Tuesday, June 29, 2010

2004 Pricing in The Shore has Arrived

With the 2010 Super Summer Selling Season(tm) over before it began, sellers like this should be sweating enough bullets to fill Camp Pendleton.

210 SAINT JOSEPH Ave, Long Beach, CA 90803
Asking Price: $999,000
Purchase Price: $1,145,000
Purchase Date: 9/2006
Beds: 3
Baths: 2.5
Sq. Ft.: 2,343
$/Sq. Ft.: $426
Lot Size: 2,970 Sq. Ft.
Year Built: 1924
MLS#: Y1001993
On Redfin: 91 days
Description: Ideal Belmont Shore location situated between 2nd and Livingston Drive so close to stores/restaurants, Livingston Park and Playground, as well as in desirable Lowell Elementary and Will Rogers Middle School District. Not a short-sale or bank-owned property. Remodeled in 2006 with new Tile Flooring, Updated Kitchen with Granite Counters and Stainless Steel Appliances, Newer Stucco and Dual Paned Wood Windowns, Inviting 2-Story Entry with Staircase, Family Room with French Doors to Backyard with Patio and Grassy Area, Separate Office or 4th Bedroom, Sundeck of Master Suite, Vaulted Ceilings, Skylights and Formal Dining Room. Wonderful Master Suite with Large Private Bathroom featuring Spa-Style Shower, Travertine, and Whirlpool Tub.


"Sundeck of Master Suite"?

On a million-dollar listing? Way to give it your all, dipshit.

Given that the current asking price of $999,000 is firmly in 2004 territory and he has yet to garner any interest, you'd think the seller would be on the precipice of a massive panic attack, hammering his agent about making this listing tighter than an AARP member with a coupon and a tip calculator.

But, no dice. I guess it's only money, right?

And how much money are we talking about? Well, after "buying" this place for $1,145,000 in 2006, in March of this year he finally stopped pretending he could actually afford this house and listed it for $1,094,000. When that didn't work, he lopped off $51,000 like a plantar wart and here the property sits, unoccupied, casually waiting for a miracle from the Lord above.

May 25, 2010 - Price Changed $999,000
Mar 30, 2010 - Listed $1,094,000
Sep 11, 2006 - Sold $1,145,000 (+7.9%/yr)
Aug 20, 2004 - Sold $980,000 (+8.7%/yr)
Jun 24, 1994 - Sold $420,000

Assuming he could get the (soon-to-be-reduced) $999,000 asking price, the four years spent living the delicious lie that he was "rich" because he lived in a million-dollar house in Belmont Shore will cost him, at a minimum, -$206,000. According to the listing this is not a short sale, meaning that enormous loss will be taken directly on the seller's chin.


But that horrific loss is predicated upon this dude actually selling for a cool mil. It's worth noting that only two properties have sold for anywhere near that kind of money during the last six months.

But still, this place is located in the heart of The Shore and it appears to have many nice accoutrements of the Great Housing Bubble:

Although, what's up with this bathroom? Talk about a shrine to bubble exuberance!

I mean, is there any travertine left in that quarry?

The exterior is fucking hideous as far as I'm concerned, but to each his own.


Take a look at that nasty stucco job. Ugh.

We can debate appearances, but you can't argue with the market. And the market hath spoken: This thing is overpriced and every week that goes by without a price reduction serves to make that fact even more glaringly obvious.

If he were truly serious about competing for the few remaining cash-flush buyers out there, he'd aggressively slash the price and try to ignite a bidding war while he can. But for whatever reason he's just chillin', waiting gingerly as more negative economic factors weigh on an already severely challenged high-end market.

This is a great candidate for a walk-away. Think about it: the house has already been abandoned, there's absolutely no staging, the only price reduction occurred more than a month ago, he's already staring down the barrel of a $200,000+ loss...clearly there is no hurry to realize the horrific loss that would result from actually pricing it right. He's not worried about selling because he's already mentally checked out.

