Thursday, May 20, 2010

"YNGFR": UPDATE II

The price was "$250,000" and changed to "$225,000"

In case anyone is operating under the misguided belief that the banking system has stabilized and housing is poised for a big comeback, I want you to consider that this shitty apartment is still booked at full value on the lender's books -- despite the current asking price being $114,000 less than the 2004 appraised value.

As long as that bullshit is allowed by the government (and in fact actively encouraged by way of mark-to-fantasy FASB policies and various extend-and-pretend programs like HAMP, HAFA, etc.), it will take YEARS for this inventory to actually hit the market. Meaning, returning to true values (based on actual incomes and sizable down payments) will take ages.

I'm tired of waiting -- exhausted, really -- but I'm also no fool. If I could use Other People's Money, this would be a no-brainer. Buy now and walk away if things go south. But I have my own cold, hard cash on the line and as long as countless properties like this are still rotting on the MLS, the buy signal is a long way off.

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The price was "$289,000" and changed to "$250,000"

Well that's one way to get buyers' attention! I guess now the question is whether the bank will actually let it go for nearly $100,000 shy of the original loan amount. I somehow doubt it. But maybe in light of the first-time homebuyer tax credit expiring, they're getting out while there's still some demand left. We'll see.

Sorry for the sporadic posts...I've been on the road all week.

Every time I travel I can't help but observe the local real estate situation. The last time I was in Miami was the summer of 2006, and as I drove around I remember marveling at the incredible number of construction cranes piercing the horizon. At the time I said to myself, "Who are these being built for? Is there that much demand for new housing or even rentals? How does all of this construction make sense?" From what I could tell, the completed towers seemed empty--why build more?

Anyhow, today the cranes are pretty much extinct but at night many of these new buildings were dark, reminiscent of the North Korea Towers in Irvine. Pretty crazy.

South Beach was still fun--it hasn't lost any of its swagger in this downturn.

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Address: 1318 East 2ND St #9, 90802
Asking Price: $289,000
Purchase Price (2004): $329,000
Beds: 2
Baths: 1.75
Sq. Ft.: 909
$/Sq. Ft.: $318
Year Built: 1964
MLS#: P701097
On Redfin: 131 days
HOA: $156
Down Payment: $10,000 (FHA)
Income Requirement (4x income): $72,000
Monthly Nut: $1,700 (FHA)
Description: Sunny & bright, this lovely condo has tons of storage space, a spacious dining room and living room, a separate master bathroom AND A PRIVATE GARAGE with storage that is big enough for an SUV! The home has large rooms that make the entire condo bright and roomy. Located just 2 blocks from the beach, this is perfect as a second home, vacation property or a retreat to enjoy every day!

"perfect as a second home, vacation property or a retreat to enjoy every day"? Looks like this bathroom took a vacation to the 1960s:

HORF!

And when was the last time you saw a white refrigerator?

Maybe I've just become accustomed to stainless fridges, but for some reason that outdated clunker is really jarring!

Pssst! Wanna see the secret to selling a tiny, dumpy apartment with original bathrooms in a shaky economy? Here you go:

December 30: The price was "$239,000" and changed to "$289,000"

Genius!

This short selling grifter has been priced below $270,000 for the last 75 days (50 of which were spent begging for $239,000) with no luck, but for some insane reason decided what this listing really needed was a price jack to $289,000. Because there's nothing buyers love more than a good ol' fashioned cornholing.

Dec 30, 2009 - Price INCREASED $289,000
Dec 30, 2009 - Relisted
Dec 03, 2009 - Delisted
Nov 12, 2009 - Price Reduced
Oct 30, 2009 - Relisted
Sep 23, 2009 - Delisted
Sep 18, 2009 - Price Reduced $249,000
Sep 14, 2009 - Price Reduced $270,000
Aug 28, 2009 - Listed $319,900
Aug 01, 2008 - Delisted
May 06, 2008 - Listed
May 06, 2008 - Delisted
Mar 30, 2008 - Listed
Mar 29, 2008 - Delisted
Feb 29, 2008 - Listed
May 25, 2004 - Sold $329,000 ($270,000 puts it firmly in 2002 pricing--the true market value, judging by the failure to sell for $249,000 is likely 2000/2001)

What kind of sales strategy is that? To paraphrase a line from Tropic Thunder, When trying to sell a house, "everyone knows you never go full retard."

