Back From the East Coast with a Quickie: FINAL UPDATE

Sold on 06/28/10 - $325,000

It's a miracle! Hallelujah!

And only $228,000 less than the original approved short sale price! Your two-year pursuit of wishing prices really paid off! That's some next level thinking!

And yes, you read that correctly: This loft has been rotting on the market since June 2008 -- exactly two years. And if you've been following this property like I have it's pretty obvious why:

Jun 28, 2010 - Sold (MLS) $325,000
Apr 22, 2010 - Price Changed $325,000
Mar 19, 2010 - Relisted
Mar 25, 2009 - Price Changed $359,900
Feb 05, 2009 - Price Changed $374,900
Jan 07, 2009 - Price Changed $395,000
Jan 01, 2009 - Price Changed $425,000
Nov 17, 2008 - Price Changed $553,000
Jun 20, 2008 - Listed $549,000

Good God, what a long, arduous, market-chasing ordeal. Do you think the bank regrets not accepting one of those "offensive" low-ball offers of $450,000 or $400,000 back in the day instead of smoking Hope joints and sticking to wishing prices while tens of thousands of dollars of value evaporated before its very eyes?

The sad thing is, despite these catastrophic losses suffered due to an inability to accept reality, there are still people out there who believe housing will come roaring back any minute now.

I remember telling people about this loft way back in the day. I mentioned that it was awesome, but hilariously overpriced. When asked what I thought it was worth, I distinctly remember the looks on their faces when I said, "Around $300,000."

They thought I was high as a kite. "There's no way prices will go down any more." "Do you really believe that?" "That's like half off! That will never happen, dude."

I hate to say I told you so, but I told you so. Look, it didn't take a crystal ball, just common sense and a belief that fundamentals will actually matter once bullshit fantasy financing is removed from the picture. Now that mortgages require actual, verified income, it makes sense that house prices must conform with those incomes. That's a simple calculation.

And Rent vs. Buy is also a simple calculation. If it costs twice as much to own as it does to rent the same house -- it's overpriced. And in light of a horrific employment situation in California, I suspect many people will begin to view homeownership as an anchor and a potential impediment to employment mobility. I'm not saying that renters will suddenly be viewed as anything other than "second-class citizens" but you have to admit that the advantages to renting are starting to become more readily apparent. Because of this, I would not be surprised to see renting fetch a premium over owning once this is all over.

For the record, $325,000 purchase price with 20% down results in a monthly payment (after mortgage interest deduction) of about $1,500. As long as you're cool living downtown, that seems like a decent deal given the significant upgrades and the State tax credit.

Oh, it's also worth mentioning that in two years the listing agent never bothered to fix that glaring "celing" typo in the listing. And for that kind of kick-ass-and-take-names diligence and attention to detail, he cashed a commission check for $19,500. What a country!

Click here for the whole awful saga.

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UPDATE IV



Mar 25, 2009 - Price Changed $359,900
Feb 05, 2009 - Price Changed $374,900
Jan 07, 2009 - Price Changed $395,000
Jan 01, 2009 - Price Changed $425,000
Nov 17, 2008 - Price Changed $553,000
Jun 20, 2008 - Listed $549,000

It's been 284 days! Put a bullet in this short sale's brain and put it out of its misery already!

Here is a compendium of this property's long, arduous, market-chasing journey: THE SAGA OF SUCK.



Look, I give the agent credit for slashing the price on cue each month for the last few months, but it's clearly not getting the job done. The weird thing is the current asking price is undercutting nearby sellers by a decent amount and $275 per square foot is almost, sort of, kind of approaching reality...so what's the problem? Why no interest?

Honestly, I think it's the sleeping platform.

First, as an investor, you are severely limiting your renter pool with that disco deck. No kids, no older folks--just young, single, wealthy men (you can call me out in the comments, but I don't think the loft-promoting movie Big had quite the same influence on young girls as it did boys--this type of property primarily appeals to dudes).