I can virtually guarantee one thing: if this guy moonwalks away from his debt-trap, the bank will foreclose and get it back on the market IMMEDIATELY. This seller clearly had a big down payment (remember, not a short sale), so the loss to the bank's balance sheet would be minimal. Given that, I very seriously doubt a lender would delay foreclosure or keep it off the market and play extend-and-pretend through the fall and winter months. Delaying foreclosure and encouraging squatting is typically reserved for houses waaaaaaaaaay underwater that banks don't want to take onto their books.

Some might point out that a sale within 5% of this sales price is possible. After all, on the face of it a 2004 price for generous square footage in a prime area sounds pretty attractive. And when you consider it sold in 2004 for $980,000 WITHOUT A SINGLE ONE OF THESE UPGRADES, $999,000 sounds like an even better deal.

The expired first-time homebuyer tax credits (Fed and soon State) wouldn't be a factor for buyers of million-dollar homes anyway, so selling this house on the open market relies solely on all-cash buyers or those who are comfortable with Jumbo financing. That's an awfully narrow field of potential buyers, but anything is possible in this crazy market.

Tuesday, June 22, 2010

The Only Certainties in Life: FINAL UPDATE

Sold on 05/30/10 - $785,000

Oh, how the mighty have fallen. This whack job started out with a $900,000 asking price, and after nearly six months rotting on the market he finally swallowed his pride, invited reality into his life, and accepted an offer almost identical to his 2005 purchase price. That's right, five years of ownership and all this dream-weaving dope has to show for it is a realtor smiling dumbly as he endorses a commission check.

Speaking of commissions, factoring in those fees it looks like $840,000 was the break-even point. So in the end it looks like he ate a nice, juicy $55,000 loss. Sure, not a catastrophic loss compared to most of the jaw-dropping equity obliterating sales we see in Long Beach, but would you want to write that check for 55 Large?


The good news is he finally, luckily rid himself of this bubble-purchased error in judgment. It's somebody else's problem now.

And honestly, for this neighborhood the new owner didn't do that bad at $534 per square.

Did he overpay relative to where prices are headed? Yeah, probably. And perhaps someday he'll realize he could have held out for a better price.

But really, who cares?

Even if (when) he loses equity during the next few years, he will have locked in a crazy low interest rate on a detached house on a big lot in a stellar Long Beach neighborhood. Things could be worse.

All that matters is that he can easily afford the payments. The former owner was obviously only pretending that he could actually afford to live here, but I have a feeling the new owner actually earns the required $180,000 per year. After all, the 2010 lending environment -- although still loose by historical standards thanks to heavy government support -- would be wholly unrecognizable to the no-money-down-interest-only-liar-loans-to-anyone-who-fogs-a-mirror heyday of 2005. You have to assume there was a decent amount of vetting in this transaction.

I'll be out of town (shocker, I know) for the next week, so enjoy the sunshine for which we all pay a dear premium.


The price was "$825,000 and changed to $799,000"

He's (finally) approaching California's conforming loan limit. Will it be enough?

P.S. How many "lowball" $800,000 offers do you think he dismissively rejected last year?


The price was "$875,000" and changed to "$825,000"

Now we're getting somewhere!

P.S. We're at 84 DOM, and the illiterate realtor still hasn't fixed the "Elementry" typo. Great work, champ!


The price was "$899,000" and changed to "$875,000"

Hey, at least he's under $600 per square foot now!


I've been traveling more than George Clooney's character in Up in the Air. Savannah was pretty cool and Austin was a blast as always.