Because that's the only explanation for the current price. All the loanowner has to do is click on their own Redfin link to see that nearby properties are selling for nowhere near this amount:

Downtown: $243,000; $271 psft
Alamitos Beach: $225,000; $262 psft
90802: $249,000; $276 psft
Long Beach: $229,900; $256 psft


And here she is, demanding $311 per square! Based on what, honey?

Anyhow, the point of this post isn't about greed or stupidity, or the living hell of two shared walls, or the difficulties involved with short sales, or the insanity of sellers having negative equity after FIVE FUCKING YEARS OF OWNERSHIP yet simultaneously driving $45,000 luxury SUVs...



No. Although all are at play here, this post is really about pent-up foreclosures.

You see, this property is just two months shy of its two year (!) anniversary on the MLS. It's technically not "shadow inventory" because its been out in the open on the MLS, right? But given the lender's failure to approve a sale in 22 months, it has never actually been "for sale." Meaning it's a bank-owned property in denial.

A monster loss is guaranteed, it just hasn't been booked yet.

And after it inevitably goes back to the bank, it will come back on the market at a greatly reduced price (it seems that most times, once the loss has been realized banks just try to unload). However, REOs dumped on the market crush values, putting everyone else in the area (further) underwater and perpetuating the cycle. It makes perfect sense why lenders are intent on keeping these phantoms in real estate limbo for as long as they can.

And without a mechanism to force lenders to actually approve short sales and process foreclosures (read: recognize losses) instead of extending and pretending for eternity, the market will be absolutely surrounded by these phantom properties for years and years, with no opportunity to actually buy them.

If this seller were smart (ha!) she would have stopped paying ages ago and lived rent-free this entire time. If her lender isn't interested in selling short after two years, they certainly aren't keen on foreclosing.

7 comments:

  1. I was in South Beach this past weekend. Only walked up Ocean from 5 to 10, since I got stopped at the Clevelander for some live music.

    That ROCKED, but I did notice a LOT of empty tables in front of those restaurants between 5 and 10.

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  2. Shitty end of 2nd Street right near the sex offender's group homes.

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  3. Okay, I live in Alamitos Beach, and not in the good part either, and yet I wouldn't consider buying this place until it was under 100K. Yeah, that's right, about one third of what it's been listed for.

    And I have to laugh over the "vacation" or "weekend" home thing. Maybe when the Breakwater is torn down, but not a moment before that.

    I agree. She should just stop paying the mortgage. Who is raising the price? If it's the "owner" then it must be becuase the bank won't go below a certain price.

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  4. I agree with Anon. Wouldn't pay much for this shitty place. The inside is just as ugly as the outside, and the surrounding area isn't any big prize.

    And to the first Anon, ARE THERE REALLY GROUP HOMES FOR SEX OFFENDERS ON 2ND STREET????

    Why on Earth would you give them a group home on Second Street??? Why not put them on 1st or Ocean? Do they at least have a view??

    Good grief.

    When sex offenders are living in a better area than you, you KNOW life really sucks. That's the clincher. Stop the world I wanna get off.

    El Bee you are the greatest!

    Happy Summer to everyone.

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  5. El Bee (and everyone), you will LOVE this story!!

    http://www.lbpost.com/don/9750

    Be sure to read the comments, as they are hilarious.

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  6. Mike,

    Did they ask how many of those people actually believe they are underwater? That survey is abso-fucking-lutely meaningless without that information.

    Just a cursory look around my blog and it's clear that most Long Beach homeowners are in total denial about their underwater status.

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  7. Why bother with reality? That only makes things difficult.

    Seriously, from what I gathered, this was a story done by realtors. Nuff said?

    At this point personally, I'm content renting. After seeing all the taxes and fees being laid upon everyone under this socialist regime, I have no motivation to become one of the mules bearing more of the tax burden.

    Whether it's increases in property tax, extra miscellaneous fees, increases in HOA fines, etc.... I see that not only is renting cheaper, but there's no overhead.

    Also if and when I do purchase, I will probably look for a state with a government that I think is at least SOMEWHAT American, in it's principles. Arizona or Nevada, or maybe even NC, seem to be better places to invest in a home purchase.

    Personally I think these people are still trying to sell dirt, and are totally out of touch with reality. RECORD unemployment rates, rising taxes, bankruptcy in both state and federal government...... all this optimism must be coming from the true believers of socialism (ie "Progressivism"), who simply are living in the land of make-believe, ignoring everything exploding around them.

    ReplyDelete