In that post I highlighted the recent price reduction to $265,000. Well, things are progressing just as I've predicted.
Just a few days ago the price was reduced another $40,000! The real estate situation in Long Beach is getting ugly, and it's getting ugly fast. Frankly, the whole scene is disintegrating faster than even I anticipated.
For those of you keeping score, the asking price has been slashed an incredible $85,000 in just over a month.
Can you imagine if you were stupid enough to believe the realtors and commision-zombies claiming "now is a great time to buy" and you bought this place a mere four weeks ago for $310,000?
Or if you bought just six days ago for $265,000?
You would be upside down instantly, overpaying for the next 30 years on an "asset" that is depreciating DAILY and that would take at least 15 years to break even.
Look, the fact is that nobody knows how to value houses in this market. Things became so detached from fundamentals and normal valuation models during the last few years that the ONLY way to calculate the value of real estate is within the context of basic economic fundamentals.
As I said in my last post: As long as big chunks of "equity" are being torn off indiscriminately and the house still sits, it means nobody knows what the hell anything is worth anymore. The only reliable indicators to steer this lost ship back to shore are incomes, rents, and availability of credit. Until all of those factors creep closer to alignment with house prices, the bottom is nowhere in sight.
I know this latest price reduction is exciting, but take another look at the listing photos. Still very far to go, my friends.
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