Wednesday, February 25, 2009
This roach motel has been on the market for roughly 550 days. I repeat, 550 DAYS! Good lord.
It's worth noting this short sale slumdog shit shack was originally listed in August of 2007 for $315,000. Hilarious. Your weed dealer deserves a Medal of Valor.
After that ridiculous wishing price, the seller began slowly cutting the price and spent the better part of a year-and-a-half chasing the market down. ALL THE WAY DOWN.
The current asking price of $149,000 represents a more than 50% price reduction. If by some mountaintop miracle this POS sold today, the loss to the lender would be well in excess of $100,000. If lenders are writing off 100k on 600-square-foot dumps like this, it's no wonder most of the financial system is insolvent! I mean, did they even look at the thing before lending out hundreds of thousands of subprime dollars?
And remember the undercutting neighbor who was asking $129,000 in August '08? Now he's aksing $89,000. Ouch!
It's obvious that this place is going back to the bank. Frankly, I'm shocked that it hasn't already. I'm guessing the only reason it's still a short sale is because the foreclosure/eviction process has become so labrinth-like that the bank is forced to allow deadbeats to live rent-free until they can complete the FC process (my bankruptcy attorney friend told me she has seen families staying in houses a year or longer after they stopped making payments. Filing BK and asking the foreclosing lender to provide the original paperwork can further forestall the process).
By the time the bank ultimately takes it back, they're going to be in even deeper trouble. That's because even if the price was cut in half, I'm still not sure it would sell (the neighbor can't get any love at 89k, after all). Honestly, could this sell at any price to an investor? Who would want to be a landlord in this 'hood?
One year ago I (correctly) predicted:
The willful ignorance of Long Beach sellers will get them through a few more months of insane pricing strategies but as inventory stacks up, sales decline, the Spring Bounce never materializes, the "Stimulus Plan" fails to make a dent, and the only people selling are those who chop prices significantly to meet the dismal economic realities, LB sellers will eventually give in to the same grim reality that their Phoenix brethren have painfully accepted.
I am going to make a prediction: This rat hole will not sell at $300,000, $250,000, or $200,000. In my estimation, this little gem won't so much as get a backup offer for anything more than $150,000. You may think that's a dramatic position, but I'll put my money where my mouth is: I'll put $1,000 on it. Any takers?
Obviously nobody took me up on the bet because the truth was plain to see. Even those whose livelihoods depend on proving me wrong knew I was correct.
But the interesting thing is that I was TOO OPTIMISTIC with my sub-$150,000 prediction. Things have changed dramatically during the past year and Long Beach has crashed much harder in certain areas than expected. It's pretty clear at this point that this place won't sell for anything above $140 per square foot. But is that prediction too optimistic as well?
Only time will provide the answer.
Tuesday, February 24, 2009
Things were actually looking pretty good for the seller because of an apparent willingness to cut the price aggressively.
Unfortunately, the aggressiveness stopped in August, and it resulted in an additional 200 days of wasted time. Pal, if you're waiting for this market to "turn around," you've just been provided with 331 reasons why that isn't going to happen.
This 109-year-old bungalow was apparently "Contingent" (which, per this example, is utterly meaningless until the sale is completed) but the deal fell through. So, after losing a month or two of crucial market time to escrow delays, the home was re-listed four days ago...AT THE SAME FRIGGING PRICE IT SPORTED IN FALL OF '08!
Worse yet, the housing market has completely passed him by while he was dicking around with this misguided "stick to my guns" strategy. In fact, looking at the asking prices of neighboring properties, the market passed this house by at transonic speeds, breaking the sound barrier with such force the seller couldn't hear the market screaming, "FUCK YOUUUUUUUUUUUUUUUUUUUU!"
$199,000 521 Cerritos Ave
0.28 miles 2 bd / 1 ba 624 Sq. Ft.
0.37 miles 2 bd / 1 ba 704 Sq. Ft.
$149,000 1182 E 9th St
0.44 miles 2 bd / 1 ba 600 Sq. Ft.
$89,000 1032 brenner Pl
0.45 miles 2 bd / 1 ba 560 Sq. Ft.
