But a sale is a sale, and it's worth mentioning.
You may remember this post from July in which I stated:
Considering the amount of work needed to make this petri dish inhabitable and the exorbitant HOA fine, this condo will absolutely rot (that is, rot further) until the price more closely resembles the 1999 price of $50,000.
Well, on the way down to 50 grand, a brave investor snapped up this 2 bed/2 bath dumpster for $70,000.
At the time I also said:
You couldn't pay me to live here and it would have to be cashflow positive to the tune of $500 a month before I'd even consider dealing with the guaranteed vacancy time.
Let's see how our brass-balled investor did:
Purchase Price: $70,000
Down Payment: $14,000
Monthly Payment: $700
I would imagine renovating (read: sanitizing) this place would run at least $10,000 (I'm being kind), but considering nearby units rent for around $1,000 it's safe to say that even after ancillary marketing costs, repairs, and vacancy costs, once you factor in tax write-offs and HOA write-offs this baby will produce cash.
Nicely done, sir!
Other than the terrible neighborhood, I can't criticize the decision to buy this unit. Seriously! At 70k it's a decent buy and meets important investing fundamentals (except for Location, Location, Location).
Finally, I'd like to reiterate that this mold farm sold for a fraudulent--ERRR...fantastic $280,000 in August 2006. That represents a stunning 75% discount from the peak! Think about that for a minute. Now think about it from the 2007 bagholder's perspective (did you vomit on your keyboard? Be honest).
To put it another way, in just 24 months, the square foot price has gone from an incredible $384 per square to a paltry $96. Yikes!
It's obvious that just like the Banker Buddy Bailout will do nothing to help the markets, it will accomplish fuck all in fixing the housing crash. I am a strong believer that markets will work themselves out. For example, Washington Mutual failed spectacularly and did the world come to an end? No. JP Morgan swooped in, bought assets for dimes on the dollar, and the financial world didn't miss a beat (which begs the question, Why the rush to pass this garbage bailout bill?). In fact, the markets shit the bed this morning on the first trading day after the bill was passed!
My point is, the only thing that will cure this disease is a full-blown, unimpeded crash and the resulting destruction of house prices. This will actually benefit those who are (or will be) underwater because house prices will recover much faster. The way the government is approaching this crash, it will drag on for years and years, possibly a decade. That's not going to help anyone. The end result is inevitable, it's just how quickly we want to get there.
Anyhow, I hope you other sellers and banks are watching carefully. Price your house aggressively (under $100 per square is a bit extreme, but for a place like this it's appropriate), be willing to deal, say a prayer, and you might be able to find a buyer.
Now, the question for the new owner is, Given the crime and filth in this neighborhood, will you be able to find a reliable renter?
Thursday, July 03, 2008
ReplyDeleteex-LBCer said...
LBC is starting to mirror Moreno Valley and the IE in foreclosures.
El Bee said...
ex-lbcer, Interesting about the IE comparison. In the past I've heard from bullish friends and associates that Long Beach won't be as hard hit as other areas because there is so little land available for further development. As the story goes, less land, more demand.
The less desirable parts of LBC *are* like the IE. low income, crime, etc..and just like the IE, housing is coming in below $100/sf. But in the IE that gets you a 10 year old SFR. I wonder what the shithole condo/apartments in Riverside are going for these days..and Barstow must be down even farther.
It can only go lower. Pretty soon the banks will be letting these POS places go for a token amount just to get out from under the burden of the taxes and HOA.
Free POS condos for all!
FreedomCM
The funny thing is that people in Belmont Shore, Belmont Heights, Rose Park, Downtown, etc STILL price as if condos (mercifully) selling for $100 per square foot--less than a mile and a half from the ocean--won't affect them.
ReplyDeleteCheck out this Riverside condo:
http://www.redfin.com/CA/Riverside/3082-Panorama-Rd-92506/unit-A/home/4955698
Looks like a decent place (those awful kitchen cabinets look similar to those in our featured property) and it's BEGGING for $75 per square foot with no takers. The current asking price of $76,900 is a third of the peak price!
This is the future for undesirable Long Beach neighborhoods.
Need a post about this "house" :)
ReplyDeletehttp://www.redfin.com/CA/Long-Beach/356-Ultimo-Ave-90814/home/7595002
Betty,
ReplyDeleteWow. That is awesome.
Truly. In my mind, the only explanation for no windows and a large basement in the LBC is vampires. Maybe the listing price is so high because the house is filled with 15th century furniture and tapestries?