That place is a Real Estate Disaster Zone, and it started imploding in 2005--long before the housing bust we're experiencing in OC and LA. By some accounts, the Phoenix meltdown is just getting started, indicating a longer, more painful return to reality in store for California.
Phoenix was one of the first bubble cities, along with Sacramento, San Diego, and the entire state of Florida. House values had V-2 Rockets strapped to them, and a bidding frenzy drove prices beyond what the local income could sustain.
First in flight, first to land. And the news from Phoenix indicates this was a crash landing and there were no survivors.
All of the phantom appreciation has evaporated and people suddenly realize that, unlike what their realtor told them, it wasn't going to last. So now capitulation has set in, and homedebtors scramble to unload their rapidly depreciating money pits for 50 cents on the dollar, or get foreclosed on due to buying beyond their means, or they simply walk away. This deadly cocktail of real estate poison results in ballooning inventory and drastically reduced prices, fueling even more panic selling, foreclosures, and walk-aways.
But you have to give Phoenix credit. At least they've woken up to the brutal economic realities of the post-housing bubble environment.
Long Beach, on the other hand, is pretending as if the housing bubble hasn't yet burst.
Take a look at this chart:
This is a list from CountryWide detailing what they determined are the highest-risk markets for issuing home loans currently. Right there at the top is Phoenix coming in at Category 5. Nobody denies that the Phoenix market crashed spectacularly, not sellers, not the media, and not even realtors.
But keep scrolling down that list. Well, what do you know, LA/Long Beach/Glendale is a Category 4. But wait a minute, I thought Long Beach is special. LB is a city of communities and house prices are immune to the national housing crash, right?
You would think so given the pricing strategy of this crack den:
Year Built: 1923
$/Sq. Ft.: $525
Purchase price: $285,000
Purchase date: 7/2005
MLS#: S499815
On Redfin: 196 days
$/Sq. Ft.: $525
Purchase price: $285,000
Purchase date: 7/2005
MLS#: S499815
On Redfin: 196 days
Down Payment: $31,500
Monthly Payment (Principle, Interest, Insurance, Taxes): $2100
Income Requirement: $78,750
Description: WOW. .. LOOK AT THE PRICE REDUCTION!!! TRUE PRIDE OF OWNERSHIP ON THIS ONE!!! CHARMING HISTORIC BUNGALOW (1923). THIS BEAUTIFULLY UPGRADED 2 BEDROOM HOME FEATURES: REFINISHED HARDWOOD FLOORS, NEW TILE FLOORING, NEW PAINT INSIDE AND OUT, ORIGINAL HISTORIC DECOR, ATTACHED GARAGE AND PRIVATE BAMBOO-SCREENED BACKYARD. ALL APPLIANCES INCLUDED AND MUCH OF THE FURNATURE (LEATHER COUCH AND CHAIRS)AS WELL AS WINDOW COVERINGS. NO MELLO-ROOS OR ASSOCIATION DUES! JUST A FEW BLOCKS FROM THE BEACH & DOWNTOWN.
There are so many things wrong with this listing, and frankly, it pains me to make fun of the mentally handicapped. I'm serious. How else can you explain the delusion dripping from this ALL CAPS MANIFESTO? However, nobody said exposing Long Beach sellers for the delusional, misguided, greed-heads they are would be easy, so here goes:
First, there are prison cells with more expansive square footage. This place is so unbelievably small that I'm unconvinced it's meant for human habitation. At least adult human habitation. Could you imagine dumping your life savings into a house and then having to buy two murphy beds just so you can move around? If the American Dream of homeownership involves living like this, then I'm moving to the slums of Brazil for a better quality of life.
Anyone care to guess why they have 47 pictures of that revolting "coffee table"? I'm guessing to show off their creative storage solution for all that crack they're smoking.
Look how small that bathroom is! You can poop, brush your teeth, scrub the tiles, and shower all at the same time!
Let's try to assess the level of mental illness by analyzing the seller's listing:
WOW. .. (ALL CAPS IS USUALLY AN INDICATION OF SOMEONE WHO NEEDS TO YELL IN ORDER TO DROWN OUT THE VOICES IN THEIR HEAD.)