$140,000 1021 Orange Ave
0.54 miles 2 bd / 1 ba 804 Sq. Ft.
$99,900 620 Lime Ave
0.6 miles 2 bd / 1 ba 836 Sq. Ft.
Dude, what on earth are you doing?! You're only undercutting one house in the vicinity (by $100) and he's been molting on the market for 100+ days!
Wake up, buddy. Slap a price tag of $200,000 on it TONIGHT and keep cutting by $10,000 every two weeks until it sells. I know it's difficult to accept that's what it will take, but if you keep this up you'll be looking at even more dreadful comps a year from now. I mean, how much longer are you willing to shell out that $2,500+ monthly payment to "own" before you realize you could rent the next door neighbor's house for half that?
I'm sorry you got caught up in the housing mania and bought this place at the peak for $442,000. I'm sure you had your reasons, and I'm sure you got some terrible advice from those who stood to profit greatly from said advice. And but for the grace of God go I.
HOWEVER, it's time to accept responsibility for your decisions. You made a terrible mistake and you are going to be financially ruined, but you're going to be financially ruined in America. You have every opportunity in the world to pick yourself up and start all over again. Maybe you'll even be a homeowner again one day.
But you're two months shy of a year on the market. It's time to accept reality and move on with your life.
Thursday, February 19, 2009
Feb 17, 2009 Relisted -- -- Oodle #876297025
Feb 04, 2009 Off Redfin -- -- Oodle #876297025
Jan 18, 2009 Relisted -- -- Oodle #876297025
Jan 04, 2009 Off Redfin -- -- Oodle #876297025
Dec 17, 2008 Relisted -- -- Oodle #876297025
Dec 05, 2008 Off Redfin -- -- Oodle #876297025
Nov 15, 2008 Relisted -- -- Oodle #876297025
Nov 13, 2008 Off Redfin * -- Inactive Oodle #2
Nov 11, 2008 Off Redfin -- -- Oodle #876297025
Nov 11, 2008 Listed * -- Inactive Oodle #2
Oct 27, 2008 Relisted -- -- Oodle #876297025
Oct 26, 2008 Off Redfin -- -- Oodle #876297025
Oct 08, 2008 Price Changed $365,000 -- Oodle #876297025
Aug 06, 2008 Off Redfin * -- Inactive Oodle #1
Aug 05, 2008 Listed * -- Inactive Oodle #1
Jul 21, 2008 Price Changed $369,900 -- Oodle #876297025
Jun 03, 2008 Relisted -- -- Oodle #876297025
Jun 02, 2008 Off Redfin -- -- Oodle #876297025
Apr 23, 2008 Listed $375,000 -- Oodle #876297025
WTF is going on here?
And after 302 days of bullshit, the price has only come down a measly 10 grand? A pathetic 2.75% cut in 10 freaking months?! This has to be a joke, right?
For all the crap I give to lazy realtors on this site, I have to say this For Sale by Owner listing makes a pretty good case for the services listing agents provide. A realtor would represent the best chance of some sense being slapped into this guy.
Address: 1418 E Florida St #1, 90802
Asking Price: $365,000
Year Built: 1981
Size: 2 beds, 2 baths, 964 square feet
$/Sq. Ft.: $379
HOA Fee: $150
Purchase price: N/A
Purchase date: N/A
On Redfin/Owners.com: 302 days
Down Payment: $73,000
Monthly Payment: $2,100
Income Requirement: $104,000
Description: Walking distance to Downtown Long Beach and Alamitos Beach area. Newly upgraded kitchen and bar area! Bamboo floors added on the main level with carpet in the bedrooms. Vaulted ceilings in bedrooms. Master bedroom has oversized window providing natural light. Upgraded master bath with tile flooring. Tankless water heater new as of 2006 provides endless hot water. All stainless steel appliances included!
This is a tidy little place, but anybody who either 1) Reads the Long Beach Housing Blog, or 2) Has a pair of working eyes, can figure out this tremendously tiny townhome is incredibly overpriced. But just how overpriced?
