Friday, August 8, 2008

L.A. Land: No More Denial in Long Beach

There is finally a bit of good news related to LB real estate (well, good unless you're a seller).

According to the L.A. Times real estate blog, denial is dead in Long Beach.

Well, sort of. The post reads:

Various economists say Los Angeles-area home prices need to fall 40% to 50% from their peak to match area incomes. Except for foreclosed houses in the deep inland markets, few properties are for sale at those levels.

But developers of a new Long Beach condominium building a block from the ocean have decided to take a leap forward. On August 24,
39 units will be up for auction at West Ocean Two, with opening bids set about 40% to 50% below earlier list prices.

And what, pray tell, do you think that will do to prices in the area? Well, sparky, I believe it will absolutely crush them. New construction trumps old, weathered, dilapidated crap any day of the week. Ouchies.

More good news. In the comments section of the IrvineHousingBlog, a discussion of Long Beach real estate provided a glimmer of what's to come even in supposedly "immune" areas such as Belmont Shore.

A poster highlighted a Countrywide-owned, 760 square foot 2 bed/1 bath going for $570,000 (to those unfamiliar with this high-demand area, that may sound nuts for such a small house but it's significant). When was the last time a Belmont Shore single family residence--even a run-down POS--asked below $600k? This means utter disaster for any distressed sellers who were too stubborn, delusional, or stupid to price accordingly during the Summer Selling Seasontm.

The listing information still hasn't been fixed--likely because the CountryWide representative is overwhelmed with listings or no longer works there--but it's a DETATCHED HOUSE in a prime location of Belmont Shore.

You read that asking price correctly: $569,900. In Belmont Shore. With a two car garage (according to my spies). On the beach side of 2nd Street. A BLOCK FROM THE BEACH!

There are no pictures yet, but from what I understand it's not a fixer-upper. I mean, even fixer-uppers sell for well above $600k. Hell, fumigation tents sell for more than $600,000 in this area!

You other sellers are so screwed. By smugly rejecting "offensive" offers due to a belief that real estate never goes down, your neighborhood is immune, or the "subprime riff raff" being foreclosed on don't live on your street, you blew it.

A good rule of investing is, "It's better to sell a year too soon than to sell one day too late." Well, you're all officially a day late.

Look, I get it. Nobody wants to admit the neighborhood they paid 7x times their annual income to squeeze into isn't actually immune from market realities. Hell, 62% of homeowners nationwide believe their property value actually WENT UP or stayed the same. Delusion still reigns supreme.

Some may say, "But RE in the LBC, that Shore house is only one example!" or "It will be bid up way past the $570k asking price, so there!"

We'll see about that, Chachi.

All I know is that we've just seen conclusive proof that supposedly immune areas are vulnerable. And one foreclosure is all it takes to set a new comp, reduce surrounding home values, and send already-strapped neighbors into the black abyss of housing distress. Hence, more foreclosures. And so on.

What does it all mean?



  1. Zillow shows that it already sold, and not for much more than the ask (582K).

    It also shows a very different price per sqft due to redfin showing the lot size as the floor size. I was wondering how you fit a 2250 sqft house on that tiny lot. $250 per sqft sounded a little optimistic.

  2. Hi jameskinia,

    Haha...yeah, $250 a square would have caused utter pandemonium. The Redfin listing is an absolute mess and every other site seems to have different information. I can't be sure if it already sold or not.

    Could Zillow be erroneously listing the 582k ($581,825) sales price from March? Seems like that would be the property going back to the bank. That would be quite a coincidence, but you never know.

    I need to drive by there tomorrow to see what the deal is.

    Good lookin' out.

  3. Property Type House
    Beds/Baths 2/1
    Building Size 760 Sq. Ft.
    Lot Size 2,284 Sq. Ft.
    Year Built 1950
    Parcel No. 7247-020-014
    Zoning Code R4R

    so a pretty tiny house!


  4. FreedomCM,

    I can't imagine living in a place that small, even if it was on the water! That's why I prefer the heights to the Shore--still a compromise in space, but more square feet to offer.

    I thought I listed the square footage on the post--I have updated it. I don't want to mislead anyone into thinking this is the deal of the century (I mean, it IS a cracker box)--but I do want to point out what this means psychologically for those priced at $725,000 (162 La Verne, 222 La Verne). Rut roh.