Anyhow, I'm back and have been checking out this bungalow LBCee sent in:
ADDRESS: 5266 East APPIAN Way, 90803
ASKING PRICE: $899,000
BATHS: 2.75
SQ. FT.: 1,471
$/SQ. FT.: $611
LOT SIZE: 5,000 Sq. Ft.
MLS#: P709784
ON REDFIN: 35 days
DOWN PAYMENT: $179,800
INCOME REQUIREMENT: (4x income): $225,000
DESCRIPTION: Charming Belmont Park cottage style home. Included in sq. ftge. is detached guest quarters with 3/4 bathroom. Living room has brick fireplace. Dining room opens to kitchen and living room. Upgraded electrical and plumbing, forced air heat, A/C, hardwood floors throughout, plantation shutters, skylights, crown moldings. Spacious grassy backyard. Oversized 2-car garage. Walking distance to award winning Lowell Elementry, Rogers Middle School, Alamitos Bay and Marine Stadium.

How awesome is it that they misspelled “Elementry”? HAHAHAHAHAHA.

As the listing description notes, the 1,471 square feet also includes detached guest quarters. Translation: The main house, where you are going to live, is as cramped as a Hong Kong cemetery.

And some of these photos highlight just how tight things are:
Is that even a Queen bed? I would guess the primary residence is sub-1,000 squares. As LBCee said, “I’ve had closets bigger than the bedrooms in this house.”

But, as we all know, people are enthusiastically willing to give up personal space if it means living in prime areas of Long Beach. And they’re more than glad to pay a substantial premium to get there. So let’s not lose sight of just how awesome this location is—just 300 feet from Marine Stadium. It ain’t beachfront, but this neighborhood is D-E-S-I-R-A-B-L-E.

H-O-W-E-V-E-R, the underlying desire of buyers to get into this nabe is often grossly overestimated by sellers, and we get what we have here today: Yet another delusional Long Beach seller who thinks he’s special and immune to the realities of the current market.

With a $611 per square foot asking price, this turd burglar is blatantly insulting potential buyers. Conversely, the batshit-insane $899,000 price tag makes nearby sellers very happy because their larger spreads look positively cheap by comparison.

To make matters worse, this overpriced wonder isn’t even that impressive. Sure, it’s ultra clean and sports some upgrades, but scope these photos and tell me with a straight face that you’re looking at a NINE HUNDRED THOUSAND DOLLAR HOUSE.
Really? That justifies being the most expensive listing in the neighborhood?

The only certainties in life are Death, Taxes…and this cocky asshole reducing his price.

As LBCee pointed out, “You'd have to knock $250k right off the top of this listing price to get to around $500/sq.ft." That's the average price per square of listed homes in this area. And considering he paid $780,000 for this 69-year-old saltine box in early 2005, the lowest he can really go (taking commissions and upgrade money spent into account) is roughly $840,000 without taking a loss. There's no way that will get the job done.

Newsflash, you time-wasting fool: If you want to sell, your billfold will take a massive hit. End of story. So start pricing realistically and get it over with.

But I'll tell you one thing: If this place sells for $899,000 I hereby declare RE in the LBC over and done with. I will close up shop immediately. There would simply be no point documenting Long Beach real estate anymore because if someone is dumb enough to drop nearly a million bones on this average-looking sardine can, it means the world has gone completely fucking mad and it’s only a matter of minutes before water jugs and ammo rounds are the new must-have status symbols.

Monday, June 14, 2010

The Tax Credits End, Let The Anxiety Begin

1901 East OCEAN Blvd #205, Long Beach, CA 90802
Asking Price: $705,000
Peak Purchase Price: $725,000
Beds: 2
Baths: 2.5
Sq. Ft.: 1,883
$/Sq. Ft.: $374
Community: Downtown Area/Alamitos Beach
MLS#: P734338
Source: CARETS
On Redfin: 35 days
HOA Fine: $444
20% Down Payment: $141,000 (20%)/$28,200 (FHA)
Income Requirement: $161,000 (Mortgage/3.5X)
Monthly Nut: $4,200 (conventional)/$4,900 (FHA)
Description: Here is your opportunity to own in the exclusive Park Regency complex along Ocean Blvd. This stunning complex is a real gem with an incredible courtyard and exterior finshes and details!This premiere 2bed+Den corner location affords stunning ocean and park views and is the largest floor plan in the complex!The interior of the home offers beautiful slate floors, custom crown molding, open and functional kitchen, newer appliances, custom window shutters throughout, full home theater, fireplace in the living room and more!This open floor plan is full of natural light and is sure to impress along with offering a oversized master suite with sitting area, large living room and formal dining room!Complex offers a clubhouse, spa and is secured along with closed circuit TV surveillance as well!2 side by side underground parking spaces and additional storage!


