Friday, May 1, 2009

Finished Before it Begins: UPDATE II

The last time we dropped in on this seller, he had just reduced the price to $249,000.

Well, as of April 1, seven months after the last price cut, this short sale is now asking $210,000. Looks like somebody woke up from their nap!

Here are the updated essentials:

Address: 1130 E 1st St #301, 90802
Asking Price: $210,000
Year Built: 1959
Size: 2 beds, 2 baths, 977 sq. ft.
New $/Sq. Ft.: $215 (from $255)
HOA Fine: $287
Purchase price: $415,000
Purchase date: 1/2007
MLS#: P648286
On Redfin: 279 days (and still no pics of the kitchen)
New Down Payment: $42,000 (from $49,800)
New Monthly Payment: $1,400 (from $1,800)
New Income Requirement: $60,000 (from $71,000)
Description: Unit was remodled two years ago. All new flooring, kitchen appliances,paint and lots of nice up grades. Front Corner, top floor. Great view of the city, the Queen Mary is visable from in front of unit. Two, assigned underground parking spaces, come with this unit. Short sale.

For those of you keeping score at home, the amount of "equity" destroyed during the last two years is a jaw-dropping -$205,000 (thus far). More than 50% off the 2007 sales price!

Poof! Gone. Like a one-winged Cessna in the Bermuda Triangle.

And as always, the question is: Will this dramatically reduced price be enough to nab a buyer?

The answer to that ever-crucial question is...

Uh, maybe?

After all, it appears to be close to rental parity. Considering the two underground parking spots, this place could possibly fetch $1,400 a month in rent. However, the income requirement of $60,000 is still about double the 90802 median household income and we're still well above the 2003 price (most condos in this neighborhood are selling for 2002 prices and lower). Furthermore, the bathroom is horrendous and we still have no idea what the kitchen looks like.

Regardless, I think this price is getting somewhat competitive. And assuming the bank gets of its keyster and processes offers in a reasonable amount of time, at close to $200 per square foot I think there is a reasonable shot at finding a buyer this summer.

On a side note, it's amazing to me how many properties purchased in 2007--the year of "contained" subprime loans and "major discounts from peak prices"--are popping up on the market.

I expect this trend to grow substantially, and would not be surprised to see an increase in 2008 "smokin' deals" appearing on the MLS in the coming months.


  1. Great blog! I discovered it a week ago and have come back a lot: a source of sanity as my husband and I currently beat our brains out between the foreclosed condo market and an over-supply of crappy rentals (two parking spots and in-unit laundry in an area where I’m not afraid of being killed in a drive-by is REALLY too much to ask?). We just moved to Long Beach a year ago and I have been STUNNED—lived in notoriously leech-like West LA for six years and I’ve NEVER had this kind of trouble finding a decent apartment.

    Anyway, this listing left off the two best features: 1) coin-operated common laundry and 2) no outdoor space.

  2. Hi Jen,

    I'm glad you found the blog! LOL, the coin-op laundry just solidifies that this isn't a condo--this is an apartment. Plain and simple.

    This summer is going to be particularly tough for housing bears. Sales will increase, we will probably see the median home price increase, and homes will most certainly close for WTF prices due to artificially low mortgage rates. And bears will feel like housing is recovering and they're once again being "priced out forever."

    Everyone's situation is different so I can't really give good advice.

    But I personally am betting that the wave of defaults on the way will result in a very ugly winter. I'm going to sit tight, be patient, and wait for 2010 to finally provide affordable housing (and I'm also going to hope I'm right).

  3. HI El Bee,

    I am a huge fan of your blog!! Do you really think 2010 will be the bottom for the LBC? I read some other blogs that say 2011 will be the bottom. I lived in Belmont Heights and really liked it and would love to move back. However, is it me or are the for sale houses the worst ever?

  4. Hi Anon,

    I don't know for sure that 2010 will be the absolute bottom--it could be 2015 for all we know. I just know that 2010 is when I'm going to START looking. Right now there's just no point. And if in 2010 the result is the same greedtarded prices so far out of line with basic fundamentals, then I'll wait until 2011. And so on.

    Long Beach obviously has a strange psychological barrier preventing it from accepting the cold hard truth of the housing situtation. Plus, Long Beach, at least compared to many other SoCal cities, peaked rather late. San Diego, for example, is way ahead of us as far as price declines. When SD bottoms, that could be our one-year heads up that LA's bottom is near.

    It's not just you: The supply in Long Beach is dreadful. First, the housing stock is OLD. Especially compared to OC. And that's one of the reasons we are seeing so many WTF prices for decent properties. And WTF SALES prices too! The good stock is hard to come by, and both sellers and buyers know it.

    However, just wait until later this year when the Option ARMs explode, the defaults become foreclosures, and some of the shadow inventory comes to market...unless there's some crazy governement intervention, it's going to get ugly and there is going to be a lot more to choose from.