Wednesday, February 11, 2009

With All This Drama in the L-B-C it's Kinda Hard Being A Short S-A-L-E


Address: 1763 Appleton St #1, 90802
Asking Price: $375,000
Year Built: 1959
Size: 2 beds, 2 baths, 1,146 sq. ft.
$/Sq. Ft.: $327
HOA Fee: (Not listed, so we’ll assume $200)
Purchase price: $510,000
Purchase date: 5/2006
MLS#: P673084
On Redfin: 16 days
Down Payment: $75,000
Monthly Payment: $2,200
Income Requirement: $107,000
Description: Beautiful 2 master suite and bath condo with Tuscan interior just a few short blocks from the ocean. Bright upgraded kitchen with tile/slate floors and newer appliances. Oversized living room adjoins elegant dining room alcove. Organized laundry lcoset including pantry. Gorgeous refinished honey-toned oak wood floors. Wonderful, resort-like patio. Clos to shopping, beaches restaurants and freeways.

What’s a “lcoset?” I think I took those after my wisdom teeth were pulled.

And for those of you who were hoping this apartment was close to "shopping, beaches restaurants and freeways"…sorry but it’s only “clos” to those things.

Under “Area,” the listing agent claims (lies) that it’s in “Belmont Heights/Alamitos Heights.” Rrrrrrrrrrrrright. Nice try, pal, but you’re not in Belmont Heights. "Clos" but no cigar. Quit trying to glom off a highly-desirable neighborhood YOU’RE NOT IN.

And I think it goes without saying that this place will require a complete re-paint. I mean, just look at some of these color choices:

Ugh. Did Rainbow Bright puke in here?

I like the two garage spaces and the square footage of this short (squat) sale, but $375,000? If the bank believes for one moment it can nab that kind of money for this place, in this economic environment, it's going to be a really, really long year for them. Hell, with all those computers in the bedroom, you would think the seller could do a little research and share it with the bank.

And then we have the bathrooms. My god, look that plant!

The pot is bigger than the toile--wait a minute...just what are they fertilizing that thing with?

You know what that thing reminds me of?


And then we have the other bathroom with a shower door built for those who just returned from an internment camp. I mean, can a normal person get in there without turning sideways?

The strangest thing about this place is how unbelievably cramped it looks for 1,100+ square feet. Perhaps it's the "Tuscan" interior, or maybe it has really small bedrooms, or simply too much crap strewn about, but every room looks really small.

To the bank’s credit (assuming the bank actually approved this asking price) the $375,000 ask represents a -$20,000 haircut just two weeks after being listed.

Sadly, whether the bank realizes it or not, it's not nearly aggressive enough. Even if it hacks off $10,000 a week for the next two months, this baby isn't going anywhere. I mean, just look around!

For example, this poor sap has been rotting on the market for 198 days, begging for a measly $279k.

Sure, it’s smaller, has community laundry and one less garage spot, but the overall point is: If this guy can’t get $279,000 ($294 per square), what chance in holy hell does the bank have in getting nearly $100,000 more for a largely comparable unit?

Anyhow, our oddly-decorated color wheel nicely encapsulates the idiocy of The Great Housing Bubble:

Dec 30, 1993 - Sold $90,000
Jan 29, 2002 - Sold $195,500 (10.1%/yr)
Jan 30, 2004 - Sold $292,000 (22.2%/yr)
Mar 24, 2005 - Sold $357,000 (19.1%/yr)
May 01, 2006 - Sold $510,000 (38.2%/yr)
Jan 26, 2009 - Listed $395,000
Feb 10, 2009 - Price Changed $375,000

Just check out ’02 – ’06. Not including commissions, more than $300,000 in profits changed hands. On this little piece of crap apartment!

And it’s not too difficult to figure out who the bagholder is. The current short seller, for some unknown reason, decided to pay $157,000 more than the previous owner slapped down just 14 months earlier.

Really, dude? You didn’t think there was anything odd about 38% annual appreciation?

Nothing strange about paying nearly $3,500 a month* for A FREAKING APARTMENT?! REALLY?

Who is your financial advisor? MC Hammer?

Assuming the bank could find someone idiotic enough to pay this 2005 price when the only properties selling in Long Beach are way into 2004 pricing (and rapidly approaching 2003), the loss to the bank would be $135,000.

That’s not too bad, especially considering some of the insane losses we’ve seen, but that loss is predicated upon 1) The bank finding a mentally-impaired buyer willing to pay the offensive, wholly-detached-from-reality (realty?) asking price of $375,000, and 2) The bank having their shit together enough that it would approve that Christmas gift of a price before the bank gets the keys back in a manila envelope.

Yyyyyyep. I’m sure the stars will align just perfectly to make that happen.

So, when this place inevitably goes back to the bank (sorry, but this place doesn’t exactly look like the home of an individual or couple making the $145,000 per year required to reasonably afford it--there's no way they can keep up with this insane mortgage), and the delays inherent in NOD/NOT filings, foreclosure, eviction, auction, and marketing and re-listing this place as a bank-owned property are accounted for (probably another six to eight months) it will be a much different world than the fantasy land the bank is currently living in.

Come this fall, assuming the bank gets aggressive once it takes ownership, it will be LUCKY to get $260,000.

However, if the bank isn’t aggressive and continues to deny reality, it will have to wait through a very long winter and hope and pray for $220,000 in 2010.

And I’m being optimistic. Just take another gander at the pictures…besides the wood floors (pretty nice, btw) give me one noteworthy upgrade that makes this property anything but an average, median apartment. Just one.


This is an mildly desirable property in an undesirable neighborhood, and asking $327 per square foot is a joke. If they don’t get serious soon, I smell trouble for this exercise in retina damage.

*assuming a reasonable HOA fee, 10% down (which in 2006 would have been quite rare), and a 6% fixed-rate mortgage (which would have been freaking miraculous)

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