Friday, June 13, 2008

Death by 1,000 Cuts

At the risk of being repetitive, here is another sample of price reductions around Long Beach. Seems to be a rising level of desperation on the streets:

637 Atlantic Ave #6 Long Beach, CA 90802: The list price was "$309,000" and changed to "$279,900" ($30,000 reduction)

637 Atlantic Ave #3 Long Beach, CA 90802 (same building as above. Major carnage at this address): The list price was "$289,000" and changed to "$259,900" ($30,000 reduction)

616 Cherry Ave Long Beach, CA 90802: The list price was "$305,000" and changed to "$275,000" ($30,000 reduction). If it sells at this price, it will represent a $200,000 loss! Fun fact: this POS sold for $710,000 in 2006. I mean, just how good was the crack in this neighborhood?

1637 E 5th St #301 Long Beach, CA 90802: The list price was "$385,000" and changed to "$295,000" ($90,000 reduction--on a condo!!)

It's scary to be a seller right now because the comps are sh*tting the bed daily--how do you compete without bankrupting yourself?

It's scary to be a buyer right now because with such dramatic haircuts all around you, it's almost guaranteed that in a few months you'll be upside down.

It's scary to be the person who bought LB property in late 2007 ("It's 10% off the last sale price!" "Interest rates will never be this low again!") because you have to wake up every day knowing you're an idiot.

It's scary to be a lender or appraiser right now because how the holy hell do you determine what anything is worth? When you've lived on Fantasy Island for the last five years, it's difficult to recognize where reality begins and where delusion ends.

The good news is that (and I don't want to get ahead of myself here, but) Long Beach appears to have finally gotten the memo. It's about time.

The overwhelming number of price cuts I'm seeing indicate sellers are finally coming to the realization that they're not going to get Wishing Prices anymore. That was so 2006.


  1. Instead of just bitching about how bad the market is, why dont you do a little research. Mortgage fraud is running wild, 616 Cherry was purchased for $60,000 in 1980 by Buntoum Kham. In 2004 this person sells it to Kham Sao for $410,000 and the on 11-27-06 it was sold to Buntoum Kham and I think Le Mai and Hoang Yen. Check title company records. I'll bet you lunch that Buntoum Kham, Kham Sao, Le Mai and Hoang Yen did this on more than one property and are living the high life back in Cambodia.

    The russians play the same game, check out Light Green Money and their cast of charactors....

  2. 1637 east 5th and 637 atlantic are both condo conversions and not in the best neighborhoods so the fact that they are staying on the market for a long time is no surprise. A lot of "developers" got into the game late and thought that by converting apartments to condos they could make the big time. Drive by 10th and Molino.

  3. Anon,

    You are absolutely right. Prices got too out of hand in desirable 'hoods, so developers renovated run down complexes in shady neighborhoods expecting the good fortune to spread inland. Didn't happen. Now comes the pain.

    All the granite countertops, pergo floors, and stainless steel ovens in the world can't overcome the three L's of real estate: Location, Location, Location.

  4. Anonymous,

    "Instead of just bitching about how bad the market is, why dont [sic] you do a little research."


    While I'm impressed by your unwavering desire to spelunk through public records and highlight fraud that is, quite frankly, no surprise to anyone, I fail to see how my "bitching" is any less valid or relevant now that you've blessed us with your revelatory "research."

    Really? There's fraud out there? Holy shit! Don't waste your time telling me, tell the FBI!

    Perhaps your e-mail didn't properly convey the tone you intended, but your opening implies that highlighting 616 Cherry's price reduction is somehow meaningless griping unless a thorough scouring of property records and the owner's personal details are included. I respectfully disagree.

    The answer to your original question is three-fold:

    1) Because uncovering potentially fraudulent information about foreign owners of a shitty house doesn't change the fact that the market is bad--whether you view it as "bitching" or not.

    2) Because the "little" research I do is enough to conclude LB real estate is overpriced and the market is experiencing significant asset deflation, and finally,

    3) Because you already did it for me.

    Oddly, it seems as if we're on the same page regarding the idiocy, greed, and rampant fraud present in the real estate's just that your opening line seems adversarial and only serves to underscore your own anger and frustration with the current market (some might call it bitching)--making whatever point you're trying to make about my "bitching" rather meaningless.

    I guess I don't see how digging up dirt on straw-buyers from Cambodia makes any difference in my analysis of the current market.

  5. Don't be so sensitive, yea the market is lame but there are still properties being sold. The lower end of the market where people can really qualify full doc has activity. Good homes in decent areas still receive multiple offers.

    Let the Bank who took the loss contact the FBI, not me.

    It's a nice day in the LBC, I'm going to get drunk.

  6. The funny part is, no one complained about the mortgage fraud (stated income) when the property values were going way way way too high... but now, they are dropping like bricks from the unsold penthouse roof. And the realtors are still saying "It's a great time to buy!"

    Who's to blame for the fraud? The banks, the realtors, or the morons who paid the 650,000 for the 1100 sqft roach motel.

    I dont exactly know who to blame, but my money is shorted against Coutrywide, and Im up 200% (or more by now, their stock seems to fall everyday).

    And as far as the people who are still buying today, I'd love some of what they're smoking. The propery values they are acquiring are going to drop futher, but at least for them they will have less value to recover, but still, they could have waited another year, and paid less in my estimation.


  7. May be off topic but friends who live in Spinniker Cove were bragging yesterday that homes rent in their community for $5,000 per month - they thought it was a sign of how prestigious their community is instead of seeing the truth no one can afford to buy the Spinniker Cove home and FB is trying to rent it to save himself/herself from foreclosure. So much for the "nice places" in LB it is just a matter of time and the whole house of cards falls.

  8. Anonymous,

    I wonder if they actually rent for 5k a month or if that's just the asking rent. I seriously doubt people are paying $60,000 a year to rent a house in that area.

    It seems to be yet another delusion of those who need to tell themselves that they are "special."

    The funny thing is, some of those Spinnaker properties would still bleed cash even if they could find an idiot to pay 5 grand a month.

    I agree, it's only a matter of time. The upper end of the market, while reslient (fewer suicide loans, more net worth to shoulder carrying costs), is not immune. If people in the lower tiers of the market lose their equity, then how will they come up with the scratch to move up to more expensive homes?