Wednesday, October 28, 2009

Wrong Side of the Tracks

I started writing this post before the price was dropped $40,000, so while my assessment of the pricing has changed, my overall analysis has not.

743 EUCLID Ave #3, 90804
Price: $299,000
Beds: 2
Baths: 2
Sq. Ft.: 1,156
$/Sq. Ft.: $259
Year Built: 1981
MLS#: P702387
On Redfin: 48 days
HOA: $189
Down Payment: $59,800
Income Requirement: $85,000
Monthly Nut: $1,800
Description: Beautiful unit in quiet tranquil complex. Features bamboo floors, granite counters, fresh paint, recessed lighting, upgraded kitchen and baths, large master bedroom with walk in closet, dinning area that opens to kitchen, separate bar area with wine cooler and lots of windows for the ocean breezes.


And dude, "ocean breezes"? You're more than a mile from the water--you sure about that?

I have to give credit where credit is due and say that overall this apartment is pretty nice inside. I'm particularly fond of the dark-colored floors, the recessed lighting (although it appears to be quite far from the wall), and the overall vibe.

Hey, those Ginsu knives come with the place?

And is that bookshelf, reappropriated as some kind of candle holder with a whole lot of negative space, really such a good idea when the bathroom already looks kind of cramped? Try a shelf, yo.

Wait. Is it just me or is the toilet paper a bit of a reach from the ol' Oval Office?

This photo is the best:

1) I can see you in the mirror's reflection and you look goofy as hell trying to prop up your picture-taking arm like that, 2) You sippin' on the sizzurp or what? 3) Install a medicine cabinet, guy! Guests don't even have to search for your Viagra with this set up.

Want to be a realtor for a day? Here's what you do: While sitting in your leased Lexus ES300, close your eyes and rub them really hard with the palms of your hands. Take two big pulls of tequila from your glovebox flask--no, the glovebox, not your center console flask--run into a nearby house and start snapping photos with your big toe:

Good job, sparky! Your license is in the mail!

I guess I can see why those photos are blurry--they didn't even bother to tidy up those rooms. And I'm confused...which room is that desk in? Your kid's room? Taking up his entire closet? He must be stoked on that.

So anyway, decent looking joint, decent square footage (although these photos make it look incredibly cramped), and only asking $259 per square...why no sale?


In general, I tend to view 7th street as an imaginary dividing line between "Desirable" Long Beach and "The Other" Long Beach.

It seems like you can take two identical properties and if one is on the "beach" side of 7th it will immediately enjoy a substantial price premium. I mean, hell, it's just a street, right? But that's the way it goes, and that's why what you buy is as important as where you buy.

As mentioned in prior posts, I believe there is a lot more to the "Location, Location, Location" cliche that realtors love so much. To wit:

As discussed previously, when realtors exhort the importance of "Location, Location, Location" they're not being needlessly repetitive--in my opinion there are in fact three different "Locations" when it comes to buying property:

Location #1 - Neighborhood.

Location #2 - Positioning within the neighborhood (waterfront, cul-de-sac, interior location).

Location #3 - Proximity to external infrastructure elements (under a flight path or power lines, behind train tracks, a freeway, or NHRA drag strip).

He didn't exactly knock it out of the park on any of these counts.

Location #1 - This neighborhood isn't terrible (it's on the good side of Redondo, at least) but I guarantee you any potential buyer would rather pay more to be on the "good" side of 7th. Just goes to show, it doesn't matter what kind of deal you got, when you buy a house you also need to consider what future buyers are going to look for when you need to sell.

Location #2 - It's barely "within" the neighborhood--it offers very little interior protection from one of the busiest thoroughfares in the city.

Location #3 - It's right across the street from a school. That means school buses and car-crammed parent drop-offs twice a day, and considerable noise from the playground if you work from home.

But even if you disagree with my assessment of the Three Ls for this property, here's something absolutely every reader must concede:

Considering he paid $400,000 for this place, the Location, Location, Location is an epic Fail, Fail, Fail.

Pricing history:

Oct 21, 2009 - Price Changed $299,000
Oct 13, 2009 - Price Changed $340,000
Sep 15, 2009 - Price Changed $377,000
Sep 08, 2009 - Listed $399,000
Feb 17, 2009 - Delisted
Aug 18, 2008 - Listed
Jul 27, 2005 - Sold $400,000 (+29.5%/yr)
Aug 17, 2001 - Sold $144,500 (+14.8%/yr)
May 20, 1997 - Sold $80,500

I guess he didn't think anything was strange about the previous owner banking nearly 30% per year in appreciation. I'm assuming the 2001-2005 owner was the one who upgraded the unit, but come on. That's a conspicuous amount of money for a place that sold for just $80,000 during the last housing bottom.

Our featured seller, after three years of ownership and believing the bubble was still alive and well, listed it in August 2008 for a price high enough to deter buyers for six months. Then, after having no success with his WTF price, he promptly took it off the market.

And kept it off the market.


Smart! Who's your realtor?

Then, after hearing all the great news on CNBC about the economy and housing "making a comeback," he slapped it back on the market last month for $1,000 less than he paid in 2005.


How'd that work out for you?

I already know the answer: Not bloody well.

