 308 Sold on Jul 24, 2009
0.05 miles 2 bd / 2 ba 1,093 Sq. Ft.

$308,741 2767 E 3rd St Apt 26 Sold on Sep 02, 2009
0.21 miles 2 bd / 2 ba 805 Sq. Ft.

$375,000 232 Junipero Ave Apt C1 Sold on Jul 07, 2009
0.31 miles 2 bd / 2 ba 1,175 Sq. Ft.

$214,000 2075 E Appleton St Unit 9 Sold on May 29, 2009
0.33 miles 2 bd / 1 ba 913 Sq. Ft.

$191,250 2033 E 3rd St Unit 3A Sold on Aug 19, 2009
0.33 miles 2 bd / 2 ba 953 Sq. Ft.

$360,000 2055 E Broadway Unit 207 Sold on Jun 19, 2009
0.38 miles 2 bd / 2 ba 1,197 Sq. Ft.

$320,000 2101 E 2nd St Unit 201 Sold on Jul 07, 2009
0.38 miles 2 bd / 2 ba 1,118 Sq. Ft.

Notably, the only three units that sold for more than $348,000 during the last six months sported an extra 200 square feet and a second bathroom. This place, as nice as it is, can't possibly compete with that in this price range.

And those sales were in June and July! Now that we are entering the winter months and holidays, the market will slow down a bit, making selling a much different ball game. This seller, if she's serious about minimizing the damage caused by these terrible two years of mistimed ownership, needs to get it in gear and hit the nitrous on price reductions.

First, the asking price is out of line with local incomes. Even if we're generous and calculate 4x income instead of my usual 3.5x, the household income requirement is still $87,000. That's $36,000 more per annum than the median income!

And because of the solo lavatory and the cramped quarters, this is not really designed for a couple, meaning the solitary occupant would have to make nearly $90,000 a year to afford this place--and even then he'd be stretching to do it.

Second, asking $364 per square foot is a pipe dream that Mario and Luigi would be proud of. We're talking pipe dream BY ANY MEASURE:

MEDIAN CONDO VALUES (List $, $/Sq. Ft.)
Alamitos Beach: $241,000, $300
East Side: $207,500, $256
90814: $247,500, $307
Long Beach: $243,000, $263
LA County: $365,000, $317

Sorry, lady. I hate to break it to you but your place isn't special and can't possibly justify the premium.

But one look at the pricing history and it becomes clear why she's reluctant to accept pricing reality:

Nov 02, 2009 - Listed $348,000
May 10, 2007 - Sold $375,000
May 22, 1987 - Sold $90,000

As it stands, if she found someone willing to make the same mistake she did and severely overpay for this tiny unit (sounds like a line from the next Deuce Bigalow movie), her loss after commissions would be -$47,000.

OUCH.

Hopefully after two years of payments she has at least that much in equity, and (assuming she finds a buyer at this ridiculous price) will break even .

But if she got an interest-only loan (which were still available in '07), she needs to be prepared to write a big fat check when she finally finds a seller (at a significantly reduced price).

I think it's going to be interesting to see what happens as 2007 buyers, many of whom listened to the "experts" about the worst of it being over and the housing crash being contained only to subprime riff-raff, unexpectedly creep underwater. It will be interesting because they won't go underwater by nearly as much as their 2004, 2005, and 2006 counterparts, but I posit many will be underwater "enough" to bail.

I'm curious to see how many '07 "owners" hang on through the downturn and years of flat appreciation, and how many pull a monkey-see, monkey-do and moonwalk away from their obligations.

Landlocked in "The Other" Long Beach: UPDATE

The list price was "$229,900" and changed to "$219,900"

But wait, when you originally listed this dump for $230,000, the listing description claimed, "This property is priced for a quick sale."

But that was 74 days ago. Perhaps "quick" wasn't the best word choice.

So are you saying now it's REALLY priced for a quick sale? Or are you just going to pepper buyers with your incessant bullshit until the next measly 4% price cut?

Then I imagine it will REALLY, REALLY be priced for a quick sale, right?

But who am I to question whether $220,000 is a fair, accurate price? After all, you're the "experts" who three years ago valued this rat's nest at $380,000--clearly you know what you're doing.

**********************************************

The Caspian Sea is the largest enclosed body of water on the planet. It's said that about 5.5 million years ago, due to geological shifts and other factors, the "sea" became landlocked and essentially became a salt-water lake.

How appropriate that today's property on Caspian Avenue is in such a sketchy area of "The Other" Long Beach (it's practically Compton) and is in such rough shape that is essentially landlocked, i.e. unsellable, in a non-bubble environment. The bank is going to take it in the shorts on this one, but it's pricing as if this house has any redeemable qualities outside of bulldozer practice.


