Friday, June 19, 2009

The Patron Saint of Greed

Address: 312 Saint Joseph, 90803
Asking Price: $649,000
Year Built: 1923/2003
Size: 2 beds, 2 baths, 1,000 sq. ft.
$/Sq. Ft.: $649
Purchase price: $355,000
Purchase date: 2/2002
MLS#: P682877
On Redfin: 72 days
Down Payment: $130,000
Monthly Payment: $3,600
Income Requirement: $185,000
Description: All new construction completed in 2003, this beautiful Spanish 2 bedroom, 2 bathroom home has beautiful cherry hardwood floors throughout, new vented gas fireplace, and romantic back yard. Dual function dual-pane Marvin windows. All new bathrooms, custom tile/glass block shower and deep jetted tub. Skylight over tub operates by remote. Ceiling fans in all rooms and solar tubes in living room and kitchen. Customized kitchen cabinets and pull out shelves with Silestone counter tops. Antique stained glass in kitchen. All new kitchen appliances including dual fuel stove, refrigerator, trash compactor, and Franke stainless sink and Moen faucet. Private rear decks off kitchen and master bedroom. New sidelights in master bedroom, central air-conditioning, central heat and insulated roof coating on house. Absolutely everything has been done!

An excellent description! Nice work!

And checking out the photos, I have no reason to doubt the claim that "absolutely everything has been done." This inside of this place looks freaking awesome.

But $649 per square foot?!

Yikes, buddy.

This seller purchased in March 2002 for $355,000, constructed a brand new house the following year, got about six good years of use out of it and this April put it on the market for a jaw dropping $699,000.


That greedtarded price resulted in a chorus of laughter from the market, and last month the price was dropped by $50,000, or 7%.

$649,000 obviously hasn't attracted a buyer yet, so what's next?

Well, if the goal is to get out while the gettin' is good, you would price it realistically from the beginning, close escrow in a matter of weeks, and run off into the Barbados sunset with a suitcase full of cash.

But seeing as how this is Belmont Heights, which, as we all have been told, is "immune to market forces," this seller decided to start with an astoundingly ridiculous asking price and slowly chase the market down. You know, just to let everyone know how "special" this place is and to advertise that he doesn't mind potentially losing out on a massive financial windfall so long as everyone is acutely aware of said specialness.

The going price per square foot in this zip is $400. Even if you add a premium for the "newish" construction and considerable upgrades (which, let's be honest, is justifiable here), this guy is still way off. In fact, this is currently the most expensive 2 bedroom listed in this area, a testament to the "uniqueness" of this tiny house.

$499,000 333 Argonne Ave
0.07 miles 2 bd / 1 ba 760 Sq. Ft.

$430,000 4512 E 4th St
0.32 miles 2 bd / 1 ba 875 Sq. Ft.

$579,000 4451 E Barker Way
0.33 miles 2 bd / 1 ba 1,122 Sq. Ft.

$549,000 616 Park Ave
0.37 miles 2 bd / 1 ba 1,147 Sq. Ft.

$620,000 237 Granada Ave
0.39 miles 2 bd / 1 ba 1,014 Sq. Ft.

$570,000 205 Santa Ana Ave
0.69 miles 2 bd / 1 ba 979 Sq. Ft.

$399,000 4037 E 7th St
0.71 miles 2 bd / 1 ba 832 Sq. Ft.

How do you justify a premium like that? Another Long Beach property with an oil field and gold depository in the back yard? Who knows what this guy is thinking.

And check out the sales history:

Oct 25, 1990 - Sold $260,000
Jul 26, 1991 - Sold $67,000 -83.6%/yr
(What happened between October 1990 and July 1991? Did it burn down?)
Jun 29, 1998 - Sold $58,000 -2.1%/yr
Mar 22, 2002 - Sold $355,000 62.6%/yr
(How do you appreciate nearly 63% per year from '98 to '02? The bubble was crazy, but that's INSANE.)
Apr 08, 2009 - Listed $699,000


So, back to our current seller. I'm not a general contractor, but if construction costs were $100 per square foot in 2003, this guy doled out around a hundred grand to build this little buddy. So he's in for about $455,000.

And you have to imagine he paid down the note considerably in seven years of ownership.

Translation: He has a REALLY nice cushion here. So why is he priced so far above his fellow sellers? I mean, this house is nice. But it ain't that nice.

Only one house this year has been "special" enough to sell for this kind of money, and that was two months ago (not to mention an unemployment percentage point and a mortgage percentage point ago). And it's bigger by 234 square feet and located 2,000 feet from the ocean.

So he's taking a gamble that his (admittedly sweet) little house is even more special than that one (and worth around $1,000 extra per month to own rather than rent). I wish him luck with that strategy.

However, I'm afraid if interest rates get away from the Fed, he'll have missed the boat. And if he hasn't sold by late summer, he'll be scrambling to cut cut cut to find a buyer. And what would have been a monstrous return-on-investment could instead become a crushing loss based on a notion that good taste can defy gravity.


  1. IF interest rates get away from the Fed? They have no where to go but up.

  2. An additional note: this house is ugly, actually, looks like a flipped refrigerator box.


  3. The link says it's no longer on the market..

    Also, only 1 thousand square feet?!?!?!!!!

  4. RE in the LBC is BLOWIN' UP!!! It must be read by the listing agent or owner of this home.

    Saw the bashing it took, and POOF!!! off the market.

    At least that is my theory.

  5. Carl..... lol

    and love the Shaggy "zoinks" reference.