Eagle-eyed Anonymous noticed that our Failure on Florida is back on the market.
For those of you counting at home, we've finally hit 404 days on market.
Since the original listing in April of 2008, the asking price has been reduced a whopping $15,000.
That's right. A measly 4%. That's 1% per 101 days rotting on the MLS.
The funniest part is, this schmuck paid $281,000 way back in 2003 but has somehow convinced himself that he is entitled to emerge from the housing bubble implosion with a profit of $60,000 after commissions (but before upgrade costs). What he fails to realize is that judging by the Sold price per square foot in this neighborhood ($225), the most he could hope to get in this horrific market is $220,000. He's actually going to LOSE $60,000, plus commissions, plus costs of upgrades (I think the fierce competition in this neighborhood will guarantee much bigger losses, but 60k is the bare minimum loss).
And that, of course, is assuming this seller suddenly wakes up and cuts $140,000 from his asking price. Given the track record of this delusional tour de force, what do you think the odds are of that happening?
At the risk of being derivative, I would like to quote myself from the Rip Van Winkle Fell the Hell Asleep post (that dolt is still chillin' on the MLS after 779 days, by the way):
Believe me, even years from now as condos are selling at 2001-2002 prices, these true believers will still be out there. Kind of like those Japanese soldiers stuck on remote islands, not realizing (or refusing to believe) that World War II had ended, continuing to fight the war decades after Japan's surrender. To some, denial is more addictive than the best heroin or crack that money can buy.
El Bee,
ReplyDeleteDid you get a chance to check out the presentation that SocalBubble posted in this post - http://www.socalbubble.com/2009/05/more-mortgage-meltdown.html (Slide 8)
Looks like this bubble STARTED in 2000, and looking at property shark numbers, it could have started in portions of Long Beach a little earlier. For the condo price (in 90802), the ppf went from $83 in 1999 to $107 in 2000. THIRTY PERCENT from 1999 to 2000.
Once the bloodbath in Long Beach begins, do you think we could see 90's pricing? Most bubbles overshoot on the downside.
Wow.
BTW, an REO in Tustin, near where my parents live is listing for $267 sq. ft. Foothill High School. North Tustin address.
http://www.redfin.com/CA/Santa-Ana/1042-La-Loma-Dr-92705/home/4761632
Well, if the bubble started earlier in LB, then it would stand to reason that it would bottom sooner here. Looking at most LB prices, I have yet to see any evidence that sellers have capitulated or that any bottom is in sight. As this property conveys, the perceptions of "specialness" have yet to dissipate.
ReplyDeleteI absolutely believe we will overshoot in most areas of Long Beach. We have already seen 90s pricing (and 80s!) in less desirable 'hoods, and I think there simply are not enough $200,000 per year households to prevent the mid- to upper-tier from suffering a similar fate.
I keep reading the next two weeks will be crucial for mortgages. If rates consistently creep up and people are able to finance less, I think 90s prices in nicer LB neighborhoods is all but assured.
But never underestimate the gov.
according to bankrate.com, the average rate on a 30 yr. fixed is 5.825 for a 0 point loan (5.869 APR) for 90808.
ReplyDeleteI'd rather be interest rate fucked than valuation fucked, if I have to be fucked.
(and the foreclosure picture was pretty!)
Wow, so the interest rate has raised that much?!? Just a couple months ago, it was at 4.8%. This is what I don't get though, how a rising interest rate helps overall. Because even though the mortgage prices will decline, the interest prices will rise.
ReplyDeleteFor example, I just ran the numbers for a $200,000 mortgage, on a 30 year loan. Now at a 5% rate, the monthly would be $1,073.64 and the total payment would be $386,512.
Lets say the interest rate rises to 6.5%, and the price of the same home declines to $160,000. The monthly would be $1,011.31 and the total payment would be $364,071.
Now I don't know how much a home value would drop, in relation to the interest rate, but it seems to me that it's not a very big "win" situation for us buyers.
What am I missing??
More interest to write off?
ReplyDeleteOne thing that MAY happen is that there will be more foreclosures if rates keep rising (they didn't today). Those who couldn't afford their house without a Option/Alt-A mortgage will be even less likely to refinance at these higher rates.
ReplyDeleteThe other thing is that there may be potential "buyers" who run the numbers at 4.5% vs. 6 or 7 per cent may be out of the market at current valuations.
Both leading to lower prices, I hope.