WOODEN TEETH: FINAL UPDATE

Sold on 02/01/12 - $165,000

At $155 per square foot, that is less than half the original asking price. Way to hold out for top dollar!

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Since there is no new inventory to speak of, out of "Where Are They Now?" curiosity I've been revisiting past Long Beach Housing Blog properties. Although most RE in the LBC victims--ERRR...featured sellers have since pulled their properties after unsuccessfully pursuing insane wishing prices ("Well, I'm not going to just give it away!"), a few deluded soldiers continue marching on.

Like this idiot:

This dreadful piece of doodie is now entering its FOURTH YEAR on the market. The good news is that after more than 1,100 days of wholly ridiculous prices and slack-jawed market chasing, this dolt seems to be finally waking up to reality. To wit:

Jan 05, 2011 Relisted - $223,000 ($210 per square foot)

But take another look at the photos and ask yourself if $223,000 is even that great of a price for this shit hole. Even if it was asking $50,000 -- the 1981 sales price -- I still don't think it's worth it. In addition to the property taxes and insurance, you have to factor in the significant (and mandatory) teardown and rebuilding costs. But look at the shitty lot and horrible neighborhood -- is that really where you want to build your dream home?

Exactly.

Still overpriced.

At this point I'm beginning to wonder if any price would garner a sale.

But, thanks to foreclosure moratoriums and can-kicking HAMP HAFA HARP BARF FART programs, properties like these are about all we've got. Right now in Long Beach we literally have the cream of the crop as far as wildly delusional sellers. The chaff has already been separated from the market and now we're left with the real kooks.

It's like if you took a stadium full of Raiders fans and systematically began whittling them down:

"All fans who have completed high school or college, please leave the stadium."

"Okay, now everyone with a job please head home."

"Anyone with a credit score above 500 please head for the exits."

"All of those without criminal records, please disperse."

Imagine what you'd be left with! That stadium would be the scariest goddamn place on earth. And sometimes I feel like most of the current Long Beach sellers are those scary, unstable nutjobs.

Think about it:

Longtime owners with assets, equity and/or stable, fixed-rate loans (like this guy) don't need to sell, and so they won't. They pull their properties off the market and we never see them again (it may seem like a good thing to get fair-weather sellers off the MLS, but they are sometimes the most willing to deal because they have equity and will still clear a huge profit if they decide to get real).

Most ticking time-bomb mortgages already blew up and went back to the banks, but the few remaining with resetting and recasting mortgages are busy playing the loan-mod, extend-and-pretend lottery. They (like this moron) are most definitely distressed sellers, but they are not really on the market because they will game the system for as long as they can before their loans explode and they moonwalk away (or a miracle buyer bails them out of their foolishness).

As we all know, short sales are not actually for sale -- that inventory is technically on the MLS, but given the length of time it takes for banks to approve short sales (not an accident), you might as well check the "Exclude Short Sales" box on your Redfin searches (I sure as hell do). Short sales are just a way for banks to delay recognizing losses associated with foreclosure and prevent the property from falling apart (keeping a deadbeat in the place is better than letting it sit abandoned) in the meantime. Short sales (like this fool, at 481 days) may technically be on the market, but in reality they have left the stadium.

You can also disregard listings of those who overpaid during the peak but are gainfully employed. They are severely underwater but can still make their mortgage payment if they really stretch themselves. The tell is they ask peak pricing plus exactly enough to cover sales commissions (like this guy or this dummy), or they are juuuuust below their peak purchase price but after a few reductions have been stuck at the same price for months because further cuts would mean writing a big check at closing or becoming a short sale (like this dreamer). These house-poor suckers won't get anywhere near peak pricing, but they have no choice but to hope for a miracle because they're stretched too thin and have absolutely no room to negotiate. They are technically on the MLS, but they, too, have left the stadium.

So really we're left with only a handful buyers who actually intend to, and can (financially speaking) sell, who don't budge on price because they know they're in the power position, and a mob of delusional die hards at 500+ days on market (like this asshole), populating the MLS with their insane wishing prices and demands for nothing short of jackpot-sized prices.

It's a sad state of affairs out there. Realtors I've spoken to believe inventory will start coming back on the market in March (the "seasonal" thing never really made sense to me in SoCal -- sure, in Des Moines I get that people don't want to go house shopping in January, but it's 75 degrees in Long Beach! I would love nothing more than to check out houses on a day like today!). Sure, inventory might pick up in Spring, but the real question is: What types of sellers will they be?


I guess we'll find out.

What are you seeing out there?

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

Days on Market: 911

NEVER FORGET!

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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:

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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

"HUGE PRICE REDUCTION!!!"