This dummy bought promptly at the peak of the bubble and has somehow convinced himself there was no crash.

Nope, never happened. Didn't take place. Just something the librul media made up. Everything's just hunky dory, and I can get out of this for pretty much break even. Yep, annnnnnnnnnny minute now...

So, this delusion-deluged soul is asking $705,000, a paltry $20,000 discount from his purchase price three years ago. Never mind the last three years have seen the most devastating housing crash in the history of the USA, where $Trillions in net worth and home equity evaporated -- but not for this guy, no way. You see, he's special.

And by the way, his asking price is just under FHA limits so technically you could get a(n essentially) no-money-down FHA loan and avoid putting substantial skin in the game. Of course, your payment would shoot from $4,200 a month to $4,900, but at least you'd have the option of moonwalking away when the value of your apartment inevitably drops and you find yourself perilously upside-down.

In the context of a free pass to walk if the going gets tough, it's difficult to argue paying a higher monthly nut isn't worth it.

If you look at the sale history, the 1997 buyer (who bought just after the trough of the last housing crash) made a nice chunk of chance during his nine-and-a-half years of ownership:

May 10, 2010 - Listed $705,000
Mar 21, 2007 - Sold $725,000 (+11.8%/yr)
Oct 24, 1997 - Sold $255,000 (+9.3%/yr)
Jul 28, 1995 - Sold $209,000

A nice, solid 12% appreciation per annum. Well played, sir.

Unfortunately for our seller he failed to see that paying nearly half-a-million bucks more than the previous owner was a big red flag of a speculative, unsustainable bubble. Unless this apartment suddenly doubled in size and was transported to the beach side of Ocean Blvd., there is no economic justification for four walls and a roof appreciating an average of $50,000 per year.

So what you're seeing here is a seller desperately clinging to the misguided notion that he didn't overpay and deserves peak pricing for his "wise" investment.

The good news for our embattled seller is a sold comp appears to justify his asking price: Unit #203, also with an ocean view, sold in May for $695,000. Going by that comp, he and his agent (the same agent who sold Unit #203, by the way) aren't that far off.

Or are they?

Because there appear to be some subtle differences between the units. For example, the kitchens.

You can get with this (Unit #203):

Or you can get with that (#205):

I think you'll get with this, 'cuz this is where it's at.

But they're both pretty nice inside, so let's just assume they're apples-to-apples.

In that case, why is our featured unit still on the market?

Maybe because that May buyer was a complete fool and the vast majority of buyers have noticed how much cheaper it is to rent luxury condos on Ocean Blvd? After all, this loaded condo with an ocean view is only asking $2,683 (a precise asking rent typically indicates an investor trying to cover his monthly nut) -- a massive $2,100 monthly savings!

And you get to live here:


Please, someone explain to me how purchasing 1901 Ocean, given the anxiety a new owner would suffer over the likelihood of further price declines, is worth that kind of premium over renting that luxury unit.

Maybe it hasn't sold because of the cheaper competition in the building? This unit (again, listed by the same realtor) is asking $599,000.

Now, to be fair it does not have an ocean view. But is an ocean view really worth an extra $106,000? Frankly, I think so, but in order to truly answer that question you first have to determine whether a non-ocean view is worth $599,000 in the first place. Given the 43 days on market with no interest, I'd say no.

Or maybe it hasn't sold because in the absence of the expired Federal tax credit and the soon-to-be-expired State credit, $705,000 just seems too rich for buyers' blood?

I think this is the most likely scenario. The expiration of the tax credits makes this a whole new ballgame. In my opinion much of the demand has already been pulled forward and we're finally about to see what the housing market really looks like without a bulk of the artificial support (other than FHA loans and record-low rates).

