To jog your memory, here is a blog post from September 2008.
Anyhow, I was perusing the always-entertaining Irvine Housing Blog Forums and I saw this:
According to Curbed LA:
A flyer was just released announcing that they are auctioning off 39 units. But here's the difference: Lower minimum bids. In August, the minimum bid on a 834-square-foot unit that was previously listed at $534,000 was $275,000. At the April auction, the minimum bid will be $195,000.
Meanwhile, the developer reported that 33 of the 39 condos sold at that first auction, but the number didn't indicate how many had closed.
Don't you find it odd that after a 39-unit auction in August, seven months later there are exactly 39 units for sale?
That can mean one of several things: 1) None of the "sales" from the previous auction actually closed, and this is the same 39 units, or 2) This unmitigated disaster of a condo tower was dealing with at least 78 vacant units (out of 114!).
Either way, this building is a bigger FAIL than Mickey Rourke's plastic surgeon.
By the way, remember when I mentioned a friend-of-a-friend bought one of the ocean-facing units:
A friend's co-worker recently bought a 1 bed/1 bath ocean view unit for $350k. Sweet deal, right? Sure, as long as you don't count the additional $250,000 (over the life of the loan) in non-deductible HOA fees. I don't know about you, but it's difficult to write $700 checks and not "count" that money.
Well, according to my friend his buddy's sale never actually closed! He apparently couldn't get financed due to an investment property he had and the sale was never completed. That was the best effing thing that could have ever happened to him!
How furious would you be if you had purchased one of these at the last auction for $275,000? I hope you're enjoying your $80,000 loss in equity. Congratulations, you just caught a falling knife! Worse yet, what if you bought one for half a million? If you haven't walked away by now, these sub-$200k opening bids might just have you stuffing your keys into a manila envelope.
And as one Curbed commenter noted, "$1000 /mo HOA? Seriously? If you got a condo for $195k- the minimum bid- your HOA fee would be the same as your mortgage."
There's a little perspective for you, eh?
(Here is an HOA discussion that was prompted by my first WO2 post).
And I know I have already beat this point to a bloody pulp, but what is downtown Long Beach going to look like as the unemployment rate continues to spike? Crime? Homelessness? Safety?
It's just a shame that the city was making such great headway cleaning up downtown and now, thanks to this severe economic downturn, in all likelihood it's going to revert back to its old ways.
The last time I lived in downtown (in the late 90s), my comfortable suburban upbringing was in for a major culture shock. Now, I wasn't living on Ocean Blvd. in a luxury tower, but that's not the point. It doesn't matter how nice your house is on the inside, you've got to go outdoors eventually. And an astute buyer would be factoring this in.
Frankly, I don't care how low the starting bids are, with those highway-robbery HOAs, the demonstrated ability to easily shed hundreds of thousands in "value," and highly questionable future for the downtown environment, I would still be cautious about purchasing at West Ocean Two.
HOWEVER, there are some major government incentives to purchase now and we don't know how much longer the Fed will be able to artificially suppress interest rates. If you're chomping at the bit to buy, you're running out of excuses to keep waiting.
Regarding these low interest rates, some people, including me, have said that the problem with buying at incredibly low rates is that when they creep back up, property values plummet because higher rates severely limit how much buyers are able to finance. This isn't a problem AS LONG AS YOU ARE PLANNING TO KEEP THE HOME AS PART OF YOUR INVESTMENT PORTFOLIO. In fact, locking in a 4.5% rate for 30 years is a really smart move if you're not planning on selling any time soon.
However, if this is only a "starter" condo and you're planning on selling it in five years to buy a detached home, you might be better off waiting for rising interest rates, the remaining bubble equity loss yet to be realized, and the ever-increasing unemployment rate (and subsequent reduction in demand) to bring down the property value of that detached home. Plus, with higher interest rates you'll be able to realize more of a tax advantage.
I don't know. There are advantages to both buying soon and continuing to sit on the sidelines--everybody's situation is different.
But make no mistake: If you buy one of these condos today, you will lose equity IMMEDIATELY. Like driving an AMG Mercedes off the lot.
Plus, nearly $2,000 a month still seems too expensive for a one-bedroom apartment--even in a building as nice as this one. Unless of course, you believe after dropping from $534,000, to $275,000, then to $195,000..."this is as low as it will go."
Anyone who reads this blog knows better, but it's your money.