However, just like any desirable community, there are drawbacks. For one, properties are tiny. Some would say that's the price you pay for living in such an in-demand area and they would be correct. Personally, it's a concession I'm willing to make to live in the area.
Two, parking is horrendous. If you get home late at night on the weekend, I hope you're not wearing heels because you're going to hoof it from your parking spot (assuming you're lucky enough to unearth one) for blocks and blocks and blocks. As with most beach communities, properties with a garage and/or driveway are a hot commodity.
Which brings us to our next drawback: property values in Belmont Shore have been, and will continue to be, extremely expensive.
I featured this property because of its time on the market. Despite an expected premium in this 'hood, apparently prospective buyers are voting with their wallets and nobody's biting. According to Redfin, 204 Nieto has been on the market for 328 days. What are you supposed to give for a one year anniversary? Stationery? Does a lowball offer written on my agent's letterhead count?
Anyhow, as some people threw in the towel and pulled their properties off the market (ostensibly because they expect a return to bubble prices), this seller persevered and kept on searching for that buyer. You have to respect that kind of temerity.
Address: 204 Nieto, 90803
Asking Price: $829,000
Size: 4 beds, 3 baths, 1502 sq. ft. (built in 1915)
$/Sq. Ft.: $552
Purchase price: $879,000
Purchase date: 12/6/2005
MLS#: P561637
On Redfin: 328 days
Description: Live in the Heart of Prestigious Belmont Shore! 2nd Street's Unique Shops, Restaurants and Coffee Shops are Steps Away! Enjoy a Short Stroll to the Beach to Watch the Sunset. This is a Beautiful Craftsman Home w/ Hardwood Floors and has been Completely Updated. Best of all you Benefit from the Extra Income the One Bedroom Rental Unit brings in every Month. This Home is Georgous and a Must See!!
A few notes about the listing:
- What's Up With The Title Case?
- This "Georgous" house has not been "Completely Updated." Not even close. I see hardwood floors, but I also spy cheap bathroom fixtures and shower curtains (Really? Shower curtains? In an $800,000+ house?!).
- According to the realtor, the best part is "you benefit" from becoming a landlord! Just what I've always wanted to do after buying a nearly one million dollar house! And believe me, you're going to need that extra income.
Down Payment: A 10% down payment would run you $82,900. Gulp.
Monthly Payment: Financing the remaining $746,100 at 6.5% would leave you with an approximate monthly payment (including property taxes and homeowners insurance) of $5500. Factor in the tax refund and the "benefit" of being a landlord, and you're at approximately $4,000 per month.
Not insane if you're pulling in six figures, but what if, God forbid, something happened (divorce, illness, etc.) and you had to rent your home out? I'll be generous and say you could rent the main property out for $2,300 a month. Add the additional income from landlordin' the back house, and you're at around $3,300 a month. At a minimum, you are at a negative monthly cashflow of -700 bones. That my friends, is what you call a poorly performing investment.
Income Requirement: Assuming a 4x income calculation, the annual household income required to afford this little buddy would be in excess of $200,000 per year (by the way, median household in this area is $71,028/year). Do you imagine a couple making multiple six-figures is looking for a tiny house with flimsy closet doors leading to the master bedroom? Ah, I nearly forgot this is "Prestigious Belmont Shores."
According to the past sales information (which can be woefully inaccurate), this property was purchased for $879,000 in 2005. That's a $50,000 haircut in two years. Ouch! Assuming 6% in realtor commissions, and making the preposterous assumption this place sells at the current asking price, this seller actually stands to lose nearly $100,000.
Upon closer inspection of the sales data, it gets more interesting. The sale previous to the '05 sale (at the peak of the housing bubble) was for $165,000 in 2001. Typo? Could be. Perhaps the place was a termite-infested dump in '01 and they pumped some money into fixing it up over the years. However, I don't see any significant upgrades to justify that kind of rampant appreciation.
What does it tell you about the confidence in their "Completely Updated" claim, when they are afraid to even post a picture of the kitchen? Maybe they're withholding their best pictures from us to ensure a "wow factor" when you see the property for yourself.
Either way, this seller expects you to believe this property appreciated more than 40% per year for the last seven years. Not effing likely.
Seems to me this poor soul bought at the peak, clearly under the influence of the mantra "real estate never goes down," and is looking for a greater fool to jump in and ride the depreciation wave down for them.
Without a doubt, this "Prestigious" neighborhood is very close to the beach and therefore will ALWAYS command a price premium. However, the days of 20% yearly appreciation (let alone 40%) are over and buyers who didn't get caught up in the hype of the recent housing bubble are far too educated, informed, and skeptical to pay 800k plus for this cute, but incredibly unimpressive beach bungalow.
But I don't want to discourage this seller from fighting the good fight. Seller, don't worry, I'm sure that magical buyer will materialize. Don't get down on yourself as the anniversary candles are lit, and whatever you do, don't lower the price. The only thing those 300+ days on the market mean is that your price is totally reasonable, but prospective buyers have yet to realize Long Beach is special and immune to the laws of supply and demand, restrictive lending standards, and housing bubbles.
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