Wednesday, June 3, 2009

Will 2003 Pricing Get the Job Done?

Address: 850 E Ocean #812, 90802
Asking Price: $399,000 (another listing for this property is asking $395,000)
Year Built: 1992
Size: 1 beds, 1 baths, 1,026 sq. ft.
$/Sq. Ft.: $389
HOA Fee: $612
Purchase price: $580,000
Purchase date: 6/2006
MLS#: P689550
On Redfin: 226 days
Down Payment: $80,000
Monthly Payment: $2,700
Income Requirement: $113,000
Description: Bought $580,000 June-2006 super sharp better than model. all built in, beautiful bathroom totally remodeled updated, special order cherrywood cabinet built over $70,000. move in conditions, ocean view condo with direct beach access 24hrs front desk security. cctv and cameras. key card limited access GYM, sauna, pool, library, lot of guest parking many more come and see. ..

That could be one of the worst, most illiterate, English-as-a-second-language listings ever featured on the Long Beach Housing Blog.

And did you notice the multiple references to security features? To wit:


“front desk security”

“cctv” [Closed Circuit Television]

“and cameras”

“keycard limited access”

Just what is the listing agent trying to tell us?

As the listing so proudly highlights, the seller purchased this ONE BEDROOM apartment in the summer of 2006 for a jaw-dropping $580,000. It took more than two years for that crushing $4,000 monthly payment to finally take its toll, and the condo inevitably went up for sale.

But it was too late to get out without sustaining a massive loss…and he knew it. Last October it was listed it for $498,000--locking eyes with an instant loss of -$181,000 including commissions and (alleged) upgrade costs.


But, losing $181,000 in 2008 would have seemed like a hot oil massage from Megan Fox compared to the nail-biting distress in store for 2009. You see, as the market continued to dive the seller desperately chased it down, only to watch in defeat as the market, preening and sneering, consistently remained a few steps ahead.

And now, with a re-listing and a new asking price of $399,000 (a 32% haircut from his purchase price), he is hoping his market-chasing days are finally done.

Assuming he could find a buyer to put him out of his misery and slap down $399,000, it would represent a staggering loss of -$275,000.

How on Earth is this not a short sale?

And those loss calculations assume someone is interested in a $400,000 one bedroom apartment. Frankly, I don’t think 2003 pricing territory will cut it and this place has much more market chasing to do.

First, compared to the average square foot price of Sold homes in this area ($225), this place must be pretty "special" if he thinks it's worth $389 per square. He and his listing agent would likely argue that the upgrades justify the premium.

Okay. Sure.

But after scoping these photos, it doesn't look that impressive. Hell, it doesn't even look that big!

The bathroom is nothing special:

And there isn't even an ocean view:

It's a bold move to call this “better than model” specs, but hey, whatever it takes to garner some interest, right? Who cares if after the Open House potential buyers walk away with a chronic case of the "Mehs"?

Second, there is some strong competition in the area. Here’s a 2 bed/2 bath across the street asking $269,900.

Yeah, I guess it’s not "totally remodeled," but with the $125,000 you save I’m sure you can manage to create a pretty swanky living environment and still have plenty of cash left over.

True, some nearby condos are asking way more than our featured seller, making this unit seem cheap in comparison, but most of them have been rotting on the MLS for ages with no interest.

Finally, any smart buyer would run away from these buildings because of the exorbitant HOA fines and potential for new Special Assessments and Loss Assessments as "owners" sink further underwater and bail on their obligations. It looks like there are at least 11 units for sale, all competing for a limited number of well-heeled buyers and adding to the distress of fellow sellers and owners alike.

That is a scary position to be in.

I don't think this place has a shot at selling at its current 2003 pricing (I also don't think it will reach its 2000 price of $216,000). How high-HOA, non-ocean-facing units like this will be valued at the bottom is anyone's guess, but now that voodoo Liar Loan, Option ARM bullshit loans have gone the way of the dodo bird, I fail to see how Long Beach incomes can support these prices.


  1. 1) Due to the great description provided by the realtor, I doubt this reatlor knows how to mark this as a short sale.

    2) I don't think the owner paid anywhere near $4000/mo for this property. I am thinking about $1,200/mo with those nice Alt-A's. :)

    3) $70,000 for kitchen cabinents in an apartment? Really?

    4) $7,000 per year for WHAT exactly? Security, and.......????? God damn, HOA fees suck ass.

    Enjoy the ride to recast and foreclosure!!!

  2. All very good points, Carl.

    It would be one thing if you could write off HOA fines or at least be able to lock them in and prevent usurious increases or BS Special Assessments. But you can't. Talk about throwing money into a hole.

  3. Definitely a front-runner for worst listing of the year (you should give out an award for that). At least it wasn't all caps. In fact, hardly any caps, not even where they were needed.

    Keep hammering home the point about HOAs and Special Assessments. Thanks for doing that.

  4. First thing -

    If a person can charge over $70,000 for some kitchen cabinets, I think we all need to change careers and get into the cabinet making business. 70 freaking THOUSAND dollars!! FOR SOME CABINETS!!!!!!!

    Oh wait, I'm sorry, they are "cherry" wood cabinets... the cherry makes all the difference (wink wink).

    Secondly, El Bee, I love your commentary. Hate to ride your jock so hard, but I love your wisecracks. #1 because they are funny, but #2 because these people so deserve to be slammed, and you are so efficient at cutting through the bs.

    I don't know about y'all, but as SOON as I found out that somebody selling something is blatantly LYING (ocean view, where it is???), that immediately makes me take 5 steps backward, and raise shields faster than the Enterprise being confronted by the Borg (trying my attempt at witty and humorous comments, so forgive me).

    What strikes me BESIDES the HOA (which made me cringe), was seeing that somebody actually paid over 500K for 1 thousand square feet of property. You'd think this was on the French Riviera or something, but on second look, it's just ghetto old overdeveloped Long Beach.

    But yeah, the HOA is just ridiculous, and if there are enough dummies out there willing to bend over to the tune of 5 and 6 hundred every month in these Ocean Blvd. condos, then I guess I can't blame the associations for raping them.

    I absolutely cherish an ocean view (real or not), but to throw away $600 extra bucks a month?

    Anyways, thanks so much El Bee.

  5. This is exactly why I endd up leaving LB and Calif. I knew this ponzi scheme would end badly. I feel bad for LB as it still holds a special place in my heart, but it wastime to go. We moved to the midwest and have enjoyed it here thus far. Still miss the great LB weather and restaurants, but we do make it back there at least 2-3 times per year. I sold and got out in '07(bought in early '01). We will return when housing gets back to some semblance of normalcy and Calif gets it's act together economically. It may take close to a decade, but i can wait andjust visit for now. Great Blog BTW. Love the straightforward candor.