If sales drop like I think they will during the next few months, another tax credit is pretty much ensured. And maybe it'll be $12,000 this time. Or why not $15,000? With Obama asking for $50 Billion in state-aid (I love how the WaPo characterized it as "pleading" for money. And wait, why more funds? I thought that's what the stimulus was for) and Freddie Mac/Fannie Mae requiring up to a $Trillion taxpayer dollars (yes, with a T) to keep the lights on, at this point it's just Monopoly money anyway.

The government has shown it will stop at nothing to prop up housing, and after dumping truckloads of cash into these reflation efforts, I don't expect it to suddenly change course any time soon.

Who's excited for the next round of free ponies?

Monday, June 7, 2010

Made in the Shade: UPDATE II

The price was "$875,000" and changed to "$825,000"

Gee, that only took seven months.

Poor guy. He really thought he would more than triple his initial 2002 investment. And now, after 552 days on market, it looks like he won't even double it.

I'll try to hold back my tears.


The list price was "$995,000" and changed to "$875,000"

Wow! Quite a price reduction!

But before you get too excited and start thinking he suddenly found religion and will start pricing aggressively, it took him four long months to make this much-needed cut. In the grand scheme of things this reduction doesn't mean anything. All it means is the property was $120,000 overpriced.

This jackass is less than a month away from his one-year anniversary on the MLS. That's a scarlet letter ("S" as in "Stale") any seller should fear. You think he'll wake up in time to beat the clock?

Considering it took 340 days to get to a somewhat realistic price, I'm going to go out on a limb and say...

Happy Anniversary, Numbnuts.


16 12Th Pl, 90802
Price: $995,000
Beds: 2
Baths: 3
Sq. Ft.: 2,056
$/Sq. Ft.: $484
Lot Size: 2,915 Sq. Ft. (yikes!)
Year Built: 1904
MLS#: P666834
On Redfin: 254 days
Down Payment: $200,000
Monthly Payment: $6,100 (@ 6.5% jumbo)
Income Requirement: $285,000
Description: $200,000. PRICE ADJUSTMENT!!! This one of a kind Alamitos Beach Bluff home has the location and views you've been wanting! It has an updated kitchen and breakfast bar with top-o-line Starmark European maple cabinets,bamboo flooring,recessed lites and S/S appliances.The large formal dining room and open living room lead to the patio overlooking the beach for your morning coffee or brunch. The large family room with recessed lites and crown moulding leads to your own private rear yard with new hardscape and landscape.The inside laundry room with premium washer, dryer and sink off the kitchen also has a upgraded 1/2 bath. The upper level off the foyer has two large master suites with walk in closets,berber carpet, ocean views, top-o-line Hans Grohe fixtures in the upgraded baths and a sun porch. This home has too many upgrades to mention.... a must see for your fussy clients! CLICK ON MEDIA 21 OR MAIN PICTURE TO ACCESS VIRTUAL TOUR AND PICS.

Boy, for a house "at the water's edge," you would think the realtor would be smart enough to include shots of that glorious ocean view.

Wanna know why she didn't? Because there isn't one.

Weren't you beginning to wonder why the exterior shots looked a bit, um, shady?

Well, it's because this house, with only two bedrooms on a cramped lot, is completely surrounded by enormous apartment buildings and a parking structure. Engulfed might be a better word to describe how deep in the shadows this house is.

Do yourself a favor and click on the Redfin listing and check out the Aerial View. DOH!

And is it just me, or does it seem like every "Cape Cod" homeowner has a graduate degree in Application of Clutter as Home Decoration?

To give you an idea of just how greedy and delusional this seller is, the original listing price in December 2008 was a laughable $1,400,000. After four months with no interest, they relisted in April 2009 (presumably with a different realtor who promised vastly more bubble profits) with an unbelievable $1,700,000 price tag.



