Sunday, August 17, 2008

The Delusual

Do you remember the movie Big with Tom Hanks? Of course you do. It was the film that led an entire generation of boys to grow up wanting an enormous light-up piano keyboard, a job at a toy company, and a huge loft apartment decorated with cool stuff like pinball machines and trampolines.

Yeah, see, the problem is that I never outgrew those prepubescent desires when I grew up [Note: To this day there is still much debate about whether I, in fact, ever "grew up"].

I want a loft. And I want one bad. And I'll even live in a crappy area of downtown Long Beach to get my hands on one.

The problem with loft living (aside from heating/cooling issues, the cold, industrial, concrete-infested, echo-laden feel, living in a much less desirable area, and the lack of a yard) is that there are many young, single professional males like myself who vowed to procure a fat bachelor's loft when they had the means.

That contributes to lots of demand. And that, in turn, translates into higher prices despite the major drawbacks inherent in loft-dwelling.

Some Long Beach home sellers, however, take this perceived demand a little too far, and believe their loft is "special" and immune from economic forces and the realities of today's real estate market.

Address: 834 E 4th St #13, 90802
Asking Price: $449,000
Year Built: 2004
Size: 1 beds, 2 bath, 1,200 sq. ft.
$/Sq. Ft.: $374
HOA Fine: $235
Purchase price: $360,000
Purchase date: 6/2004
MLS#: P643442
On Redfin: 55 days
Down Payment: $88,800
Monthly Payment: $2,900
Income Requirement: $112,800
Description: Inspired living in the East Village Arts District. 16' tall ceilings allow a tremendous wall of windows to flood the space with natural light.Nothing is comprimised:polished concrete & Brazilian hardwood flooring,an organized kitchen workspace,in-unit laundry,walk-in closet,ample storage,skylights,& a private patio deck w/dramatic views.Unique to this loft-a thoughtful division of space that creates room for a second bedroom/office/den. Close proximity to all the best cafes,shops & galleries.

This place is awesome. Flat out. I mean, just check out those windows! Gimme gimme gimme!

This is the babe lair those two wild and crazy guys from the last post dream of every night while resting on their satin leopard print sheets. But, the Ladies' Men would sorely miss their pool.


But yikes! That price tag is brutal. A premium is to be expected for a luxury penthouse with such amenities, but almost half a million dollars has no connection to reality whatsoever. Sorry Nathanial--you owe your client better advice.

Forget for a moment that you would need to make an astounding FOUR TIMES the median income to afford this place. Instead, focus on the fact that this was purchased as brand new construction just four years ago--meaning the hardwoods, appliances and other upgrades were most likley present AT PURCHASE. I'd be willing to bet this seller hasn't put a penny into upgrading beyond what was already there at closing.

So how else do you explain this seller's belief that the loft appreciated $89,000 during the last few years (the last three of which transpired during one of the most horrendous housing value meltdowns in human history)?


The usual.

In fact, I'm going to employ a new term that will sweep the real estate internet tubes and take over as the most effective way to describe the tendency for sellers to cling to wholly unrealistic prices with the full expectation that someone will--or could get financing to--bail them out of their financial mistakes:

The Delusual.

I think it perfectly describes the level of self-delusion of Long Beach sellers, along with how pervasive and frustrating this mental illness is.

Yes, there are huge pluses to this place and lofts can generally be expected to sell for more than regular ol' condos, but let's not forget where it is. Some people might feel like a prisoner in their own home living in this neighborhood.

Look, even if you're really into that whole "downtown," no-chance-in-hell-I'd-leave-my-car-on-the-street-or-have-my-mom-walk-around-by-herself thing, everybody knows (for the exception of one particularly optimistic seller) this place has ZERO chance of selling for anything over the 2004 purchase price.

Hell, don't listen to me--just ask the neighbors as they try to escape like rats from a sinking ship:

Address: 834 E 4th St #17, 90802
Asking Price: $280,000
Year Built: 2004
Size: 1 beds, 2 bath, 839 sq. ft.
$/Sq. Ft.: $334
HOA Fine: $250 ($15 more than the bigger place? WTF?)
Purchase price: $285,000
Purchase date: 6/2004
MLS#: P626821
On Redfin: 158 days
Down Payment: $56,000
Monthly Payment: $2,000
Income Requirement: $70,000
Description: FINALLY FINALLY... and Aproved Sale... original listing 295K.. we are now approved at 280K...Originally bought at 470K 2 years ago... DONT MISS OUT ON THIS ONE... This kitchen is exquisite with stainless steal appliances. One bathroom is down stairs for your guest. Also the balcony has a view of the southern pacific sea and sky. You will be able to enjoy the fireworks from the comfort of your own balcony. Don t hesitate if you desire to live in a luxury loft.

Looks like SOMEONE in this building has joined us in the land of reality. The short sale asking price is $5,000 less than what they paid in 2004. As I've explained ad nauseum on this blog, the vast majority of properties in Long Beach are selling for 2004 prices and the sooner sellers accept that cold, hard fact, the closer they will be to offloading their debt trap before '03 and '02 prices come a knockin'.

Oh, and realtard, don't think you're getting off the hook:


"Stainless steal"?


"Don t"?

Whenever I see such egregious errors in listing descriptions, in addition to losing all faith in our education system, I'm often reminded of this exchange from There's Something About Mary:

"Step into my office."


"'Cause you're f*cking fired!"

Anyhow, the worst part of the neighbors finding REligion is what it means for unlucky #13 in the penthouse, who is busy chasing top dollar in fantasy land. A little perspective: #17 has been undercutting #13 by $160,000 for 159 days on market and still no dice. Doesn't bode well for Mr. Big upstairs does it?

Yeah yeah, they're not accurate comps because this is ground floor compared to penthouse, 839 square feet versus 1,200, etc. But think big picture for a moment: 2004 prices aren't even moving this place. That means the penthouse has to come down AT LEAST to 2004 prices to hope for a sale.

And lest you think the short sale at #17 is an anomoly, Unit #20 is also asking $280,000.

Keep in mind #20 is likely nicer than #17, in that it was purchased for $313,000 (or he was just a really crappy negotiator). This means he or she is actually well into 2003 pricing territory if you go by the '04 purchase price.

Time keeps on slipping, slipping, slipping, while the penthouse playboy is sipping, sipping, sipping on housing Kool-Aid.


  1. Anomaly is spelled wrong.

  2. Good looking out, anon.

    Imagine how embarrassed I'd feel if I was demanding $26,940 for writing that blog post!