Monday, May 19, 2008

Welcome to the Party, Pal!

Address: 4723 E 3rd. St 90814
Asking Price: $790,000
Year Built: 1950
Size: 2 beds, 2 baths, 1044 sq. ft.
$/Sq. Ft.: $757
Purchase price: $525,000
Purchase date: 2/2004
MLS#: I101516
On Redfin: 20 days
Description: None
Down Payment: $79,000
Monthly Payment: $5,000
Income Requirement: $197,500

No description after three weeks on the market? Really?

Here, I will help the helpless and provide a killer description:

WELL MAINTANED, VINTAGE estate perfect for 1ST time buyers!!!!!! No trendie granitt or stainless stell aplliances—just tile in the LITE N’ BRITE kitchen!!!!!! Rare brazilien bamboo flrs!!!1 ONE BATHROM UPGRATED: but other is “ALL ORIGINAL”! !!1! Start living the Belmont Hites life!!;!

Wow, a hair shy of $800K. That's Orange County money.

Last time I checked 3rd Street is not on the water, so how could this seller possibly justify asking $757 per square foot? Further, how could the realtor allow their client to embarrass themselves with this DUH-lusional wishing price?

Hell, even, which is known for spouting hideously optimistic property values, will give it “only” $572 per square foot.


Unless he’s planning on cutting 20% off the price (and not this piddly 7% crap they pulled yesterday) there is no way he can compete with other sellers. Nearby houses that are nicer and asking way less money have remained unsold for much longer. Bad News Bears.

Plus, I don’t see any major upgrades (ugh, that kitchen). Sure, they remodeled one bathroom but check out the tiny shower door! Do you just stick one limb in at a time?

The original bathroom (below) is actually kind of cool, but those slat windows--OY! The line between “retro” and “older than dirt” is a subtle one, but ordering only 28 vinyl windows for a 29-window house is a good way to end up in the dirt category.

Speaking of dirt, why no pictures of the backyard? Afterall, that's one of the biggest advantages of owning a detached home instead of a condo. Well, that and avoiding an HOA fine. If the backyard was nice, don't you think they'd include it in the listing photos? Actually, these are the same marketing geniuses that provided no information in the listing description, so who knows. Either way, I'm betting the back yard is a dirt farm.

Wait a minute! I just looked at the overhead map and THERE IS NO BACK YARD!! Dude, this place is a mess.

FYI, this place sold for $367,000 in 2002. That seems a little high even for back then (I wouldn’t be surprised if the upgrades were performed before ‘02. It explains the outdated look of the kitchen and bathroom), but it is right in the heart of a prime neighborhood so a premium is expected.

However, given that a bulk of the properties actually selling these days are at 2003 prices, this has a long way to go before it approaches basic investing principles.

With that said, I think a knife catcher would come in at $525,000 because of the allure of buying at the "2004 price." He'll be underwater immediately, but that's the price I think will attract a buyer.

But remember, before that blade-clapping buyer so fond of terrible ROI (Return On Investment) swoops in, the delusional seller will have to cut an astounding 30% to even entice a sale.

Considering how “special” this house is (isn’t everybody’s?) to earn 50% appreciation during the last four years when most houses selling recently are LOSING money, I doubt the seller and their realtor are level-headed or serious enough to do what it takes to sell.

Greed will rule the day, and this house will sit until that kitchen comes back in style.


  1. Whoa! I couldn't believe it when I saw that with the attached 1 car garage it takes up the whole of the tiny, tiny lot. all for $790k!

    Here are the right comps, which suggest that even right now, it should be listed in the high 500s (which is still fantasy-land):

    $695k--200sf smaller, but parking for 2, plus a very recent renovation and tiny yard

    $660k--about the same size, renov., but twice the lot so you actually have a little yard

    Either of those is so, so much nicer.


  2. aplliances?

    This is CLASSIC!!1!

    Still my favorite blog, El Bee.

  3. Freedom CM,

    Thanks for posting the comps. It puts it all into perspective, eh?

    There are still people out there who don't get out much, don't crack open the newspaper, and most certainly don't read this blog. I mean, to come onto market that much higher than the competition (which are growing MLS Mildew by now) highlights a certain level of insanity and greed that's simply baffling. They actually believe they are going to get out of this with a 50% profit! Don't you have friends?

    Homeboy is oblivious to the cash carnage on the way if he doesn't start slashing prices like Crazy Gideon.

  4. anonymous,

    Golly, I'm blushing. Thanks for reading.

  5. Hi,

    I'm so excited to find your blog -- we used to live in LB (rented a 1 bd/2bth, 1250 sf ocean-view apt for 1900/mo) and loved it, but now are in Korea. . . .

    Why Korea? We also wanted to buy a modest, clean, safe house/condo in a decent area of LB, but as two public school teachers making a combined income of appx $100,000 it just wasn't working . . . no matter how we worked the numbers, we couldn't find anything w/ a normal, sane income/mortgage ratio. . . . we refused to buy anything so ridiculously overpriced, although we gnashed our teeth as friends/colleagues bought tiny shacks at outrageous places . . .

    so we left in 2006 and are living here in Seoul, saving money, avoiding the rat race and waiting for prices to return to some semblance of sanity. I only wish your blog was around back when we were checking out possible purchases in 2003-2006. Even though we knew it was foolish to purchase at that time, it still irked to see others giddily enjoying their new homes w/o caring about the possible downfalls. . .

    We plan to stay over here another year or so, and hopefully prices will come down enough to make it feasible -- until then, I'm going to continue reading your blog -- I just found it today and read through most of the posts already (yes, I guess I'm obsessed, hahaha) -- keep up the good work!


  6. L,

    Well, I'm glad you found the blog too. I'm especially glad you went through all the old posts (although most of those sellers have given up by now)--I always do that when I find a new blog I like.

    Korea, eh? I'd like to hear some stories about that. I have friends of friends in Hong Kong, the land of $10,000 a month rent.

    I can relate to your feelings about the last few years. Isn't that pathetic that two hardworking teachers pulling in six figures are priced out of Long Beach?

    I too felt enormous pressure to buy (Friends and co-workers repeatedly warned, "Paying rent is throwing away money" and "If you keep waiting, you won't be able to afford SoCal") but something just didn't feel right.

    When I ran into idiots from High School (who barely got out of H.S.) that were suddenly "Mortgage Brokers" and ne’er-do-wells who used to sell pot and work as bartenders now working as "Senior Loan Officers" I knew we were in for something bad.

    However, I'd be lying if I said the pressure didn't get to me. I mean, at one point I considered buying in the Inland Empire and once the property appreciated I hoped I could FINALLY get into OC or LA.

    I know, right??? That would have been the most colossal mistake ever.

    Prices will return to some semblance of reality. It could take a few years depending on the next moves of Congress and the Fed, but the fundamentals are on our side.

    Enjoy yourself in Seoul and have faith that when you return, you'll be able to swoop in on the place you deserve (and you will pay pennies on the dollar for someone else's upgrades).