JUDGING BY THE LOOKS OF THIS THING, YOU'RE GONNA NEED A LOT MORE!!!

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.

A New Low

Given some of the ridiculous bullshit I've encountered in my house search, I might have to come out of blogging retirement.

ASKING PRICE: $469,900
ADDRESS: 14 5TH Pl, Long Beach, CA 90802
BEDS: 2
BATHS: 2
SQ. FT.: 1,214
$/SQ. FT.: $387
YEAR BUILT: 1953
MLS#: P786112
ON REDFIN: 86 days
HOA: $260
DOWN PAYMENT (20%): $94,000
INCOME REQUIREMENT (3.5 x Income): $107,000
MONTHLY NUT: $2,500
DESCRIPTION: Amazing sweeping ocean views from the main living space of this two bedroom, two bath condo. This secure unit is just steps from the sand and a large communal patio area, perfect for entertaining or watching the 4th of July fireworks. Condo features hardwood floors, updated kitchen, upgraded bathrooms and plantation style shutters. This could be your perfect ocean home.

I looked at this bank-owned condo a few months back and walked away unimpressed. Between the termite damage, filth, poor condition of the kitchen cabinets, darkness of the bathrooms, lack of street parking, community laundry, creaky floors and incredibly wonky layout, I quickly determined there was no way I was plunking down nearly half a million clams for this place.

Apparently I wasn't the only one.

Because after nearly 90 days on market and two price cuts, this thing is still rotting on the MLS. However, while checking out the listing photos I noticed the bank had finally staged the place to make it look more appealing to buyers. My first thought was, Maybe they're finally getting serious about selling!

Hey, not too shabby!

But then I took a closer look:

Something's off about the lines of the sofa and coffee table in relation to the walls...and the light sources aren't matching up with the rest of the -- wait, what the??

That's right, friends: PHOTOSHOPPED FURNITURE.

I mean, if it wasn't so pathetic it'd be hilarious.

Here is the real photo, with the "enhanced" one right below it for comparison:

Man, I have so many questions!

First, how long did it take to draw those shadows from the bar stools? That is some painstaking detail work. Second, where did the furniture and decorations come from? Another listing? A Crate & Barrel ad? Third, did the bank actually pay an outside firm for this cut-and-paste bullshit, or does an in-house Loss Mitigation employee just happen to have a passion for it?

I mean, why waste time with all this silliness? If you really want to sell, just lower the fucking price.

I'm sure the listing agent would say, "It's to show the potential of the space." And I would retort, "This has the potential to make you look like a low-rent, gold-bricking idiot."

The bank, which has already lost at least $200,000, is thinking the killer view will stop the bleeding. But that awesome white-water view is not nearly enough to overcome the dilapidated condition and layout disadvantages of this property.

But hey, instead of investing a few grand into actually repainting, cleaning, and staging the property, why not just waste time, money and effort digitally inserting fake paint, artwork and furniture into a listing photo? TOTALLY MAKES SENSE.

And hell, why stop at just one photo? Might as well go all the way. Here, I'll even supply a few freebies...

This original listing photo makes the bathroom look dark, dank and unwelcoming (um, because it is dark, dank and unwelcoming):

But the new version adds a much needed dose of mold-killing sunlight:

And yuck, look at those beater cars and stinky Port-o-Potty in this photo:

A little digital magic and we've really classed up the neighborhood!

I mean, is this where sellers are now in their quest to deny reality? Do they actually think this is going to have a positive effect on how people perceive a property?

I remember when the housing bubble first popped and people were giving away the brand-new Toyota Highlander in the driveway if you bought their overpriced McMansion. NOBODY FUCKING CARES ABOUT SOME SHITBOX YOU JUST BOUGHT WITH YOUR HELOC -- JUST LOWER THE GODDAMN PRICE!

For the record, if in real life this condo actually resembled the fraudulently altered listing photo, $387 per square foot, given the proximity to the sand, might be approaching a decent deal. But as it stands, I think this place requires entirely too much work to command such a premium price.

But hey, instead of putting in a little work to recoup more money at sales time, I fully support banks and listing agents lazily sprucing up listings with photo editing software. Sure, buyers are going to be bummed out that they were misled, but we will at least get a good laugh.

UPDATE: AN EAGLE-EYED READER SPOTTED THE SAME PHOTOSHOPPED FURNITURE IN ANOTHER LISTING. AMAZING CATCH, ANON!

Please please please let this trend catch on.

Introducing the 2009 Losers

To those of you who bought during the last few years because of a growing family, a desire to lock in a low interest rate for 30 years, newfound affordability, renter's fatigue, or you simply got tired of waiting, congratulations. Whatever the reasons, they were your reasons, and I sincerely hope you're enjoying home ownership.