3555 Caspian Ave, 90810
Price: $229,900
Beds: 2
Baths: 1
Sq. Ft.: 832
$/Sq. Ft.: $276
Lot Size: 2,500 Sq. Ft.
Year Built: 1970
MLS#: P700253
On Redfin: 12 days
Down Payment: $46,000
Income Requirement: $66,000
Monthly Nut: $1,300
Description: Truly affordable 2 bedroom home. This property is priced for a quick sale. Opportunity knocks...will you answer the door? This property features tile and carpet flooring, seperate living room and den, updated bath with pedestal sink, updated kitchen with what appear to be newer cabinets and what appear to be granite countertops, and attached 1 car garage. This property has a usable rear yard as well.

So, judging by the photos, you're buying a two-bedroom, one-bath garage. Sweet.

"Opportunity knocks...will you answer the door?" Hell no! Every weekend that opportunity to catch a falling knife is banging on my door--he's worse than the Jehovah's Witnesses!

"and what appear to be granite countertops"? This again? Look, geek--when you're asking hundreds of thousands of dollars for a POS shack, take the fucking time to figure out what you're selling. I mean, don't you think granite countertops would be a plus? Maybe something worth confirming?

That's like saying, "...and what appears to be a swimming pool." It either is or it isn't.

And "seperate"? There seems to be a growing trend of realtors misspelling this word. Maybe the NAR has enough pull to convince Webster's to change the spelling and make me look like the illiterate one.

If you can believe it, near the peak this dilapidated petri dish sold for $380,000. $457 per square foot? ZOINKS!

Aug 21, 2009 - Listed $229,900
Jul 13, 2009 - Sold $136,000
Mar 23, 2006 - Sold $380,000
Jul 12, 2001 - Sold $135,000
Jun 12, 2001 - Sold $100,100
Jan 12, 1990 - Sold $1,000

Then the bank took it back this July for $136,000 (Weird. That would indicate the former loanowners had several hundred thousand dollars in equity/down payment. Or maybe a second mortgage?). Now the lender, who couldn't be bothered to make this shithole presentable, is getting cocky and demanding a $96,000 profit. You're going to need a golden horseshoe up your rectum to pull that one off, pal.

You see, the listing agent claims $229,900 is "truly affordable," but by what measure? Definitely not price per square foot:


And certainly not recently sold comps:

$174,250 3557 Caspian Ave Sold on Jun 16, 2009
0 miles 2 bd / 1 ba 832 Sq. Ft.

$200,000 3521 Baltic Ave Sold on Jun 26, 2009
0.06 miles 3 bd / 2 ba 960 Sq. Ft.

$130,000 3568 Denver Ave Sold on Jun 30, 2009
0.08 miles 2 bd / 1 ba 708 Sq. Ft.

$129,000 3608 Denver Ave Sold on Jul 31, 2009
0.09 miles 2 bd / 1 ba 836 Sq. Ft.

$481,676 3612 Denver Ave Sold on Jul 07, 2009
0.1 miles 1 bd / 1 ba 720 Sq. Ft.

$150,000 3625 Delta Ave Sold on Jun 24, 2009
0.13 miles 1 bd / 1 ba 634 Sq. Ft.

$160,000 1801 W Arlington St Sold on Jun 30, 2009
0.23 miles 3 bd / 2 ba 874 Sq. Ft.

$205,000 1747 W Cameron St Sold on Jun 19, 2009
0.28 miles 2 bd / 1 ba 659 Sq. Ft.

How the hell did the lender figure $229,900 for this turdpile is "priced for a quick sale"?

Have they even looked at an overhead map? It actually looks like a decent little street looking at Street View, but you clearly are not concerned with your personal and property safety if you buy in this area of LB. And you aren't terribly concerned about your family's health if you purchase so close to power lines. And then there's the interior:

Uf da! Get me a Swine Flu mask!

You might point out that some people don't have many options financially and a $1,300 monthly payment is all they can afford. That's true, but wouldn't they be better off renting a nice, big, clean condo in a much safer neighborhood? $1,300 can get you a lot in LB these days, and in very decent areas. And they wouldn't need to worry about losing equity as the market for these undesirable digs gets absolutely crushed in the coming months and years.

In other words, $230,000--ERRRR...sorry: $229,900--is a total, unabashed rip-off and the only thing this is priced for is a good ol' fashioned rot session on the MLS.