That's because the price cuts started in earnest a week after relisting, and continued down to today's asking price of $299,000. Shockingly, that price, a massive 25% decline in value, puts this lil' buddy into short sale territory.

And by "short" I mean, "the bank must be soiling its tightey whiteys."

That's because even if the lender approves this price, I still don't think buyers will bite. Besides the fact that most shoppers would rather fuck a bowl of scorpions than mess around with a short sale, the sold comps are absolutely killing this guy. Peep:

$220,000 680 Grand Ave Apt 103 Sold on May 18, 2009
0.13 miles 2 bd / 2 ba 855 Sq. Ft.

$250,000 648 Coronado Ave Apt B Sold on May 20, 2009
0.25 miles 3 bd / 2 ba 1,200 Sq. Ft.

$183,000 420 Redondo Ave Unit 204 Sold on Jul 29, 2009
0.31 miles 1 bd / 1 ba 932 Sq. Ft.

$195,000 420 Redondo Ave Unit 207 Sold on Jul 30, 2009
0.31 miles 1 bd / 1 ba 883 Sq. Ft.

$440,413 3600 E 4th St Unit 202 Sold on May 14, 2009
0.33 miles 2 bd / 2 ba 1,320 Sq. Ft.

$215,000 1100 Newport Ave Unit 407 Sold on Jun 16, 2009
0.35 miles 2 bd / 2 ba 1,138 Sq. Ft.

$215,000 1100 Newport Ave Unit 407 Sold on Jun 16, 2009
0.35 miles 2 bd / 2 ba 1,138 Sq. Ft.

$390,000 3637 E Vermont St Sold on Jun 05, 2009
0.35 miles 2 bd / 1 ba 888 Sq. Ft.

$125,000 1100 Euclid Ave Apt 317 Sold on Jul 16, 2009
0.37 miles 2 bd / 2 ba 820 Sq. Ft.

$195,000 1100 Euclid Ave Apt 313 Sold on Sep 24, 2009
0.37 miles 2 bd / 2 ba 843 Sq. Ft.


It's notable that the only two units that sold for more than $299,000 are located--surprise, surprise--on the "good" side of 7th Street in the more desirable 90814 zip code.

Do you see my point?

Given the competition (not to mention the community laundry and solo garage space), to say this place has no shot at selling at this price is like saying a patient with necrotizing fasciitis has "a bit of a skin problem."

**UPDATE: You know what I just noticed? Look at this picture again and focus on the right side:
A Convict Cage (or as FreedomCM calls them, "Ghetto Gates") on the front door doesn't exactly emanate a warm, safe feeling, and as far as I'm concerned is a deal killer for something anywhere near this price range. The "Other" side of 7th already has a perception among many as being less safe, and (justified or not) this only solidifies that predisposition.


  1. Convict cages?

    I call them "Ghetto Gates". They are a great marker of how the "good areas" shrunk during previous downturns in the economy. Just drive through neighborhoods, and if you see them, you know the tide could lap up on those shores again.


  2. FreedomCM, great to see you again! Damn it, I like "Ghetto Gates" better! I'm going to steal that one if you don't mind.

    And a great point about the good areas "shrinking." Realtors used to refer to neighborhoods as "transitory" during the bubble, but during a downturn those marginal "up and coming" neighborhoods are the most likely to turn sour first.

    The next few years in Long Beach will be interesting.

  3. el bee
    You wrote:

    Actually that's the correct spelling. Could it be the dean of lexicon has made a mistake?

  4. JK,

    Holy crap, I must be slipping. It's just that after a few years of doing this blog, I almost reflexively call out that word for being misspelled because it happens so often.

    "Dean of Lexicon." HAHA.

  5. I live a few blocks up from here, by 10th and Termino....

    I can tell you that the "ghetto bird" is flying in this area on the reg, for the past 10 years at least.

    To be honest tho, the past few months have been very quiet!

    But it's not uncommon at all, to be woken up at 1am, to hear a helicopter overhead, going round and round, big ass spotlight, for up to 30 or more minutes.

    Reminds me of the days we used to live on the border of Compton, over on Orange and Alondra, back in 89.

    Now THOSE were the days to be scared!!!!!!!!

    Can't believe I'm still alive actually!

  6. I love your posts. I live here in LB, and can't believe that prices are so inflated. How the hell did something go up from 80 k to 400 k in 10 years, and people think that is normal. It doesn't correspond with incomes. I know b/c I make a good income, but all I can afford is the ghetto cages. I hope that prices come down and these assets are deleveraged. Keep up the great work. AVS

  7. I am NOT happy to be sharing this -

    THIS is the kinda thing that brings down "nice" hoods here in Long Beach.

    And I told ya, over here, it goes down. Sucks, but it's the truth.

    This is really sad, to contrast what else I saw on Halloween night, which was an awful lot of COMMUNITY, interacting with each other, in a really positive way.

    2nd street was off the hook for Halloween. Kids were cute, out with their parents, and the parents were dressed up too. The whole atmosphere was nice and warm, and there wasn't the thug element at all.

    Even at the church thing on 7th at Redondo, it was a very nice community thing going on.

    A few days before, I saw all the high school kids wearing those yellow shirts, to signify the coming game between Poly and Wilson.

    So fucking pathetic, it has to go here.

    Welcome to Long Beach.

    And you wanna raise your house price?????