Tuesday, November 4, 2008

Wave Ya Hands in the Air, if You's a True Playa: UPDATE II

This is just getting depressing.

Remember those two wild and craaaazy guys at 5585 E. PCH?

Well, after failing miserably in their attempts to scare buyers into overpaying for their condo, using realtor garbage like "won't last" and "HURRY!", now they're threatening to take their ball and go home.


My response is, who gives a shit? Go ahead, convert it to a rental and bleed cash every month for the next 20 years, what the fuck do we care?

In fact, at 117 days on the market, I think they're morons for not doing that from the start. Why waste everyone's time at $350 per square foot if you were just going to convert it into a negative-cashflowing debt trap anyway?

They were holding out hope for a Greater Fool to pay their wishing price, I suppose.

Address: 5585 E Pacific Coast Hwy #154, 90804
New Asking Price: $299,900
Year Built: 1970
Size: 2 beds, 2 bath, 913 sq. ft.
$/Sq. Ft.: $328
HOA Fee: $274 (newly increased from 229?)
Purchase price: NA
Purchase date: NA
MLS#: P646198
On Redfin: 117 days
Down Payment: $59,980
Monthly Payment: $2,000
Income Requirement: $85,000
Description: LAST CHANCE BEFORE OWNERS CONVERT IT TO A RENTAL!! BEST PRICE PER SQ.FT. IN COMPLEX AND EASTSIDE AREA! 1st flr CRNR location....Quietest in complex!-Only 1 shared wall. Popular 'Park Ocean' building w/ Commnty pool,Spa,Sauna,Tennis,Bsktball,New BBQ grills,Workout Rm w/New Equipment,AND unit is wired for FIOS & Cable all included in the Low Assoc.Dues! Best flr plan w/ Two Mstr Bdrms and 2 Prvt. Baths-Both Newly Remodeled w/Cstm Tiling,New Vanities,Faucets,Fixtures,Sinks,AND Designer Shwr Dr and Granite Counters..Mdrn,Open Lving Area w/ Pergo-Type Flrng,Air Cond,New Doors and Custom Blinds. Contemp. Kitch. W/extra storage Maple Cabnts w/under lighting,'2' 7 ft Pantries,Recessed Lghtng w/Dmmr Swtchs(& in Bthrms),and Stnlss Steel Appliances. Desireable 'Park Estates' neighborhood-Conveniently located to Golf Course,Cal-State Long Beach,Stores,Shops,Frwys,& Beaches!! One of the Lowest Assoc. Dues w/ the Most Amenities in the Area. HURRY-JUST REDUCED...WANT OFFER!

My spellchecker just shot itself in the face.

Ths hideus pice of sht, evn @ JUST REDUCED 299k is n abslut jke. To affrd it wth enuf lft ovr fr lvng Expnss, a cpl wuld hv 2 mk 85k pr yr.

$85,000, you say? But that's only three-and-a-half times annual income. The reason for that is as of today, I am calculating the income requirement at 3.5X instead of my usual 4X.

The reason for this change is simple: The last year has taught us many things about financial bubbles, real estate, blinding greed, calculating property values, the crushing power of debt, lending standards and the economy in general (I mean, Credit Default Swap is a household term now). And one of the most obvious lessons (re)learned by banks is if people don't make enough income to reasonably afford their mortgage payment, those loans don't get paid back.

I formerly used 4X annual household income to determine home affordability because in Southern California, our standards for what constitutes "affordability" are much different than other parts of the country. We have high-demand areas, larger incomes, and more jobs here, therefore we are more accustomed to spending a larger portion of our income on housing.

For example, how many of you have family or friends visit SoCal and lose their minds about housing prices? "Oh my, $400,000 for that? In [INSERT PODUNK TOWN] that would go for about $95,000." And many of you probably shrug and reply, "Meh, crazy I know. But that's just how it is out here."

However, California also has one of the highest tax rates in the country and the day-to-day cost of living in SoCal is considerably more expensive than other states and areas of California (ever go to the Midwest and marvel at how much cheaper their gas is?). That means less income available for housing, which means families stretched too thin trying to pay mortgages they could never afford to begin with are destined to go bust and add to the growing compendium of distressed properties.

AND SO, 3.5X income is a more realistic calculation to determine how much house someone can truly afford without serious risk of default, insolvency, or a poverty-level lifestyle, and that will be the new standard on this site. If the economy worsens, don't be surprised to see myself and other bloggers using the formerly tried-and-true 3X income.

As for these idiots at 5585 E. PCH, since the July 10 debut on the market, Ace and Gary here only managed to reduce the price by 10%--a clear indication they were never serious about selling in the first place.

But they were right about one thing: "Won't last!" Of course, they weren't referring to the apartment. No, they were referring to their nerves. Once they realized the only way to get an offer on their swinger's paradise was to take a serious loss, they suddenly didn't have the guts to stick around.

But hey, at least now some lucky renter gets to enjoy this wonderful property. A win-win (well, except for the whole owners-bleeding-cash-from-the-rectum-every-month thing. Other than that, total victory for all).

No comments:

Post a Comment