Here's all you need to know: Income Requirement: $104,000
Sorry, Charlie. Not in this neighborhood.
Other than this dumbshit at the Diplomat (skewered here), this is the highest asking price in the area by a long shot:
$289,999 1449 3rd St #303
0.05 miles 2 bd / 2 ba 858 Sq. Ft.
$229,900 1449 E 3rd St #204
0.05 miles 2 bd / 2 ba 810 Sq. Ft.
$299,900 1515 E Appleton St #304
0.13 miles 2 bd / 2 ba 780 Sq. Ft.
$279,900 1625 E Appleton St Unit 2a
0.18 miles 2 bd / 2 ba 987 Sq. Ft.
$250,000 1187 E 3rd St #207
0.18 miles 2 bd / 2 ba 1,041 Sq. Ft.
$269,000 1187 E 3rd St #311
0.18 miles 2 bd / 2 ba 1,039 Sq. Ft.
And let's not forget the competition in the same building, undercutting Count Walter VonWishfulthinking here by nearly $100,000:
$275,000 1418 E Florida St #3
0 miles 2 bd / 2 ba 964 Sq. Ft.
Good luck with your Wishing Price, pal!
Who knows what this guy is thinking. Running up and down those three flights of stairs must be reducing the amount of oxygen to his brain. Oh well, just another day of greed and delusion in the LBC.
I'm off to hit the slopes in Park City with some close friends, so no updates until next week. On that note, have a great weekend and as sappy as it may sound, I leave you with a quote from author Garrison Keillor:
"Even in a time of elephantine vanity and greed, one never has to look far to see the campfires of gentle people."
Sunday, February 15, 2009
After 220 days on the market with absolutely no interest, this seller finally decided to downwardly adjust their ridiculous asking price of $325,000 to $215,000.
Address: 445 W 6th St #305, 90802
Asking Price: $215,000
Year Built: 1988
Size: 2 beds, 2 baths, 865 sq. ft.
$/Sq. Ft.: $249
HOA Fee: $235 (they didn't list it, I had to research it on my own--GREAT SALES TECHNIQUE!)
Purchase price: $78,000
Purchase date: 2/2002
On Redfin: 221 days
Down Payment: $43,000
Monthly Payment: $1,300
Income Requirement: $61,000
Description: Super Clean condo, Very Well Maintained! 2 bedrooms & 2 bathrooms. Spacious living room with fireplace. Breakfast bar in the kitchen. Nice balcony with a great view of the city lights. Great community. Perfect for first time buyers! Submit all offers.
221 days and you only include one photo? And it's a fuzzy exterior shot taken from across the street? Dude, are you sure you're actually trying to sell this place?
Because your previous asking price of $325,000 sure didn't indicate a true desire to offload this property either.
Man, a $110,000 discount? That right there my friends is the very definition of capitulation. The question is: Will the price cut be enough to move this tiny apartment?
In a word, no.
Despite the fact that it is almost at rental parity and has reasonable income and down payment requirements, $215,000 isn't going to cut it. It's a matter of competition.
Check out these nearby 2 bed/2baths:
645 Chestnut - $185,000
535 Magnolia - $179,900
403 W 7th - $184,000
And last but not least, we have some friendly in-building competition:
445 W 6th - $180,000
This tidy little neighboring unit is undercutting Sleepy McOblivious here by 35 grand! Our seller, who I imagine is quite proud of himself for his ingenious plan to cut the price and "start a bidding war" is in for another disastrous 221 days unless he knocks off 40 Large TONIGHT.
The good news is that even if he ends up chasing the market down all the way to the bottom, he's not going to lose a dime (assuming he didn't refinance and HELOC the thing to death). He bought in 2002, before the bubble really got going in earnest, for $78,000. The total monthly nut is under $700! Dude, why are you even bothering to sell--especially in this ever-declining environment?
Actually, I'm starting to suspect he refinanced and HELOCed the thing to death.
Also, did you notice how many units are in this complex? 400! Good lord. Is that even possible?
Unless buying is substantially cheaper than renting, I can't think of one compelling reason to buy one of these apartments.
And after 200+ days on the market, it looks like nobody else can either.