They are obviously convinced the proximity to the water is worth big bucks. But I have news for them: With no actual view of the ocean, that's like Rachel Bilson being your girlfriend online.

Or living near the most scenic point of the Grand Canyon--in a windowless mansion.

Great in theory, but about as useless as braille on a Harley Davidson owner's manual.

So, the current asking price of $995,000 represents a $705,000 fall from grace--ERRR, wake up call--ERRR, reality check--ERRR, discount from the highest asking price.

Jul 17, 2009 - Price Changed $995,000
Apr 07, 2009 - Price Changed $1,200,000
Apr 07, 2009 - Relisted ($1,700,000)
Dec 18, 2008 - Delisted
Dec 02, 2008 - Listed $1,400,000
Sep 06, 2002 - Sold $459,000
Oct 20, 1998 - Sold $300,000
Nov 22, 1996 - Sold $255,000

Dang, can you believe this place sold for $255,000 during the last housing downturn? Sheesh.

The crazy thing is, the 2002 purchase price of $459,000 means if this seller just priced realistically, he would walk away with a pallet full of cold, hard cash. Assuming he didn't HELOC himself into the stratosphere, that is.

But given the costs associated with "too many upgrades to mention," all bets are off.

Friday, June 4, 2010

Wooden Teeth: UPDATE II

The price was "$299,000" and changed to "$269,000"

Days on Market: 911



Well, this is a fun way to start the new year:

The price was "$344,000" and changed to "$299,000"

By the way, this marks the THIRD YEAR on the MLS for this property. There are a lot of notable delusional greedtards in the LBC, but I think this guy, given that he paid $50,000 ages ago yet is still too dumb fucking stupid to price realistically ("I'm not going to just give it away!") and take the money and run, earns the Official RE in the LBC Eternal Shitbird Award:

I think it's especially appropriate given this photo:


732 N Washington Pl, CA 90813
Price: $344,000
Beds: 2
Baths: 1
Sq. Ft.: 1,064
$/Sq. Ft.: $323
Lot Size: 3,850 Sq. Ft.
Property Type: Single Family Residence
Year Built: 1905
MLS#: S514617
On Redfin: 630 days
Down Payment: $67,000
Income Requirement: $95,000
Monthly PITI: $2,100
Description: HUGE PRICE REDUCTION!!!Historical Craftsman w/loads of charm.Huge Formal LR,original features:hardwood floors,doors & hardware glass & brass doorknobs,kit with 'ice box' cabinetry,mosaic tile counter,coved ceilings,wrap around porch has been enclosed,orig sash windows,light fixtures,french doors.Oversized lot w/alley and street access.'Potters area off kit with washer and dryer hook-ups. Formal Dining room. 1 BR w/original built ins above closet, 2nd BR has double walk in closet. Bath has built in linen cabinet above tub. Tandem gar divided



Sweet mural. GONE!

Sweet kitchen. GONE!

No pics of the one bathroom, so you know what that means...GONE!

This realtor must have graduated from the Shaky McParkinson's School of Photography:

Really? 628 days to fix that shit and your potential buyers still get vertigo from viewing your listing? Clever.

The listing says "No Laundry in Unit" but that there are hook-ups in a "'Potters" area (a euphemism for "out-the-fuck-side"). That must be some kind of mistake.

Because there's no way someone is dumb fucking stupid enough to ask $344,000--nearly TEN TIMES the median income--in this awful neighborhood with no freaking laundry hook-ups in the house.

There's just no way.

Plus, the owners don't have a washer and dryer?! Just the hook-ups? Seriously, who the fuck lives here? The Swiss Family Slobinson?

But hey, at least it's got a "sleeping porch!" After viewing those interior photos, I think I'll take my chances sleeping outside.

This thing doesn't need fixing up, it needs a bulldozer.

This is a perfect candidate for Real Estate Intervention. The owner purchased this 104-year-old lean-to in 1981 for a paltry $50,000 ($47 per square foot, y'all!). In other words, with a 30-year fixed-rate mortgage, this dump should be paid off in a year and a half.

