Address: 185 Quincy AVE #301, 90803
Wishing Price: $399,900
Size: 2 beds, 2 baths, 878 sq. ft. (built in 1971)
$/Sq. Ft.: $455
Purchase price: $270,000
Purchase date: 1/2003
On Redfin: 35 days
Description: OPEN HOUSE EVERY FRIDAY FROM 3:00 TO 6:00 p. m. JUST REDUCED $25,000! TURNKEY!!! THIS IS THE BEST BARGAIN YOU WILL EVER FIND IN BELMONT SHORE. SPACIOUS 2 Bedroom 2 Bath Condo on the 3rd Floor 'One block off 2nd St. ' in Belmont Shore. Buyers will Love this one. Upgraded with Remodeled Kitchen and Bath. Master Bedroom with Bathroom and Wall to Wall Closet. 2nd Bedroom has Walk-in Closet. Custom Painting throughout. Large Living Room with Balcony over looking Quincy, just right for that Morning Coffee or Evening Coctail. Current owner rents a space for $50.00 in the parking garage and the space will transfer over to the new owner at the same rate. THIS PROPERTY IS VALUE RANGED FROM $399,900 TO $414,900.
878 square feet is “SPACIOUS”? To a midget wrestling tag-team, perhaps. Other than the “Coctail” typo, annoying Title Case, a decent listing.
Why this property suits me: It’s in a prime location in Belmont Shore (walk out the front door right onto 2nd street), on an upper floor in a decent building, has secure parking, tasteful and simple upgrades, a reasonable HOA fine, and a balcony.
Why I would lose interest: It’s very small at 878 square feet.
Deal breakers: Community laundry, one measly parking spot, and the price, duh.
This area has been largely immune to the dramatic median price drops in LA and Long Beach and I think the reasons are obvious—this is an extremely desirable neighborhood with a considerably higher median income.
Because this is a place I would consider buying (if the fundamentals aligned), let’s run the digits (which I now have to completely re-do because of the price slash--but that's a good thing):
Down Payment: A 10% down payment would factor in at $39,900.
Monthly Payment: Financing the remaining $359,910 at 6% would leave you with an approximate monthly payment (including property taxes and homeowners insurance) of $2600. Then slap on the $167 HOA fine—errr, fee, $50 for a garage space (you must be kidding—I’m paying almost half a million for an apartment and I’m penalized an additional fee to park in my own building? No sweat, street parking in Belmont Shore is a breeze, right?) and we’re looking at a payment of roughly $2800 per month.
Income Requirement: Assuming a 4x income calculation, the annual household income required to buy this condo is $100,000 per annum. Not an issue for a couple bringing in two decent incomes, but with such a small layout it would be very cramped for two. Plus, if you give your partner the one and only parking spot, you’ll be slinging the Explorer around the block for hours looking for a spot on the weekends.
To see how overpriced this condo is, even at it's dramatically reduced price, let’s quickly check local rents in the area and compare it to our $2,900 carrying cost. Whoops, looks like you can rent and get more for less money:
Description: $1950 / 2br - Spacious condo in belmont shore w/parking. Beautiful and spacious 1600 sq ft 2 bedroom, 1 3/4th bath condo. Close to Belmont Shops and Belmont Olympic Pool. The unit features 2 parking spaces, stove top, oven, dishwasher, and new berber carpet throughout.
Now, there’s no denying this rental condo isn’t quite as nice as the Quincy property but it’s almost DOUBLE the square footage (roll that around in your skull for a minute), has TWO parking spots, and is in a similarly prime location. Plus, it’s a whopping $1,000 a month cheaper!
Or check this one out:
The quibblers would argue there are differences in these properties but the overall point is obvious: Prices have a long way to go before they reach parity with local wages and rents.
But enough about those boring rent vs. buy calculations—let’s check the comps! Remember how I described the upgrades for #301 as “tasteful and simple”? Well, what follows is an example in the same building of an “alternative” approach to decorating.
Address: 185 Quincy AVE #202, 90803
Wishing Price: $479,000
Size: 2 beds, 2 baths, 900 sq. ft. (built in 1971)
$/Sq. Ft.: $532
Purchase price: $440,000 (YOWCH!)
Purchase date: 4/2005 (Timing couldn't be any worse)
On Redfin: 45 days
Description: Belmont Shore living at it's finest. This corner unit w/ master suite condo offers custom-lit gourmet kitchen w/ granite counter tops, Neff custom cabinets & all stainless stell appliances wich opens to the spacious custom painted living room. Remodeled bathroms w/ Master Laid tile, new shower enclosures, & new fixtures are some of the additional features the gorgeous unit has to offer. Large balcony w/ view of Quincy & 2nd Street. Walk to everything including 2nd Street fine dining and shops. Low HOA dues!