Wednesday, February 11, 2009
Address: 1763 Appleton St #1, 90802
Asking Price: $375,000
Year Built: 1959
Size: 2 beds, 2 baths, 1,146 sq. ft.
$/Sq. Ft.: $327
HOA Fee: (Not listed, so we’ll assume $200)
Purchase price: $510,000
Purchase date: 5/2006
On Redfin: 16 days
Down Payment: $75,000
Monthly Payment: $2,200
Income Requirement: $107,000
Description: Beautiful 2 master suite and bath condo with Tuscan interior just a few short blocks from the ocean. Bright upgraded kitchen with tile/slate floors and newer appliances. Oversized living room adjoins elegant dining room alcove. Organized laundry lcoset including pantry. Gorgeous refinished honey-toned oak wood floors. Wonderful, resort-like patio. Clos to shopping, beaches restaurants and freeways.
What’s a “lcoset?” I think I took those after my wisdom teeth were pulled.
And for those of you who were hoping this apartment was close to "shopping, beaches restaurants and freeways"…sorry but it’s only “clos” to those things.
Under “Area,” the listing agent claims (lies) that it’s in “Belmont Heights/Alamitos Heights.” Rrrrrrrrrrrrright. Nice try, pal, but you’re not in Belmont Heights. "Clos" but no cigar. Quit trying to glom off a highly-desirable neighborhood YOU’RE NOT IN.
And I think it goes without saying that this place will require a complete re-paint. I mean, just look at some of these color choices:
Ugh. Did Rainbow Bright puke in here?
I like the two garage spaces and the square footage of this short (squat) sale, but $375,000? If the bank believes for one moment it can nab that kind of money for this place, in this economic environment, it's going to be a really, really long year for them. Hell, with all those computers in the bedroom, you would think the seller could do a little research and share it with the bank.
And then we have the bathrooms. My god, look that plant!
The pot is bigger than the toile--wait a minute...just what are they fertilizing that thing with?
You know what that thing reminds me of?
And then we have the other bathroom with a shower door built for those who just returned from an internment camp. I mean, can a normal person get in there without turning sideways?
The strangest thing about this place is how unbelievably cramped it looks for 1,100+ square feet. Perhaps it's the "Tuscan" interior, or maybe it has really small bedrooms, or simply too much crap strewn about, but every room looks really small.
To the bank’s credit (assuming the bank actually approved this asking price) the $375,000 ask represents a -$20,000 haircut just two weeks after being listed.
Sadly, whether the bank realizes it or not, it's not nearly aggressive enough. Even if it hacks off $10,000 a week for the next two months, this baby isn't going anywhere. I mean, just look around!
For example, this poor sap has been rotting on the market for 198 days, begging for a measly $279k.
Sure, it’s smaller, has community laundry and one less garage spot, but the overall point is: If this guy can’t get $279,000 ($294 per square), what chance in holy hell does the bank have in getting nearly $100,000 more for a largely comparable unit?
Anyhow, our oddly-decorated color wheel nicely encapsulates the idiocy of The Great Housing Bubble:
Dec 30, 1993 - Sold $90,000
Jan 29, 2002 - Sold $195,500 (10.1%/yr)
Jan 30, 2004 - Sold $292,000 (22.2%/yr)
Mar 24, 2005 - Sold $357,000 (19.1%/yr)
May 01, 2006 - Sold $510,000 (38.2%/yr)
Jan 26, 2009 - Listed $395,000
Feb 10, 2009 - Price Changed $375,000
Just check out ’02 – ’06. Not including commissions, more than $300,000 in profits changed hands. On this little piece of crap apartment!
And it’s not too difficult to figure out who the bagholder is. The current short seller, for some unknown reason, decided to pay $157,000 more than the previous owner slapped down just 14 months earlier.
Really, dude? You didn’t think there was anything odd about 38% annual appreciation?
Nothing strange about paying nearly $3,500 a month* for A FREAKING APARTMENT?! REALLY?
Who is your financial advisor? MC Hammer?