Considering the interest rate was 17.5% in '81, I'm sure this owner refinanced during the last 28 years. But the point is, there have only been three price reductions in nearly two years. Even with refinances they still must have a truckload of equity--why not just cut the price and walk away with stacks of bubble cash?

Nah, forget that. Just keep doing what you're doing. And by "doing what you're doing" I mean napping on your sleeping porch, washing your loincloth in the bird bath, and making drinking water from your pee.

Wednesday, June 2, 2010

Bungling Buffoon Badly Burned by "Bottom" Buying: FINAL UPDATE

Things have been nuttier than squirrel shit around here, so forgive the lack of posts. I wish I could say things will mellow out soon, but that's not the case.

Anyhow, this condo ended up selling in May for just under full asking price. That represents a loss of about -$80,000 after commissions. Wow. Losing your entire cash down payment is one expensive way to find out all the 2008 bottom callers were dead wrong.

You could have saved yourself some serious loot by reading this blog.

What's interesting is that in April the REO from the same post also sold...for only $326,000. Now, we don't know the condition of that bank-owned unit, so it may not be apples to apples, but I am curious why the bank approved $395,000 for Unit G2 when Unit H1 -- an identically sized unit in the same building -- sold for a whopping $70,000 less just a month earlier.

Unless H1 was a complete dump, it looks like the new owner of G2 is already in the hole. Ouch.

Look, although I think he waaaaaaaaaaaaaaaaay overpaid for this outdated apartment relative to what it's actually worth, I am on record as saying I really like this place. The listing doesn't show it (why, I have no clue), but the old listing shows it even has a little balcony off the dining room. Freakin' sweet. I'd live here in a hot minute, and I'd pay a premium to do so.

Just not as much as this dude.

Let's hope he doesn't need to sell in the near future lest he end up like his predecessor and eat a big fat loss for his impatience.


2662 East 2ND St Unit G2, Long Beach, 90803
Asking Price: $399,000
Beds: 2
Baths: 1.75
Sq. Ft.: 1,292
$/Sq. Ft.: $309
Year Built: 1966
MLS#: P727352
On Redfin: 2 days
HOA: $213
Down Payment: $80,000
Income Requirement: $114,000
Monthly Nut: $2,300
Description: Look no further! You have found one of the nicest and most spacious 2 bedrooms PLUS office currently available in Bluff Park. This END UNIT boasts gleaming hardwood floors, plantation shutters, a formal dining area, a huge remodeled eat-in kitchen with amazing storage and counterspace, a large guest room, updated guest bath with spa-like feel, oversized master bedroom with a dressing area and remodeled bath, french door enclosed sunny office area, and an in unit stackable WASHER/DRYER. Finally, no community laundry!!! The condo also comes with an oversized parking space and additional storage above the space in the garage. One of the nicest and well maintained buildings in Bluff Park or Belmont Heights you will show. Just a pleasure! Pets are allowed and you are just one block to the beach, bike path, Long Beach Museum of Art and fine retail and restaurants. The perfect elegant and stylish neighborhood. This is a standard sale!

The 2008 losers just keep stacking up. Today's seller was yet another sheep who allowed himself to be misled by CNBC hyper-bulls and his commission-hungry realtor that he was "buying at the bottom" in late '08.

And now, predictably, he is being sent to slaughter.

Just a short 19 months ago he foolishly purchased this apartment for $451,000 from a pre-bubble owner who paid a mere $165,500 ("Thanks for the bubble profits, noob!). Considering the original asking price was $469,750, I bet he thought he was pretty slick negotiating a whopping 4% discount.

Sadly, he abruptly discovered that his negotiating skills were about as strong as Corey Haim's willpower (too soon?). Armed with the sudden realization that he grossly overpaid in a rapidly declining market(!) and could never afford such a monstrous payment in the first place, he threw it on the MLS for an ego-deflating $399,000 and is now begging for the market's mercy.

After commissions, that represents a -$75,000 loss. Ouch.