It's a Wonderfyl Life

3833 East 2ND St #301, 90803
Price: $594,500
Beds: 2
Baths: 1.75
Sq. Ft.: 1,489
$/Sq. Ft.: $399
Year Built: 1986
MLS#: P704353
On Redfin: 37 days
HOA: $291
Down Payment: $119,000
Income Requirement: $170,000
Monthly Nut: $3,500
Description: This Plaza Mira Mar penthouse is stunning. This top floor corner unit with ocean and city view condo is just steps to the Ocean, Pier and the wonderful Shops and Dining in Belmont Shore. Marble floors through out with newer carpet in both bedrooms. Newer kitchen with cherry wood cabinets, granite counter tops with built-ins, including a lazy Susan. Gas fireplace in the living room with a marble manttle and hearth. Custom see through shades in living and dining rooms, plus custom drapes. New double paned windows and doors. Forced air heat and central air conditioning. Both bathrooms are highly upgraded, master bath has a seperate shower and a jacuzzi tub. Recessed lighting and skylights. Inside laundry, washer and dryer are included. There is a large balcony for you to enjoy your wonderful views. 2 parking spaces are also included. There is no need to preview this wonderfyl home.

"Through out"

"Manttle"?

"Seperate"?

"Wonderfyl"? WTF? You just spelled "wonderful" correctly TWO SENTENCES AGO!

Come on, lady! Have a little pride in your work. For a $600,000 listing (and the commission you're demanding "for all of your hard work") you should really be providing better service to your client.

Every time I roll by this building, I'm impressed with the exterior. Most Long Beach buildings this old very much look their age, but this one is quite nice with vinyl windows and doors, a decent paint job, and updated balconies and railings. For a building built in 1986, it's commendable.

The interior isn't too bad, either. For instance, the bathroom looks really nice:

As does the kitchen (that's an impressive collection of refrigerator magnets!):
But I have to say, the tile floors are killing me.
Yikes. I want a living room, not a mausoleum. Those would have to go STAT.

And for an apartment sporting 1,500 square feet, this master bedroom seems awfully cramped:

Come to think of it, so do the hallways:

Whatever, I'm picking nits--overall this apartment is pretty sweet. And with the right furniture and wood flooring, it would be amazing.

Anyhow, the pricing history tells an interesting tale:

Oct 05, 2009 - Price Changed $594,500
Sep 23, 2009 - Listed $619,900
Apr 27, 2005 - Sold $660,000 (+15.8%/yr)
Apr 05, 2004 - Sold $565,000 (+50.4%/yr)
May 09, 2003 - Sold $390,000

Our featured seller purchased this apartment in 2005 for $660,000 , just two years after it was appraised and sold for a mere $390,000.

That's a 70% increase in "value" in just 25 months. No red flags went up? Really?

Anyhow, after adorning the 2004 buyer with $105,000 in pure, unfettered bubble cash, our featured seller settled in to enjoy his wonderful new apartment for years and years.

And by "years and years" I mean four.

Because this September he put it on the market for $619,900--a grim acknowledgment that by this time the party was long over and a loss would incur.

And that grim acknowledgment quickly morphed into abject horror as the market continued to drop like a porpoise thrown off the Empire State building. Consequently, the seller cautiously reduced the price by $25,400, hoping to attract a buyer.

**crickets**

And assuming a cash-flush savior shows up tomorrow and agrees to pay full asking, the loss including commissions will be approximately $106,000. But I have a feeling Real Estate Jesus will be turned off by the $3,500 monthly payment considering his carpenter's salary.

Not to mention the fact that nothing in this (awesome) neighborhood has sold for anywhere close to $594,500 during the last six months:

$447,500 110 Termino Ave Unit 201 Sold on Jun 26, 2009
0.13 miles 2 bd / 2 ba 1,408 Sq. Ft.

$440,413 3600 E 4th St Unit 202 Sold on May 14, 2009
0.62 miles 2 bd / 2 ba 1,320 Sq. Ft.

$530,000 2999 E Ocean Blvd Unit 840 Sold on Jun 26, 2009
0.63 miles 2 bd / 2 ba 1,510 Sq. Ft.

$569,000 2999 E Ocean Blvd Unit 1820 Sold on Sep 04, 2009
0.63 miles 2 bd / 2 ba 1,510 Sq. Ft.

$385,000 2538 E 2nd St Unit 107 Sold on Jul 09, 2009
0.84 miles 2 bd / 2 ba 1,347 Sq. Ft.

$400,000 2538 E 2nd St Unit 307 Sold on Jun 10, 2009
0.84 miles 2 bd / 2 ba 1,347 Sq. Ft.

$380,000 2131 E 1st St Unit 304 Sold on May 19, 2009
1.05 miles 2 bd / 2 ba 1,451 Sq. Ft.