Second, as an owner occupier you not only have the same problems but, come on, that bedroom barge would be fun for about 3.6 days before you longed for a few walls to hang pictures on and a door to shut every once and a while. Even if you live by yourself, you're telling me being out in the open like that wouldn't get old?

Maybe it's just me.

All I know is last night two smart, economically-educated friends, whose opinions I respect and value, ganged up on me and told me I was dead wrong about house prices continuing to fall in Long Beach--specifically Belmont Shore. They both said that sales are picking up and "prices aren't going to get any lower."

When I countered, "That's what they said six months ago, and a year ago, and 18 months ago...how did that work out for those buyers?" my opinions were promptly dismissed as the biases of a doom and gloomer.

Is it just me, or are people becoming more optimistic lately? But unless I'm missing something, it's wholly unjustified. I get the weird feeling that a lot of folks are "willing" the economy to improve simply because they feel like now is the time.

When I asked them to provide just one positive economic indicator that prices won't continue to fall, I got nothing. What I did get was a "feeling" that this is the bottom and that things can't get any worse.

I know plenty of Long Beach Housing Blog readers who would strongly disagree with that sentiment, but I'm curious to hear from those who are a bit more bullish, or at least have reasons for becoming more optimistic. Any thoughts?

Is it time for me to officially change into my Bull hat?

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UPDATE III

While some downtown sellers are snorting huge lines of delusion and raising prices amidst the worst employment news in 30+ years (and are too stupid to change the listing description proclaiming, "HUGE PRICE REDUCTION!!!"), some people are beginning to see the light:

In this post I updated you on a kick-ass loft that suffered from WTF pricing when it was originally listed in June 2008. The Housing Kool Aid buzz has slowly worn off, and now we're looking at an asking price nearly 20% lower than the original.



I'll recap so you don't have to look through all the old posts:

Jun 20, 2008 Listed $549,000
Nov 17, 2008 Price Changed $553,000 ("SHORT SALE APPROVED AT $553,000!" )
Jan 01, 2009 Price Changed $425,000
Jan 07, 2009 Price Changed $395,000
Feb 05, 2009 Price Changed $374,900

That right there is a beautiful portrait of what it's like to chase a horrendous market down. Each price reduction is like a David Beckham penalty kick right to the family jewels.

And, to reiterate my point about buying right now being a guaranteed rusty knife-catch, please imagine for a moment that you bought this place in November for $553,000. You would have lost nearly $200,000 in property value in TWO FREAKING MONTHS. Do you have any idea how long it would take you to build that value back up? We're talking 30 years just to break even on the place.



Or what if you bought on January 6th? If you just waited one day, you could have saved yourself enough money to buy a new car with cash.

Don't listen to anybody that tells you we've hit a bottom. Print out this post and carry it around with you if need be! Everybody is eager to call a bottom right now, but Long Beach properties like this are a prime example of why it makes very little sense to buy any property right now--especially one that diverges from basic investing fundamentals.

Considering the $175,000 bloodletting (in less than 90 days, mind you), let's update the listing and see how close we are to said fundamentals:

Address: 207 E Broadway #301, 90802
Asking Price: $374,900
Size: 1 beds, 2 baths, 1310 sq. ft. (built in 1925)
$/Sq. Ft.: $286 (down from $422 last time we checked on it)
HOA Fee: $327
MLS#: S537137
On Redfin: 231 days
Down Payment: $74,980 (from $110,600)
Monthly Payment: $2,300 @ 5.5% (from $3,700)
Income Requirement: $107,000 (from $158,000)
Description: Gorgeous south and west facing corner unit loft in the Historic Insurance Exchange Building! True loft living with open loft layout, exposed ceilings, gorgeous blond wood floors and floor to celing windows with city views! Unique floorplan, over 1300 square foot footprint with 1.5 baths, master bath with dual vanity, jacuzzi tub and two person shower. Enjoy additional square footage and privacy from the custom built-out sleeping loft. Central AC and heat, private storage room, secured parking, gourmet kitchen with granite countertops and viking appliances. One of a kind loft in one of the most well designed and sought-after loft conversions downtown.