Assuming the bank could find someone idiotic enough to pay this 2005 price when the only properties selling in Long Beach are way into 2004 pricing (and rapidly approaching 2003), the loss to the bank would be $135,000.
That’s not too bad, especially considering some of the insane losses we’ve seen, but that loss is predicated upon 1) The bank finding a mentally-impaired buyer willing to pay the offensive, wholly-detached-from-reality (realty?) asking price of $375,000, and 2) The bank having their shit together enough that it would approve that Christmas gift of a price before the bank gets the keys back in a manila envelope.
Yyyyyyep. I’m sure the stars will align just perfectly to make that happen.
So, when this place inevitably goes back to the bank (sorry, but this place doesn’t exactly look like the home of an individual or couple making the $145,000 per year required to reasonably afford it--there's no way they can keep up with this insane mortgage), and the delays inherent in NOD/NOT filings, foreclosure, eviction, auction, and marketing and re-listing this place as a bank-owned property are accounted for (probably another six to eight months) it will be a much different world than the fantasy land the bank is currently living in.
Come this fall, assuming the bank gets aggressive once it takes ownership, it will be LUCKY to get $260,000.
However, if the bank isn’t aggressive and continues to deny reality, it will have to wait through a very long winter and hope and pray for $220,000 in 2010.
And I’m being optimistic. Just take another gander at the pictures…besides the wood floors (pretty nice, btw) give me one noteworthy upgrade that makes this property anything but an average, median apartment. Just one.
This is an mildly desirable property in an undesirable neighborhood, and asking $327 per square foot is a joke. If they don’t get serious soon, I smell trouble for this exercise in retina damage.
*assuming a reasonable HOA fee, 10% down (which in 2006 would have been quite rare), and a 6% fixed-rate mortgage (which would have been freaking miraculous)
Sunday, February 8, 2009
According to the ever-informative Calculated Risk:
The tax credit is 10% of the purchase price up to $15,000.
The tax credit is for one year (from date of enactment).
The credit is available for both new and existing home purchases.
This is for primary residences only, and the home must be owner occupied for two years after purchase.
There is no income cap (the $7,500 tax credit had an income cap of $150,000 per year).
Unlike the $7,500 tax credit, the new credit does not have to be repaid over time.
The credit is limited each year to the amount of taxes paid in any one year (with the $7,500 tax credit, buyers received the entire credit and a refund if the $7,500 was greater than taxes for the year)
Buyers can split the $15,000 into two separate tax credits to be taken in successive years.
Some are lamenting the "real" cost of this cash giveaway, some argue that the loss of equity between buying now and the eventual (inevitable) bottom will make $15,000 look like a fourth grader's milk money, some say sellers will simply up their asking prices by 15k to compensate for this "free money," but I'm choosing to look at this optimistically. Despite its flaws, ultimately this is a good thing for buyer psychology.
Regardless of what this will cost my kids and grandkids (and me), if they can also jam through the 4.5% government-backed interest rate on a 30-year mortgage, you'd quickly run out of excuses for not contemplating buying in the next 12 months. Hell, it's our money anyway, right?
So, to continue with my optimistic outlook, I want to show you a newly-listed property in Belmont Shore that should give anyone who believed they would be "priced out forever" a glimpse into the future.
Address: 210 Park Ave, 90803
Asking Price: $470,400
Size: 2 beds, 2 baths, 1242 sq. ft. (built in 1925)
$/Sq. Ft.: $379
On Redfin: 6 days
Down Payment: $94,900
Monthly Payment: $2,600 @ 5.5%
Income Requirement: $134,000
Description: Great 2 bedroom 2.5 bath home includes a fireplace in the living room and separate den. Wood Flooring throughout the entire home, with granite counters in kitchen. Walking distance to the Beach.
I wish there were more photos. The wood floors and granite makes it sound like it's updated inside, but we have absolutely no way of knowing that. And judging by the rough exterior condition, it's a crapshoot.
But what I want to point out is that a house (albeit a shabby one) with a garage, 1,200+ square feet, and a few upgrades is listed for $379 per square in Belmont Shore! I mean, come on...that's pretty exciting.