Hey guy, is the smoke bothering you?

You know, from the smoldering crater where your bank account used to be?

The thing is, I quite like this place. I think it's an "updater," a term I first became familiar with by way of Jim the Realtor's site. It's certainly not a "fixer," (by the way, have you noticed that hardly any properties are listed as a "fixer upper" on Redfin anymore? Here is a prime example of someone in "fixer" denial) but it's also not quite "turn-key" and requires $10,000 to $15,000 in lipstick and blush.

For example, the kitchen:


But add some new countertops and mild updating and you'll be set.

And the master bath, while not horrendous, could use some freshening up. You might disagree, but remember this is a property demanding $400,000!

Don't get me wrong, this place is pretty slick. Crown molding, nice floors, two bedrooms plus an office, reasonable square footage, in-unit laundry, only one common wall, decent HOA fee...pretty impressive.

Plus it's in a great neighborhood in close proximity to those killer Long Beach waves.

I'd live here, no doubt.

However, I would never pay this much. Way overpriced for what you get.

But that's just me. I think some buyers will find $309 per square foot reasonable given the location and sold comps. Unfortunately, they, just like our seller, will be catching a falling knife.

Let's look at the fundamentals:

Rent vs. Buy: I seriously doubt it rents for anywhere near $2,300, but I'm open to being proven wrong. But most buyers probably focus on after-tax payments, so let's call this one a wash for the typical (imprudent) buyer.

Local Incomes: The median income in this zip is $82,765, and I would imagine someone looking at these beach-close units would earn above median. Let's say $100,000 per year. At 3.5X income, they would need to make $91,000 to reasonably afford the mortgage (assuming 20% down). However, if you calculate the more conservative figure of House Price/3.5X income, they would need to pull in $114,000 per year. Could be a wash depending on how you calculate the numbers, but a conservative buyer would be stretching too thin to make the monthly nut.

Pre-bubble pricing/fundamental value: Here's where it gets tricky. If you apply a generous 4% per year appreciation to the 1999 sales price (and remove the bubble and ensuing crash), today this apartment would be worth $255,000. Add in a little extra for the few upgrades it does have, how well-maintained it is, and the fact that the '99 price seems low, and at most you're looking at a 2010 value of $300,000 - $310,000.

"El Bee, you're smoking Plymouth Rocks if you think this place is only worth $310,000!"

Well then I guess I'm not the only one because a certain bank is robbing its sister for a taste of that sweet, sweet crack too. In the very same building a lender is trying to offload a larger unit and believes it's only worth $325,000 (FYI that's a $100,000+ discount from the 2004 price!).

How the shit is our featured beggar--ERRR...seller going to compete with that? He's not. And that means this joint won't be a "standard sale" for long.

Assuming the REO isn't a complete turd pile inside (thanks for the photos, dick!), this is horrendously bad news for our overly optimistic seller. If the bank-owned property sells for full asking price (which, frankly, I'm surprised it hasn't already), then that comp guarantees our seller eats a -$150,000 loss instead of the -$75,000 hit he was initially worried about.

How pissed do you suppose the residents are at that dastardly bank?

Anyhow, this dummy listened to the wrong people and thought he could beat the odds. But now he's just going to get beat down. Just like pretty much every other 2008 "bottom buyer" who tries to sell today. If only they had been readers of this blog.

Look, if you ignored my (absolutely correct) prediction that prices would continue to slide and bought during the last two years, I'm not trying to pick on you. There are a million reasons to buy in a declining market and a million more ways to fudge the numbers to justify it. Hell, I'm ready to get on with my life too!

But if you did your homework and paid close to rental parity, got a fixed-rate 30-year mortgage, have a healthy emergency fund, can reasonably afford your payments, and absolutely adore the place you live, then you'll be able to ride this thing out just fine -- and get to live in a house you love in the meantime.

But if you bought way before the bottom like this dude and want to sell in today's environment, just know that you are in neck-deep in shit and have no one to blame but yourself.