LOOK AT THE PRICE REDUCTION!!! (I'm looking. Should I be impressed? It's still overpriced, as evidenced by the 196 Days on Market. You need to come down another 40% or languish on the MLS for another 196 days, Oh, I forgot to add, !!!!!!!!!!!)
TRUE PRIDE OF OWNERSHIP ON THIS ONE!!! (Really? You mean from the seller with so much "pride" that they're desperately slashing the price to try and get rid of it? Or the "pride of ownership" the new buyer will feel as he spends more than a $300,000 dollars on a 85-year-old, tear-down roach motel that he'd be ashamed to invite his friends and family to? Oh, I get it, the "pride" of owning in this wonderful neighborhood, as evidenced by the security bars on all the windows.)
CHARMING HISTORIC BUNGALOW (1923). (I guess "historic" is the new euphemism for "Really F*cking Old")
THIS BEAUTIFULLY UPGRADED 2 BEDROOM HOME FEATURES: REFINISHED HARDWOOD FLOORS, NEW TILE FLOORING, NEW PAINT INSIDE AND OUT, ORIGINAL HISTORIC DECOR, ATTACHED GARAGE AND PRIVATE BAMBOO-SCREENED BACKYARD. (Are we even talking about the same house? Where is this "Beautifully Upgraded 2 bedroom" you speak of? All I see is a miniature haunted house with a nearly 100-year-old kitchen. Wait, that's a garage? It's so small I was sure it's where the rats park their scooters)
ALL APPLIANCES INCLUDED AND MUCH OF THE FURNATURE (LEATHER COUCH AND CHAIRS)AS WELL AS WINDOW COVERINGS. (What did I ever do to you to deserve that? That's just mean, sir.)
NO MELLO-ROOS OR ASSOCIATION DUES! (Hallelujah...I found it: The dumbest f*cking statement in a real estate listing. Really, no Mello-Roos? THIS HOUSE IS ALMOST A CENTURY OLD! MELLO ROOS DISTRICTS WEREN'T ENACTED UNTIL THE LATE 70S! And regarding the Association dues, are you sure? Judging by the pristine condition of this masterpiece and the paint schemes that match the burglar bars to the house trim, I thought for sure a diligent HOA was behind this kind of immaculate preservation)
JUST A FEW BLOCKS FROM THE BEACH & DOWNTOWN. (Well, I guess that all depends on how well you can read a map. They're clearly not counting on selling to people with that kind of expertise because unless those "few blocks" are half-a-mile each, this dump is nowhere near the beach.)
This type of ignorance and greed just makes me sick and it makes me want to buy elsewhere. On the one hand, I understand. This seller obviously overpaid in 2005 and they are obviously having a tough time accepting that they're going to be financially ruined by the end of this.
Everyone must be wrong, right? The housing market can't possibly collapse in just two year's time, can it? My realtor and lender told me if I didn't buy now I'd be priced out forever, and that if I ran the numbers to see if this purchase made any kind of financial sense, I'd only be wasting valuable time. I'm too smart to end up financially ruined. There's no way I'll end up like one of those sub-prime losers I read about in the paper. My situation is different.
Long Beach is different.
Right?
Right?
The only way to protect themselves from utter despair is to put up a psychological barrier, ignore the overwhelming signs of impending doom around them, and price it according to profit, not reality. Is it any wonder this place has dwindled away on the market for almost 200 days? The price is outrageous.
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? Before you place that bet, let's take a peek at the sales history:
Jan 08, 2001 - $69,182
Apr 10, 2001 - $68,000
Jan 04, 2005 - $208,000
Jul 26, 2005 - $285,000 (Holy crap, that last seller made out like a bandit! He cleared like $60,000 just for holding onto this P.O.S. for 6 months! Housing bubble, anyone?)
Prices in Orange County and Los Angeles have already dropped past 2005 levels with no sign of slowing. In cities that experienced the bubble earlier than OC and LA, like Sacramento, the Inland Empire, and San Diego, many prices are well below 2002-2003 levels. And those price drops are for nice properties. So, looking at this crap shack, if you think this seller will unload it for anything above $150,000, let's place a friendly $1,000 wager.
Just because this seller's financial outlook is bleak, it doesn't mean mine has to be.
http://www.redfin.com/CA/Long-Beach/1182-E-9th-St-90813/home/7613370/socalmls-S499815
ReplyDelete$149,000.