It's still not even close to fundamentals from a rent vs. buy or household income perspective, but it's a hell of a lot closer than some other beaters I've seen in the Shore.
Assuming the interior isn't a complete horror show, I think this will be snapped up pretty quickly. And if it is, it will lead the way down for nearby sellers of less desirable properties. Naturally, there are going to be some pissed off neighbors when this place sells, and I have a feeling I'm not the only one anxiously waiting to find out the final sales price.
Friday, February 6, 2009
In this post I updated you on a kick-ass loft that suffered from WTF pricing when it was originally listed in June 2008. The Housing Kool Aid buzz has slowly worn off, and now we're looking at an asking price nearly 20% lower than the original.
I'll recap so you don't have to look through all the old posts:
Jun 20, 2008 Listed $549,000
Nov 17, 2008 Price Changed $553,000 ("SHORT SALE APPROVED AT $553,000!" )
Jan 01, 2009 Price Changed $425,000
Jan 07, 2009 Price Changed $395,000
Feb 05, 2009 Price Changed $374,900
That right there is a beautiful portrait of what it's like to chase a horrendous market down. Each price reduction is like a David Beckham penalty kick right to the family jewels.
And, to reiterate my point about buying right now being a guaranteed rusty knife-catch, please imagine for a moment that you bought this place in November for $553,000. You would have lost nearly $200,000 in property value in TWO FREAKING MONTHS. Do you have any idea how long it would take you to build that value back up? We're talking 30 years just to break even on the place.
Or what if you bought on January 6th? If you just waited one day, you could have saved yourself enough money to buy a new car with cash.
Don't listen to anybody that tells you we've hit a bottom. Print out this post and carry it around with you if need be! Everybody is eager to call a bottom right now, but Long Beach properties like this are a prime example of why it makes very little sense to buy any property right now--especially one that diverges from basic investing fundamentals.
Considering the $175,000 bloodletting (in less than 90 days, mind you), let's update the listing and see how close we are to said fundamentals:
Address: 207 E Broadway #301, 90802
Asking Price: $374,900
Size: 1 beds, 2 baths, 1310 sq. ft. (built in 1925)
$/Sq. Ft.: $286 (down from $422 last time we checked on it)
HOA Fee: $327
On Redfin: 231 days
Down Payment: $74,980 (from $110,600)
Monthly Payment: $2,300 @ 5.5% (from $3,700)
Income Requirement: $107,000 (from $158,000)
Description: Gorgeous south and west facing corner unit loft in the Historic Insurance Exchange Building! True loft living with open loft layout, exposed ceilings, gorgeous blond wood floors and floor to celing windows with city views! Unique floorplan, over 1300 square foot footprint with 1.5 baths, master bath with dual vanity, jacuzzi tub and two person shower. Enjoy additional square footage and privacy from the custom built-out sleeping loft. Central AC and heat, private storage room, secured parking, gourmet kitchen with granite countertops and viking appliances. One of a kind loft in one of the most well designed and sought-after loft conversions downtown.
Nope, still no dice. No way this one-bedroom rents out for $2,300 a month.
So have fun chasing that market down some more, guy! We'll be sure to get you an ice cream cake on your one-year anniversary.
Wednesday, February 4, 2009
Address: 140 N Claremont Ave, 90803
Asking Price: $739,900
Year Built: 1925
Size: 2 beds, 1 baths, 957 sq. ft.
$/Sq. Ft.: $773
Purchase price: $899,000
Purchase date: 8/2005
On Redfin: 96 days
Down Payment: $147,980
Monthly Payment: $4,000
Income Requirement: $211,000
Description: JUST REDUCED! REDUCED! $50,000. This is a great LOCATION, don't let the square footgage keep you away from seeing this Sunny and Bright Home on a Corner Lot just Steps from the BAY. This Unique Location has BAY VIEW from the Kitchen, Backyard and Sideyard. There's Nothing like it in the Shore. Not only do you have the Fantasic View, but the Owners have made Significant Upgrades, such as: Remodeled Kitchen with Stainless Steel Appliances, Copper Plumbing, New Mahonaney Wood Floors Throughout, Double Hung Windows with Low-E Insulated Glass, Remodeled Bathroom, Crown Molding, New Roof, New Awnings, Freshly Painted Inside and Out, Sprinkler System and last but not least a Security System. Property has a single car detached garage, but has room for 3 parking spaces. Because of this Location and the View, this Home has Great Potential for Adding on and Doubling your Value.