Nope, still no dice. No way this one-bedroom rents out for $2,300 a month.

So have fun chasing that market down some more, guy! We'll be sure to get you an ice cream cake on your one-year anniversary.

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UPDATE II

A quick update of a quickie post:

Here is the original post:



Address: 207 E Broadway #301, 90802
Asking Price: $553,000
Size: 1 beds, 2 baths, 1310 sq. ft. (built in 1925)
$/Sq. Ft.: $422
HOA Fee: $327
MLS#: S537137
On Redfin: 153 days
Down Payment: $110,600
Monthly Payment: $3,700
Income Requirement: $158,000
Description: SHORT SALE APPROVED AT $553,000!

Well, considering it was priced $4,000 cheaper for 150 days AND STILL FAILED TO GARNER ANY BUYING INTEREST...best of luck with that!

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As I suspected would happen, that approved short sale price didn't attract a buyer. The new pricing is indicative of serious capitulation, as the short sale asking price has been reduced by a mammoth $103,000 trying to nab a buyer. That's a helluva haircut!

Here is the updated listing information:

Address: 207 E Broadway #301, 90802
Asking Price: $450,000
Size: 1 beds, 2 baths, 1310 sq. ft. (built in 1925)
$/Sq. Ft.: $324
HOA Fee: $327
MLS#: S537137
On Redfin: 197 days
New Down Payment: $85,000
New Monthly Payment: $2,700
New Income Requirement: $121,000
Description: Gorgeous south and west facing corner unit loft in the Historic Insurance Exchange Building! True loft living with open loft layout, exposed ceilings, gorgeous blond wood floors and floor to celing windows with city views! Unique floorplan, over 1300 square foot footprint with 1.5 baths, master bath with dual vanity, jacuzzi tub and two person shower. Enjoy additional square footage and privacy from the custom built-out sleeping loft. Central AC and heat, private storage room, secured parking, gourmet kitchen with granite countertops and viking appliances. One of a kind loft in one of the most well designed and sought-after loft conversions downtown.

"celing"?

Despite that typo, I'm thankful they finally bothered to provide a listing description. And a really good one, too! Bravo, bravo!



This loft is about as cool as they come. I'm legitimately impressed. We aren't treated to photos of the bathrooms (uh-oh) but the upgrading work looks new. Assuming the bathrooms aren't disastrous, all you need is some sleek, modern furniture and you're set.

And check out those phantom stairs!

Someone told me those rail-less stairs aren't compliant with building codes (good luck navigating those things after a night of downtown boozing), but damn they look awesome!

And speaking of downtown boozing, if this economic downturn persists well into 2009, I'm wondering if we're going to see an upsurge in downtown criminal activity. It's possible that Long Beach's commendable efforts to clean up downtown and make it a nightlife hot spot will be gradually erased as the unemployment rate climbs and state budget woes create cuts in services to the poor.

I hope that's not the case, but it's something to consider when checking out downtown properties and thinking of long-term values. And considering many downtown properties are (still) woefully overpriced and have yet to see the full force of equity destruction experienced in other Long Beach areas, crime will have a tangible effect on further price declines.

As far as this property goes, I don't know if the bank actually agreed to this greatly reduced short sale price but I fear that it's still not enough to find a buyer in this economic environment. This place would make a great spot for a young, high-income childless couple, or a young, very wealthy single professional, but outside of those specific criteria I can't see much of a market for this place (I mean, that's more of a "sleeping platform" than a "bedroom"--not very practical).

I guess the question is whether that very small, very rare, very wealthy subset of potential buyers that could comfortably afford this place will believe it's worth $450,000. I somehow doubt it.