Keep in mind, the ONLY nearby comps to sell for more than $500,000 were in the Towering Inferno at 2999 Ocean--which as we all know is an OCEAN-FRONT building.

Here's the view from 2999 Ocean:

And here's our seller's "view":

Sorry holmes, those aren't even close to comparable.

And don't try to tell me a premium is justified because of the "penthouse" location. Saying, "I live in the penthouse" sounds really impressive until you discover this building only has three freaking floors.

So how does he justify asking this kind of money?

Easy: Because he's trying to minimize losses. So he tools around with little 3% cuts in the hopes that some sucker with severe brain damage (caused, incidentally, by a porpoise flung from the Empire State building) strolls along and makes his dreams of getting out with some semblance of a financial future come true. The market may prove me wrong, but I think this place is way overpriced.

I have a feeling he can't afford to cut the price any further, meaning an attempted short sale can't be far away.

Wrong Side of the Tracks

I started writing this post before the price was dropped $40,000, so while my assessment of the pricing has changed, my overall analysis has not.

743 EUCLID Ave #3, 90804
Price: $299,000
Beds: 2
Baths: 2
Sq. Ft.: 1,156
$/Sq. Ft.: $259
Year Built: 1981
MLS#: P702387
On Redfin: 48 days
HOA: $189
Down Payment: $59,800
Income Requirement: $85,000
Monthly Nut: $1,800
Description: Beautiful unit in quiet tranquil complex. Features bamboo floors, granite counters, fresh paint, recessed lighting, upgraded kitchen and baths, large master bedroom with walk in closet, dinning area that opens to kitchen, separate bar area with wine cooler and lots of windows for the ocean breezes.

"Dinning"?

And dude, "ocean breezes"? You're more than a mile from the water--you sure about that?

I have to give credit where credit is due and say that overall this apartment is pretty nice inside. I'm particularly fond of the dark-colored floors, the recessed lighting (although it appears to be quite far from the wall), and the overall vibe.

Hey, those Ginsu knives come with the place?

And is that bookshelf, reappropriated as some kind of candle holder with a whole lot of negative space, really such a good idea when the bathroom already looks kind of cramped? Try a shelf, yo.

Wait. Is it just me or is the toilet paper a bit of a reach from the ol' Oval Office?

This photo is the best:

1) I can see you in the mirror's reflection and you look goofy as hell trying to prop up your picture-taking arm like that, 2) You sippin' on the sizzurp or what? 3) Install a medicine cabinet, guy! Guests don't even have to search for your Viagra with this set up.

Want to be a realtor for a day? Here's what you do: While sitting in your leased Lexus ES300, close your eyes and rub them really hard with the palms of your hands. Take two big pulls of tequila from your glovebox flask--no, the glovebox, not your center console flask--run into a nearby house and start snapping photos with your big toe:


Good job, sparky! Your license is in the mail!

I guess I can see why those photos are blurry--they didn't even bother to tidy up those rooms. And I'm confused...which room is that desk in? Your kid's room? Taking up his entire closet? He must be stoked on that.

So anyway, decent looking joint, decent square footage (although these photos make it look incredibly cramped), and only asking $259 per square...why no sale?

CHOO CHOO! MAKE WAY FOR THE LOCATION LOCOMOTIVE, Y'ALL!

In general, I tend to view 7th street as an imaginary dividing line between "Desirable" Long Beach and "The Other" Long Beach.

It seems like you can take two identical properties and if one is on the "beach" side of 7th it will immediately enjoy a substantial price premium. I mean, hell, it's just a street, right? But that's the way it goes, and that's why what you buy is as important as where you buy.

As mentioned in prior posts, I believe there is a lot more to the "Location, Location, Location" cliche that realtors love so much. To wit:

As discussed previously, when realtors exhort the importance of "Location, Location, Location" they're not being needlessly repetitive--in my opinion there are in fact three different "Locations" when it comes to buying property:

Location #1 - Neighborhood.

Location #2 - Positioning within the neighborhood (waterfront, cul-de-sac, interior location).

Location #3 - Proximity to external infrastructure elements (under a flight path or power lines, behind train tracks, a freeway, or NHRA drag strip).

He didn't exactly knock it out of the park on any of these counts.

Location #1 - This neighborhood isn't terrible (it's on the good side of Redondo, at least) but I guarantee you any potential buyer would rather pay more to be on the "good" side of 7th. Just goes to show, it doesn't matter what kind of deal you got, when you buy a house you also need to consider what future buyers are going to look for when you need to sell.