Honestly, I think this is the worst, laziest, most incredibly muddled, woefully error-filled listing description I’ve ever featured on this blog.
If I were to parody a “Typical Illiterate Realtor” and write a jokey listing description, I don’t think I could do a better job.
You’ve got inexplicably repeated words (“REDUCED! REDUCED!”);
Alarmingly capitalized words (“This is a great LOCATION.”);
Horrific misspellings (“footgage” “Fantasic,” “Mahonaney”)
And the pièce de la résistance of random, wholly unnecessary Title Case (too many examples to list).
Good God, man. Have you no pride in your work? Those 96 days haven’t blessed you with 15 spare seconds to have a fourth-grader skim over your sad little screed?
And as a closer we get this beaut’: “Because of this Location and the View, this Home has Great Potential for Adding on and Doubling your Value.”
Unless you add on four more stories and a Condor enclosure, I don’t see how this place could double in value anytime before 2040. I’ll give you three guesses who doesn’t get it…Go!
Ugh. Anyhow, back to the actual property. Lots and lots of upgrades, yet somehow it doesn’t look like a place with that much scratch sunk into it. Weird right? It looks very outdated and, well, like it was built in 1925.
And that explains why, despite these improvements, it’s still languishing on the market.
These sellers really screwed the pooch. They bought in August 2005 for $899,000, sunk God knows how much into a new roof, new copper plumbing (not cheap), a new (tiny, old-looking) kitchen, crown molding, etc…and now they’re trying to unload it for a 2003-equivalent price. If you assume they can actually sell it at this price and factor in improvement costs and commissions, the total loss on the property will be at least -$250,000. BRUTAL.
By the way, what are “Double Hung Windows with Low-E Insulated Glass”? I don’t see any updated windows whatsoever. I mean, check out the screen door! Somebody’s pulling a fast one.
The one silver lining is that the previous owner, who obviously left this place in shitty condition to necessitate such thorough updates and repairs, bought in 2001 for $393,000 and sold to these suckers for MORE THAN TWICE WHAT HE PAID JUST FOUR YEARS EARLIER!
Nice work, pal. I hope instead of buying an overpriced replacement you saw the ridiculousness of 22% annual appreciation, socked away your windfall into a 4.5% CD and rented a decent place overlooking the water. Man, I’d sleep like a drunken baby every night, dreaming of doing the backstroke on mountains of gold coins like motherfuckin’ Uncle Scrooge from Duck Tales.
I’ve thoroughly documented Long Beach’s steady decline from 2007 prices...
down to 2006 prices...
down to 2005 prices...
down to 2004 prices...
...and now it seems we are about to kiss ’04 goodbye as well. All in the matter of a year and a half! Next stop, 2003…and nobody knows the final destination of this freight train.
I mean, if this well-located (albeit kind of shabby-looking) place, spitting distance from the sand, can’t get action at what is quickly approaching a 2003 asking price (they’ve been asking $160k less than the 2005 price since FREAKING NOVEMBER and still no interest!), then what chance of success do LB sellers in less desirable areas that are still asking 2004-era asking prices have?
Answer: Very little.
Once the Great Housing Bubble has been fully deflated, those that chased the market down in an effort to deny the cold, hard truth that their decision to overpay for property during the housing frenzy was the financial equivalent of shitting the bed, will collectively kick themselves in the ass for not getting more serious about price reductions when the writing was on the wall and they could have still gotten out before financial ruination came knocking.
The sound of that collective ass kicking, my friends, will be deafening.
Monday, February 2, 2009
Nicaragua, as I'm sure you're aware, is a very poor country. The people were incredibly nice and were laudably patient as I stumbled my way through poorly-conjugated verbs and an endless stream of "come se dice?"