Who knows what people are thinking when they do this kind of radical personalization to a home’s interior and then sell it as-is. I’m guessing something like: “I have such impeccable taste that this décor and color combination will surely appeal to a wide array of potential buyers.”
In a declining market with a shrinking group of qualified buyers, it’s a bad idea to reduce that group even further by employing a “creative,” “modern” decorating style that alienates more potential buyers. Headache inducing, completely out of place in this building, and more than enough to dissuade all but the most adventurous buyers. The “bathroms” (is that a tub you can burn music onto?) look good, so they’re clearly capable of exhibiting good taste.
So just what in holy hell happened in the kitchen?
Maybe it’s just not my cup of tea. However, I have a feeling there aren’t many tea drinkers out there willing to pay top dollar for someone else’s whimsy.
One look at this “gourmet” kitchen and I know the stainless steel (or “stell” according to this agent) trend is dead dead dead. I always liked the stainless look, but in this application it just looks gaudy. Plus, stainless appliances are entry-level stuff in this price range. Am I supposed to be floored by its mere presence, when practically every property I’ve featured on this site sports it?
Now let’s take a look at the kitchen from #301:
And let’s not ignore the most obvious distinction: Price. A $77 per square foot premium for 22 more square feet, ugly paint, and weird kitchen cabinets? I’ve got bad news for you, my friend. It’s not going to happen.
In fact, I don’t think it’s going to happen for either of these sellers. One look at the sale history and it’s obvious these are both overpriced.
Sep 18, 1996 - $100,000
Apr 23, 1997 - $111,000
Sep 24, 2001 - $187,000
Jan 10, 2003 - $270,000
#202 (get it?)
Sep 18, 1990 - $151,000
Oct 24, 2000 - $165,000
Apr 19, 2005 - $440,000 (the owner from 2000 to 2005 made out like Paris Hilton at Lollapalooza)
Our seller at #202 is in for a lot of pain here. If his upstairs neighbor unloads #301 for the sub-$400,000 asking price (that would be an approximate profit of $100,000 after upgrade costs and commissions—wow!) then it will set the new comp for the building, period.
That means the Smurf-tastic love den’s price will come crashing down $80,000 INSTANTLY. A new comp of $400,000 instantly puts #202 $40k in the hole from what he paid just three short years ago.
Sure, you could argue the quality of the materials in #202 compared to #301 adds a premium (stainless, granite, nicer bathrooms with glass shower doors--there's no doubt), but in this market I can’t imagine the difference is much more than $10,000 to $15,000.
One delusion that I’m particularly fond of is sellers who believe what they spent in upgrades actually translates to a HIGHER property value. That may have been true when anyone with a pulse could get a loan and rampant competition was causing prices to jump every month, but those days are over.
In fact, the days when sellers could upgrade a property and get out what they put in are numbered as well.
We are fast approaching a real estate environment when a $30,000 upgrade translates to only a partial return on investment. Remember, EVERYONE has granite, travertine, and hardwoods—even the lower-priced foreclosures and bank-owned properties competing with these condos.
Lest we forget, the entire comp scenario is assuming that #301 sells for anywhere near the asking price of $399,900. Unless a fool flush with cash and an affinity for falling knives knocks on the door tonight, we’re going to see many more months of price cuts before interest in either of these properties is piqued.
Even worse for #202, his neighbor bought for $270,000 before the bubble inflated prices to ridiculous levels (like, say, $440,000), meaning he: 1) Has equity in the home, 2) Has a hell of a lot more room to negotiate, and 3) Will absolutely sink #202's ship.
Real Estate predictions are like assh*les, everyone has one and they all stink. With that said, unless two miracle buyers magically appear, I can’t imagine either of these places selling for more than $350,000.
Just to put $350,000 in perspective, for #301 that price would still be almost 10% annual appreciation since the 2003 purchase! That’s pretty hefty for a tiny condo with laundry shared with an entire floor and one parking spot.
Plus, since all of the data suggests we have already rolled back to (at least) 2005 prices, meaning the appreciation from the last few years has been wiped out, a price of $350,000 makes better sense. And if you crunch the numbers, $350,000 pretty much puts it in line with local rents, wages, and lenders’ current debt-to-income ratio requirements).
What say you, dear reader?