Sunday, January 4, 2009

Will Consider Sale

A vast majority of properties selling in Long Beach are at, or below, 2004 pricing. This is consistent with national price declines as well.

Before I go any further, does anyone out there disagree with that?


Okay, just making sure we're all on the same page (read: planet earth).

So, within the context of that premise, I'd like to highlight a particularly delusional Long Beach seller who believes the Great Housing Crash never happened, and that he is immune from the reality of 2004 pricing.

Address: 2425 E 5th St #1, 90804
Asking Price: $349,126
Size: 2 beds, 1 bath, 840 sq. ft. (built in 1971)
$/Sq. Ft.: $416
HOA Fee: $120
MLS#: P664704
On Redfin: 51 days
Down Payment: $70,000
Monthly Payment: $2,100
Income Requirement: $100,000
Description: NEWLY REMODELED - READY TO MOVE IN NOW 2 BEDROOM CONDO, new kitchen & bathroomwith beautiful tile floors, Kohler Executive Chef sink, Kenmore convection oven and cooktop, new butcher block counter tops, dishwasher & venthood, new cherry hardwood floors throughout, recessed lighting, new interior doors, new double glazed windows, new double patio doors, new crown molding-base boards-door & window casing, doggy door, patio, laundry hookups, floor to ceiling mirrored closet doors, private garage with storage & Kayak racks behind remote controlled gated parking lot, low HOA dues $120, Condo located 5 short blocks to the beach on quiet 1 block long street.

Kayak racks? Huh? Well, I hope you like kayaking because they can't be used for anything else. After all, they're Kayak racks.

Other than the cheap cabinets and awful countertops in the tiny kitchen, this is a very nice remodel. Well done with attention to detail. I mean, check out the cool doggie door:

Nice touch.

Only one shared wall, french doors into the patio, indoor laundry hookups, nice hardwoods, incredibly low HOA...this is a nice apartment.

The problem, as is common with Long Beach sellers, is the price. This place is just too small, and the economy too damaged, to command $416 per square foot. For an individual or couple to reasonably afford this place, the household income would have to be $100,000 per year. Not unheard of for a couple in Southern California, but consider that the median income for this zip code is just over half that amount.

That means the median Long Beach family is priced out of this 840 square foot apartment. In fact, the median family would be shelling out 6.5 times their annual income to (literally) squeeze into this place.

I dare anyone to claim this is an above median property in a prime area. Dare you.

I know everyone got used to $300,000-$350,000 as "the norm" for condo prices, but when provided with a little perspective about how unaffordable these prices are, you start to see how far down prices still have to fall.

So, it's abundantly clear that this apartment is overpriced. Forgetting the cramped quarters, the so-so neighborhood (bums sifting through recycling bins are common in this area), the ground-floor level, and the solo garage spot, the most damning information is the fact that it sold for $250,000 in 2004.

Yep. Despite the ironclad fact that most Long Beach properties (especially less desirable properties in less desirable 'hoods) are selling for 2004 prices, this numbnuts thinks his property appreciated 10% per year during the last four years--AND HASN'T LOST A SINGLE DOLLAR OF VALUE DURING THE WORST HOUSING MELTDOWN IN THE HISTORY OF THE WORLD.

Wake up, pal.

Not even the most delusional perma-bull would argue those upgrades are worth $100,000.

There's no way in holy hell this place would fetch $2,100 a month in rent. Maybe in Belmont Shore, but not here. So, clearly this price is all wrong. But what do you expect from someone so ignorant to the realities of the new housing era? This property is doomed to rot on the market, unless a knife-catcher descends from heaven to bleed cash for the next few years and be stuck in cramped quarters while doing it.

But forget all that. Here's my favorite part of the listing:

Will Consider Sale

Oh really? Good thing you're considering selling it, considering you're selling it.

1 comment:

  1. At one time it seemed like LB had potential but now it slowly circles the drain. Even the areas that were once considered trendy are riddled with vacant units and very high HOA dues. In 10 yrs I may look back at this area and kick myself for not investing but at this point I think the potential downside risks do not outweigh the potential rewards.