When you see how Nicaraguans live, you gain instant perspective about our lives in America and just how ridiculously fortunate we are. I mean, deciding between granite and Corian counter tops is a legitimate, keep-your-ass-up-all-night concern back home.
"Damn it, Bryce, they're out of the maple cabinets! Now our stainless steel fridge won't look right! Why, God, whyyyyyyyyyyyy!"
Nicaraguans, on the other hand, are at their happiest when they have a glass of potable water.
For those of you who believe I'm too hard on used house salesmen, loose lenders, gold-bricking government "leaders" and materialistic greed-heads, you have to realize that to some of our fellow humans, the Great Housing Bubble and our unchecked materialism is a complete fucking joke. I criticize HELOC-abusing pricks who tried to live like millionaires, but to most Nicaraguans WE'RE ALL FREAKING MILLIONAIRES.
Believe me, this isn't some anti-materialist conversion. I haven't sold my car or my suits, and I haven't donated all of my down payment money to charity--I'm still a Southern California boy bitching about condos that don't feature in-unit laundry.
My point is that this site is all about perspective. I don't want anyone to get the idea that this blog is dedicated purely to laughing at the misfortunes of others. Well, it is dedicated purely to laughing at the misfortunes of others--but those that deserve the ridicule (either through reckless lending, taking on insane debt-loads, or acting like a holier-than-thou prick when I run into you at Schooner or Later and you brag endlessly about the "toys" selling used houses got you).
And before someone carts out the guy who got cancer and was "forced" to take out HELOCs to pay bills or the single mother who lost her job and could no longer keep up with her mortgage as examples of why we shouldn't have senses of humor, I'll remind you that they're not being taken out back and shot. They're just calling U-Haul and moving their shit to an apartment they can afford. And the life they're living in rental unit #38B is 80,000 times better than the lives being lived in the plantain fields of Nicaragua.
With that said, check out this disgusting shit pile!
Address: 3245 Santa Fe Ave #68, 90810
Asking Price: $49,900
Size: 2 beds, 1 bath, 730 sq. ft. (built in 1965)
$/Sq. Ft.: $68
HOA Fee: $215
On Redfin: 79 days
Down Payment: $9,980
Monthly Payment: $500 @ 5.5%
Income Requirement: $15,000 @3.5X
Description: Affordable 2 bedroom Westside area condo. Located in a security complex with nice landscaping, this property is in need of a cosmetic upgrade. Priced to sell.
First of all, a $215 HOA fine? WTF for?
Second, at $68 per square foot, this is one of the least expensive properties in Long Beach. And there is a distinct reason why.
"In need of a cosmetic upgrade" is sure one way to describe the filth and horror about to befall us. I guess he just wasn't feeling honest enough to say the truth:
This dump is awful enough to make your vomit vomit.
Kids, get on your hazmat suits because we're going in!
Ugh. I can smell it from here. This place is truly, truly awful.
And, the agent included one of my favorite listing photo trends:
And it's a toss-up for the Most Meaningless Listing Photo Award, so I'll let you decide:
Photo #1: Just in case we didn't believe them about the unit number.
Photo #2: Assuming you can afford a car, I guess it's nice to visualize where you'll be parking it?
Photo #3: Safety first?
And although the following picture may initially seem pointless, a security door in this neighborhood is more desirable than a rock pool in Newport Coast.
Hell, you might need two!
Anyhow, this borderline tenement housing is obviously only intended as an investment property. People who live in these conditions aren't concerned with "building equity" or climbing "The Property Ladder" (unless by "Property Ladder" you mean eventually living in a place that doesn't involve roaches shitting in your coffee mug)--they just want cheap rent.
The good news is that with a monthly nut of only $500 (40% of which is your HOA fee!), as an investor you would easily be cashflow positive on this one-step-up-from-a-cardboard-box apartment.
But it's clear that you'll have to dump $10,000 to $15,000 into it right away to keep the health inspectors away. Plus, I very seriously doubt you could get financed on this deal, so it's most likely going to be an all cash transaction.
I guess the question is, if there's still no action at this rock-bottom price...is there any price at which this place will move?