Thursday, January 24, 2008

Temerity, Grit, and Possibly Brain Damage

By the way, quick shout out to Redfin. Not only is this invaluable research tool shedding light on the housing insanity we’ve just experienced in California and nationwide, but, like rings on a tree stump, it can tell you a lot about individual properties and their owners.

This Redfin listing tells us that temerity, grit and possibly brain damage are the three essential elements required to continue on the disastrous path this poor seller has chosen.

Address: 2236 San Vicente Ave, 90815
Must Be a Really Good Weed Dealer Next Door Price: $645,000
Size: 4 beds, 2 baths, 1506 sq. ft. (built in 1953)
$/Sq. Ft.: $428
Purchase price: $585,000
Purchase date: 10/2005
MLS#: P527330
On Redfin: 548 days (!)
Description: Beautifully Remodeled Los Altos Home, Upgraded Dual Pane Windows & Elec. Service, Polished Hardwd Floors, New Custom Paint in/out, New Fixtures, Upgraded Base Molding, New Kitchen-Maple Cabinets-Stone Counters-Appliances-Recessed Lighting-Tile Flooring, Newly Remodeled Bathrooms, 4th Bdrm is Familyrm/Office OWN Entrance used for Separate Guest Quarters, Copper Plumb, Patio area, Laundry Rm, Newer Roof, Room to Add-on. .. EASY TO SHOW NOW. .. Seller may consider lease option call for terms. .. Sellers May Consider Renting/Lease' See remarkes & /or Call For Informaton.

Forget about the spelling errors and misguided abbreviations, check out the Days on Market! You read that right, folks: 548 days.

Well over a year and a half rotting on the MLS, sticking to their delusional guns about the value of their bomb shelter of a house.

Interestingly, most of the sellers in this area are also asking peak-o-the-bubble prices for their tiny working-class homes. I guess being in lock-step solidarity with their equally delusional neighbors allows them to justify insulating themselves from reality, and makes them comfortable with a block full of 180+ day listings.

Admittedly, I don’t know much about the area other than the median income is $71,686, it’s adjacent to schools and CSULB, and smog-huffing distance from the 405. For all I know it’s the landlocked, freeway-close Naples, but I highly doubt it.

The high median income certainly indicates house prices in his zip code would be higher, so I will do some more investigating. However, it doesn’t take intimate familiarity with the neighborhood to conclude this particular shoebox is ridiculously overpriced. Days on Market trumps all.

I mean, what is this seller thinking?

“Don’t worry, fellas. 548 days on the market don’t mean nothin’. This neighborhood is special. The only reason we all ain't sold yet is because this lil' time-warp slice of Pleasantville is such a well kept secret. Why, I reckon it takes a real sophisticated individ'ule to find this little Eden on a map. But I got a feelin’ this year is our year!”

If not, there’s always 2011.

You have to give him credit though. According to the listing he was generous enough to reduce his original asking price of $719,000. Sweet Lord, that’s the funniest thing I’ve heard since Jessica Alba demanded to be taken seriously as an actress.

By the way, he gave himself a $65,000 haircut and still no takers. What does that tell you?

Sigh, it's almost too depressing but let’s crunch the numbers:

Down Payment: (10%) $64,500.
Monthly Payment: $4,100.
Income Requirement: $161,250.

We already established that the median income for this area is more than 70 Large per year, which is high compared to most parts of Long Beach. However, even at that high income, a majority of buyers STILL can’t afford this blast from the past. Not to mention the new sucker--er, buyer will have to qualify for a jumbo loan. Unless of course, they have $220,000 in their sock drawer.

And given that we’re approaching the two-year anniversary, the few people who could actually qualify for a loan on this little slice of heaven have voted with their wallets.

My spidey senses tell me this seller got caught up in the speculative bubble, believed the horsesh*t about “Real Estate Always Going Up”tm and bought a run-down house at the peak with the hopes of fixing it up and flipping it for a hefty profit. I don’t see how you can look at the property information and conclude otherwise.

Plus, he bought in October 2005 and tried to sell in the summer of ’06. Sounds to me like a flipper with disastrous timing got caught holding the bag.

If this seller gets his asking price, after commissions he will make a profit of about $21,000. But, judging by the looks of the rudimentary “upgrades,” I’d say he put in almost exactly $21,000 fixing this bread box up.

I'm not a contractor, so how do I know this? Do you wonder why he hasn’t moved the price lower than $645,000 since that hilarious $719,000 attempted money grab? He wants to cover his costs and get the f**k out of dodge:

$585,000 - Purchase Price:
$38,700 - 6% Commission:

$21,300 - Renovations
$645,000 - Asking Price (Wow! Magic!)

I hate to be the one to tell him this, but the odds of him getting out at break even are about as good as me pooping gold bricks.

And then there’s the backup plan:

“Seller may consider lease option call for terms. .. Sellers May Consider Renting/Lease' See remarkes & /or Call For Informaton.”

By the way, what’s an “Informaton”? Some kind of automated real estate kiosk at the mall?

According to Craigslist, to rent a comparable home in Los Altos, it will run you about $2,200 a month. That means our seller would bleed cash to the tune of $1800 a month. If he does that for another 548 days, he stands to lose more than $30,000.

Seems to me he should save himself the hassle, price this brick top competitively, and never try his hand at real estate flipping again. But someone with this much temerity, grit, and possibly brain damage surely knows what he’s doing.


  1. I think the outside of this house has sort of a 1950's vibe going for it. The interior shows some upgrades. Still, who's going to pay $645k for vibe and upgrades? Not I.

    Re your previous blog entry on comp killers: 2241 Fanwood, just one block over from this property, sold for $534k in Dec '07 - more than $100k under 2236 San Vicente's list price.

  2. Genxer,

    Thanks for the input and the on-the-street info re: Fanwood. I'm planning on driving through this neighborhood to see for myself what this pricing is all about.

    With the federal government bailing out greed heads--I mean, stimulating the economy, prices like these may actually keep!

    Having the federal government insure larger loans may actually promote this insane pricing. It will also increase the buyer pool--not by making houses more attainable--but by once again allowing people to buy way over their heads.

    However, the plan might only prolong the inevitable--making the eventual reality check that much more devastating.

    I hope we can avoid a recession and I'm glad the government is finally doing something, but I think the economic issues are too big and too widespread to stave off economic turmoil by spending a check (with funds borrowed from China, most likely) on cheap Chinese goods.

    The core problem is prices, not access to monstrous loans. The goal should always be to make houses more affordable for typical Americans, but it's clear that the ramifications of rapidly declining home values (upside down homeowners foreclosing or walking away on a massive scale) are too powerful for the Fed to allow the market to correct on its own.

    Thanks for posting Genxer, I hope to hear more feedback from you soon.