“A ‘Distinquished’ Beauty”

This pricing strategy comes to us straight from the Plaxico Burris School of Poor Decision Making.



Address: 2601 E Ocean Blvd #608, 90803
Asking Price: $399,900
Size: 1 beds, 1 baths, 672 sq. ft. (built in 1973)
$/Sq. Ft.: $595
HOA Fee: $290
Purchase price: $230,000
Purchase date: May 24, 2002
MLS#: P622255
On Redfin: 292 days (!)
Down Payment: $80,000
Monthly Payment: $2,600
Income Requirement: $114,000
Description: Priced well below comps for you to make an offer!! Welcome to the Versailles! A distinquished Long Beach beauty! Steps from the Sand, the Long Beach Museum of Art, Downtown Attractions, Belmont Shore and Freeway Access. This one bedroom Oasis offers the finest in Uptown living at the Beach with Designer touches throughout. Newly upgraded bathroom with the Impressive Textiles, Freshly Painted, East facing Beach views from both the Living Room and Bedroom balconies, walk in closet, Parking, Pet Friendly community and much more!!! Community Ammenitites plentiful.

Quick question: Just what exactly does “distinquished” mean? Is that when you vanquish your rival in a distinct manner?

This listing also reminds me of a girl with a perfect body I used to date. Every time I saw her approaching in a low-cut top, I looked gratefully to the sky and proclaimed to the Lord, “Amenitities!” (sorry, that was bad).

The Strange Capitalization and shpelling choices aside, this is an awfully nice little apartment. However, the ultimate question is whether there are any economic fundamentals that can justify a $399,900 asking price for this cramped one-bedroom.

The answer, in short, is NO.



A few noteworthy items about this tiny 672 square footer:

1) It was purchased by this seller six-and-a-half years ago for $230,000 ($238 per square foot).
2) The current asking price of $399,900 has remained unchanged since July, despite enduring a terrible Summer Selling Season(tm) and one of the worst credit crises in our nation’s history.

This tells us a few things about the seller. First, home skillet sincerely expects you to believe this shoebox appreciated 10% per year since his purchase. Yes, that's including the last two years of the housing crash, during which 20-30% of Long Beach equity has been completely wiped out.

Well, buddy, as the esteemed Steve Perry would say, “Don’t Stop Believin’!”



Second, due to the seller’s failure to meaningfully reduce the price during the last 292 days (we were treated to a paltry 9% haircut during that time), he has unquestionably joined the ranks of the Greedtarded.

It’s worth noting that at one point this May, the price briefly flirted with $324,900. This attempt to drum up interest must have worked, because just a scant 40 days later the price was increased to an outrageous and obviously greed-headed $399,900, where the sellers have convinced themselves it belongs permanently.

This (sort of) ocean-view apartment, settled in a killer location, in a seemingly well-maintained building, sold for $150,000 pre-bubble ($223 per square). If we apply a generous 5% annual appreciation, this place should be valued at around $233,000 ($346 psf).

That price would correspond to a $66,000 annual income, a $1,600 monthly payment, and would come awfully close to equivalent rent. That's starting to make a helluva lot more sense. Given, that price won't be seen for quite a while, but that's what it will take to make any kind of investment sense.

Within that context, the current $595 per square foot (not to mention $653 when first listed) is a joke that apparently only the seller gets. I mean $595 per square foot for two common walls, community laundry, one garage spot, and no gym??

To paraphrase an alien visiting from outer space: TAKE ME TO YOUR DEALER.

Because you must be smoking some incredibly good stuff.



The Delusual thinking probably goes something like this:

“We were clever enough to buy in 2002—before the bubble really got blowing—meaning we are wise, prudent real estate investors. Our place is special—so special that we posted each photo twice in the listing. And we, of all people, should know what our ‘distinquished’ broom closet is worth. $595 for a one-bedroom ‘Oasis,’ according to our informed, brilliant estimation, is a great deal. The price stays put until someone with an intellect and financial acumen comparable to our own recognizes the value in paying $2,600 a month for a one-bedroom apartment.”



These people will either give up or rent it out and absorb the negative monthly cash flow. Becuase they sure as hell ain't selling it at this price.

I don’t pretend to know their situation but they likely have a decent amount of equity (unless they took out big HELOCs to fund those disgusting "upgrades") and it’s clear from their supremely idiotic pricing strategy that they have no intention or desire to actually part with this property.

292 days on market is an awfully long time to live with your head buried in the sand. At some point everyone needs to come up for air, and when they do it will become immediately apparent that the bright, sun-slapped skies they fondly remember have been replaced by dark, menacing thunderclouds portending doom, destruction and financial mayhem for sellers of tiny properties who continue to believe their "special" place is exempt from the carnage.