Sunday, August 31, 2008

Profiles in Delusion: UPDATE

Ho hum. Another price reduction on another incredibly overpriced property. Yawn.

Address: 3401 E. 1st Street #6, 90803
Asking Price: $599,000
Year Built: 1966
Size: 2 beds, 2 baths, 1,481 sq. ft.
$/Sq. Ft.: $404
HOA Fine: $200
Purchase price: $375,000
Purchase date: 6/2003
MLS#: P623107
On Redfin: 194 days
New Down Payment: $119,800
New Monthly Payment: $3,800
New Income Requirement: $150,000
Description: Top Floor Corner unit penthouse With excellent OCEAN VIEW from Unit and Superior 360 degree Roof top deck. Spacious 2 bedroom and 2 bathroom condo with Entertainment size Living room, Dinning Room and balcony. This home also offer an office area and eat in Kitchen. Priced to sell.

The last time we featured this "priced to sell" property, the asking price was an eye-popping $649,000. Now, 42 painful, wasted days later, two price reductions have resulted in a new asking price of $599,000.

Again, do you see why it makes absolutely no sense to buy right now or in the near future? If you purchased this condo a mere three weeks ago, you would have cost yourself an extra FIFTY THOUSAND DOLLARS.

Think about that. If not for your impatience, you could have paid cash money for a brand new, loaded BMW 335i twin turbo. AND YOU WOULD BE LIVING IN THE SAME EXACT HOUSE!

You know where else that extra 50 Large would have come in handy? That god-awful kitchen:

It's obvious that prices still have a long way to go.

And if you're foolish and myopic enough to buy right now, two months from now, or even a year from now, you are guaranteed to be purchasing a depreciating asset. How badly do you need to feel part of the "Ownership Society"?

I've heard some pretty magical excuses to justify buying a SoCal house despite knowing Underwater Status will be acheived in no time. My favorite is, "Well, we're trying to start a family, so we need a house."

Oh, really? Because your zygote knows the difference between a condo and a single family detached residence?

Or, "Well, an apartment is just to small for two of us and a kid."

Huh. I'm pretty sure they have two bedroom apartments now. I know, sounds crazy. And I'm also fairly certain three-year-olds care more about Legos and Fruit Loops than about whether the roof over their head is rented from a bank or a management company.

I don't get it. If these people (whom I am powerless to convince) just waited a year, they would save enough money to put their precious little snowflake through a decent college. Cash money. Hell, maybe law school too if they play their cards right.

But, noooo...I hear, "We need to put down roots."

Okay, I kind of get that, but at what cost? Maybe it's just me, but 50, 75, or 100 grand is a big deal! Think about the investment opportunities you could take advantage of with that kind of loot. How about a down payment on an investment property? A few years from now you'll probably be able to achieve positive cash flow and have a nice asset in your portfolio. If you wait a year or two for fundamentals to realign, you would have TWO properties retaining, or even gaining, value. Why so impatient?

Keep in mind, the same commission-based vultures encouraging you to buy right now and lose equity immediately are the same ones who told you during the bubble that renting was "throwing money away."

Sorry, dummies, you can't have it both ways. Buying a depreciating asset and losing 5%, 10%, or 20% of your equity (which would take a very long time to recover in even a moderately healthy housing market--which we are years away from) is the very definition of pissing money away.


Anyhow, back to the property at hand. There is no doubt its size and location commands a significant premium, but despite the price cuts this seller is still smoking the good stuff. One look at that horrendous kitchen and we know they're not playing with a full deck. Plus there are STILL no pictures of the bathrooms, so you know they are awful as well. Knock off another $200,000, and people might think your diet consists of more than just Elmer's glue, buddy.

The bad news for those of us sick and tired of idiots wasting time on the MLS when they're clearly uninterested in selling is that there is a decent amount of equity in this apartment. That means this place will rot forever on the market, testing our patience by serving as a blinding reminder that no matter how far we come, the The Delusual are still strong and many.

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