It's pretty much the same ol' properties I've been scoping out since last summer. Nothing's selling (save the occasional knife catcher who is suckered by the "15% less than the last buyer paid a year ago!") and homedebtors tempted to sell obviously know this.
And the reason nothing is moving is because most Long Beach sellers have either hit their absolute pricing floor (meaning if they drop any further, they'll have to cut a big fat check to keep their credit intact or risk foreclosure) or for whatever reason they're just not serious about selling (they have a decent amount of equity or they're not under an inordinate amount of stress yet).
In addition to e-mailing new listings, Redfin also sends me pricing updates on listed properties. Due to sellers clinging to the delusional hope that the market will turn around any minute now, these e-mails have also been slow.
Until now.
I've been noticing a lot more desperation in the market lately, and there have been some incredibly dramatic price cuts. In fact, this morning a Redfin e-mail referenced six condos that dropped their price last night. One property lopped off $58,000!
This indicates 1) Anyone who buys right now is an absolute fool, and 2) There is a measure of capitulation in the air that's only going to get stronger as rates start resetting and competing foreclosures add to the mayhem.
There are so many properites to choose from, but today I want to feature an entire building that's in deep trouble.
Address: 1605 East Second St. # 204, 90802
Asking Price: $349,900
Down Payment: $34,990
Montly Payment: $2,300
Income Requirement: $87,475 (2.5 times median income!)
Year Built: 1987
Size: 2 beds, 2 baths, 925 sq. ft.
$/Sq. Ft.: $378
MLS#: P572303
On Redfin: 336 days (YIKES!)
Description: One of 12 Luxury Remodeled Condominiums just 3 blocks from the Beach and 2 blocks West of Bixby Park. All units feature new kitchen cabinets, new stainless steel appliances, slab granite countertops in the kitchen and baths, travertine stone, new in unit stackable washer and dryers, new carpet, designer paint and balconies. The building features new windows, paint, landscaping and gated parking beneath the building at ground level.
Nice description my man! This is a cool looking building with nicely upgraded condos. It's not in a neighborhood I feel safe in at night, but it has a washer and dryer inside, only 12 units, garaged parking, and a relatively low HOA fine. Dang, I really dig this place! It has pretty much everything I want...
Except a realistic payment.
As you can see by the pricing history, this seller didn't start seeing the light until eight days ago:
Apr 18, 2007 - $429,000
Dec 27, 2007 - $428,900
Mar 11, 2008 - $398,500
Mar 18, 2008 - $349,900
For those of you counting at home, that's an almost 20% price cut in just 11 months. Now, that doesn't mean much considering the initial asking price was absolutely absurd, but imagine if you would have bought this place on March 17: Assuming you put 10% down, you would already be $10,000 underwater ...
...OVERNIGHT!
Do you see why buying a home at today's price is so incredibly stupid? Regardless of how sweet these price reductions sound, there is no reason to conclude that they are anywhere close to stopping. We got so far away from basic market fundamentals and housing valuations that sellers, realtors, appraisers and buyers have no clue what anything is worth anymore.
I commend the seller for finally getting serious, but despite their latest price cut (which I'm sure caused instant diarrhea) means absolutely nothing because the place is still way overpriced.
Furthermore, from what I can gather there are five units for sale in this 12-unit building. Great for throwing parties, but not so great for home values. But judging by the seller's idiotic pricing I'd be willing to bet the entire building is vacant but they've just delayed putting the rest of the units on the market. No past sales show up on the MLS, so unless I'm corrected this place is completely uninhabited, collecting cobwebs.
As I said, this isn't my ideal neighborhood, but I'm definitely interested in buying one of these condos once prices enter reality. To any of you realtors out there reading this, contact me if your negotiating skills are strong. If you're looking for a client who is ready to roll, I'm looking for a realtor who can make things happen.
Plan on a first offer of $250,000.
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