Wednesday, September 24, 2008

Finished Before It Begins: UPDATE

It appears as if our lackadaisical seller over at 1130 E. 1st St. finally decided to get off his ass and try to sell his apartment.

As you may remember, I berated the seller and their six-percenter for their obvious lack of effort, most ably demonstrated by their half-assed pictures and total lack of staging.

Well, two weeks ago they finally figured out the formula to selling in a rapidly declining market (i.e. Drop the price, dumbass) and sliced off an astounding $40,000. That represents a two-month total reduction of 50 grand for those of you counting at home. Now we're getting somewhere!

Keep in mind, this place was purchased a scant 22 months ago for $415,000. Un-effing-believable. And now our unelected Treasury Secretary wants total immunity in wasting our tax money to bail out banks idiotic enough to believe this cramped, outdated shit pile was worth upwards of $400k.

It makes me want to vomit shards of glass.

Anyhow, let's revisit the numbers and see if the odds of a sale have measurably improved:

Address: 1130 E 1st St #301, 90802
Asking Price: $249,000
Year Built: 1959
Size: 2 beds, 2 baths, 977 sq. ft.
New $/Sq. Ft.: $255 (from $306)
HOA Fine: $287
Purchase price: $415,000
Purchase date: 1/2007
MLS#: P648286
On Redfin: 63 days
New Down Payment: $49,800 (from $60k)
New Monthly Payment: $1,800 (from $2,100)
New Income Requirement: $62,000 (from $75,000)
Description: Unit was remodled two years ago. All new flooring, kitchen appliances,paint and lots of nice up grades. Front Corner, top floor. Great view of the city, the Queen Mary is visable from in front of unit. Two, assigned underground parking spaces, come with this unit. Short sale.

"No deal, Howie!"

Are you beginning to notice how many Long Beach properties are sitting unsold at $250 per square foot? I bet you misguided housing bulls never thought you'd see the day. And I bet you're a little nervous that $250 per square foot is only the beginning of the decline.

And for those of you who got it dead wrong by dumbly insisting "Now is a great time to buy"tm, potentially costing yourselves and others tens of thousands of dollars, the price collapse is going to get worse. Much, much worse.

Because $250 per square foot in the face of stagnating incomes, increasing job losses, time-bomb loans resetting next year, and incredibly strict lending requirements, doesn't have a Sno-cone's chance in Hades of sticking. Especially for sellers like this who are too afraid to post pictures of the decrepit kitchens.

In this zip code, in this neighborhood, in this condition, with a $287 HOA fee (with no discernible amenities, mind you), even $200 per square foot would be an absolute miracle sent via FedEx from heaven. And if you have any doubt about that, just take another gander at the bathroom:

Perhaps I might be on to something?


    This crappy apartment better not sell at this price. Call me greedy, but I want MORE!! I don't feel like I'm asking too much. All I want is a 3 bedroom 2 bath house with a small yard in a safe, clean, quiet, long beach neighborhood. And yes, I want it for $2000-$2500 a month. Is this really too much to ask? Will this happen in my lifetime? And by the way...correct me if I'm mistaken, but those income requirements assume no signficant debt, right? How many of us don't pay out a hefty sum for car payments, credit cards, student loans, etc.?

  2. I lived in the apartment building nextdoor to this complex in 2005. The 'hood is sketchy at best. I seem to recall units in "Whitley Bay" going for 500+ at that time. Keep in mind that half of the APARTMENTS look out onto the glorious alley and the parking lot to the senior center. The other half get the fire trucks wailing by at all hours. I guess the high HOA fee is worth it if you factor in the drug accesibility and entertainment value that comes from the interesting bum population.

    I love reading your blog--thanks!

  3. Katy,

    Correct, the income requirement of $45,000 per year (which is about $15k more than the local median income) does not factor in any debt.

    So, no student loan, no car payment, no credit card debt, no child support payment. The monthly payment of $1800 also does not factor in utilities, maintenance costs, gym memberships, groceries, fuel, entertainment, clothing, cell phone/internet/cable bills, renovation costs (significant in this case) or any other ancillary expenses of ownership (e.g. busted garbage disposal).

    When you put all of that into perspective, I hope you and all the readers see how overpriced Long Beach housing STILL is--despite the record price drops we've witnessed.

    Banks and the FHA also understand that your principal, interest, HOA, and insurance are not your only monthly financial obligations. And that's why we're in this credit crisis: Houses are just too damn expensive for people to reasonably afford.

    P.S. It might sell at this price, but it doesn't mean it won't sell for considerably less a year from now when the knife-catcher realizes just how expensive it is to carry a mortgage and live a normal life, and it inevitably goes back to the bank.

  4. "I guess the high HOA fee is worth it if you factor in the drug accesibility and entertainment value that comes from the interesting bum population."

    I love my readers.