Location #2 - It's barely "within" the neighborhood--it offers very little interior protection from one of the busiest thoroughfares in the city.

Location #3 - It's right across the street from a school. That means school buses and car-crammed parent drop-offs twice a day, and considerable noise from the playground if you work from home.

But even if you disagree with my assessment of the Three Ls for this property, here's something absolutely every reader must concede:

Considering he paid $400,000 for this place, the Location, Location, Location is an epic Fail, Fail, Fail.

Pricing history:

Oct 21, 2009 - Price Changed $299,000
Oct 13, 2009 - Price Changed $340,000
Sep 15, 2009 - Price Changed $377,000
Sep 08, 2009 - Listed $399,000
Feb 17, 2009 - Delisted
Aug 18, 2008 - Listed
Jul 27, 2005 - Sold $400,000 (+29.5%/yr)
Aug 17, 2001 - Sold $144,500 (+14.8%/yr)
May 20, 1997 - Sold $80,500

I guess he didn't think anything was strange about the previous owner banking nearly 30% per year in appreciation. I'm assuming the 2001-2005 owner was the one who upgraded the unit, but come on. That's a conspicuous amount of money for a place that sold for just $80,000 during the last housing bottom.

Our featured seller, after three years of ownership and believing the bubble was still alive and well, listed it in August 2008 for a price high enough to deter buyers for six months. Then, after having no success with his WTF price, he promptly took it off the market.

And kept it off the market.

DURING THE ENTIRE SUMMER SELLING SEASON OF 2009 WITH INTEREST RATES AT RECORD LOWS.

Smart! Who's your realtor?

Then, after hearing all the great news on CNBC about the economy and housing "making a comeback," he slapped it back on the market last month for $1,000 less than he paid in 2005.

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!

How'd that work out for you?

I already know the answer: Not bloody well.

That's because the price cuts started in earnest a week after relisting, and continued down to today's asking price of $299,000. Shockingly, that price, a massive 25% decline in value, puts this lil' buddy into short sale territory.

And by "short" I mean, "the bank must be soiling its tightey whiteys."

That's because even if the lender approves this price, I still don't think buyers will bite. Besides the fact that most shoppers would rather fuck a bowl of scorpions than mess around with a short sale, the sold comps are absolutely killing this guy. Peep:

$220,000 680 Grand Ave Apt 103 Sold on May 18, 2009
0.13 miles 2 bd / 2 ba 855 Sq. Ft.

$250,000 648 Coronado Ave Apt B Sold on May 20, 2009
0.25 miles 3 bd / 2 ba 1,200 Sq. Ft.

$183,000 420 Redondo Ave Unit 204 Sold on Jul 29, 2009
0.31 miles 1 bd / 1 ba 932 Sq. Ft.

$195,000 420 Redondo Ave Unit 207 Sold on Jul 30, 2009
0.31 miles 1 bd / 1 ba 883 Sq. Ft.

$440,413 3600 E 4th St Unit 202 Sold on May 14, 2009
0.33 miles 2 bd / 2 ba 1,320 Sq. Ft.

$215,000 1100 Newport Ave Unit 407 Sold on Jun 16, 2009
0.35 miles 2 bd / 2 ba 1,138 Sq. Ft.

$215,000 1100 Newport Ave Unit 407 Sold on Jun 16, 2009
0.35 miles 2 bd / 2 ba 1,138 Sq. Ft.

$390,000 3637 E Vermont St Sold on Jun 05, 2009
0.35 miles 2 bd / 1 ba 888 Sq. Ft.

$125,000 1100 Euclid Ave Apt 317 Sold on Jul 16, 2009
0.37 miles 2 bd / 2 ba 820 Sq. Ft.

$195,000 1100 Euclid Ave Apt 313 Sold on Sep 24, 2009
0.37 miles 2 bd / 2 ba 843 Sq. Ft.

Yowch.

It's notable that the only two units that sold for more than $299,000 are located--surprise, surprise--on the "good" side of 7th Street in the more desirable 90814 zip code.

Do you see my point?

Given the competition (not to mention the community laundry and solo garage space), to say this place has no shot at selling at this price is like saying a patient with necrotizing fasciitis has "a bit of a skin problem."

**UPDATE: You know what I just noticed? Look at this picture again and focus on the right side:
A Convict Cage (or as FreedomCM calls them, "Ghetto Gates") on the front door doesn't exactly emanate a warm, safe feeling, and as far as I'm concerned is a deal killer for something anywhere near this price range. The "Other" side of 7th already has a perception among many as being less safe, and (justified or not) this only solidifies that predisposition.

More Free Ponies!

Calculated Risk: Home Buyer Tax Credit to be Extended