But to those of you who believed economic "experts" and commission-hungry tea-leaf readers who proclaimed 2009 was "the bottom" and planned to sell in a few years for profit...

WHAT THE HOLY HELL WERE YOU THINKING?

In addition to losers who bought during the bubble, I have documented quite a few 2008 buyers who purchased based on the false assumption that "the worst is over," and then faced total annihilation when they tried to unload just a few years later.

Well now I'm starting to see more 2009 buyers who believed all the bullshit about "the bottom" being in spring 2009 try to sell their "wise investments," only to learn that prices have fallen considerably since their supposed bottom.

Very few people think about it, but because of commissions every seller is 6% underwater from the outset. That means if they hope to break even, home values would have to increase by a minimum of 6% during their ownership. For 2009 buyers operating under the premise that the last two years provided those kinds of gains, they are about to learn a valuable, and painful, lesson about the dangers of listening to those financially dependent on home price increases, instead of common sense and simple math.

That's because home prices on average have dropped by 5.1% since 2009. Welcome to the (totally foreseeable) double dip.

HAIL MARY ASKING PRICE: $429,900
1310 East OCEAN Blvd #803, Long Beach, CA 90802
BEDS: 1
BATHS: 1
SQ. FT.: 960
$/SQ. FT.: $448
VIEW: Catalina, City Lights, City, Coastline, Harbor, Marina, Ocean, Panoramic, Yes, White Water (Wait, it has a view of "Yes"?! Maybe this price isn't that bad after all)
YEAR BUILT: 1984
COMMUNITY: Downtown Area/Alamitos Beach
MLS#: S660918
ON REDFIN: 19 days
HOA FINE: $740 (OUCH)

DOWN PAYMENT: $86,000

MONTHLY NUT: $2,800

INCOME REQUIREMENT: $98,000/year
DESCRIPTION: Sleek and sophisticated luxury high rise with spectacular Ocean views from every room. This home is right on the beach. Ocean views by day and city lights by night. You ll never tire of seeing gorgeous sunsets or graceful sailing ships. Stunning home with modern kitchen and bath. Lots of sunlight spills through the floor to ceiling windows. Open floor plan, great for entertaining. Spacious master bedroom suite with walk in closets. Let the sound of the waves lull you to sleep. There are many amenities including 24 hour concierge, Fitness room and community room, pool, spa, cabana, BBQ area and fire pit. Conveniently located to downtown, shopping, restaurants, parks, museums, theater, Queen Mary, Marina and more!

This fool bought in October 2009 for $420,000 (down from an original asking price of $450,000. He probably thought he was getting a smoking deal) and for whatever reason (oh, I don't know...maybe the obscene $740 HOA fine, the limitations of only one bedroom, or that he simply can't afford that monstrous monthly nut anymore) just 19 months later decided to lay his head on the chopping block--ERRR...put it on the market asking $30,000 more than he paid (anybody want to guess what the sales commissions are? Whoever said "around 30 Grand" wins a key chain).

He has since dropped the price to $430,000 in the hopes of that $10,000 cushion somewhat offseting what is sure to be a sizable hit to his finances...but things aren't looking good.

On a positive note, the views are astounding:

The interior looks largely untouched from the 1984 build date (the dead giveaway is the florescent overhead lights in the kitchen and those gnarly bathroom counters), but you're mostly paying for the view in these types of places anyway.

And more good news: There is a sold comp from a few months ago that sold for $475,000 (but if that comp really was indicative of fair market value, then why would our seller need to reduce his original $450,000 asking price? Hmmm).

And he's also undercutting his competition (another 2009 "bottom" buyer!) by $40,000, although that unit appears to be upgraded with granite, a new bathroom and plantation $hutters.

The overall point is that he's just $9,000 above his 2009 purchase price and there still doesn't appear to be any interest. Which means more price cuts. Which means he is about to be in a world of hurt.

Let's put it this way, with 10% down ($42,000), after $27,000 in commissions and $14,800 in HOA fees, all of that down payment money is now gone. POOF!

If he put 20% down (likely, given how panic-stricken 2009 was), he's now halfway through that money. And every additional price reduction just eats further and further into that former nest egg of his.

Sure, he'll have some equity after 19 months of payments, but not nearly enough to break even on this foolish purchase. The question is not if he will lose a great deal of money on this, but how bad the damage will be.

His biggest challenge will be finding a wealthy, single, retiree who is financially savvy enough to be able to afford this place, but dumb enough to believe there will not be better buying opportunities in the future. Yeah, good luck with that.

However, there are some who say there won't necessarily be any better deals in the future because all of the must-sell inventory has been washed out of the market, the Fed can keep interest rates low and banks can keep supply off the market for as long as it takes, thus keeping supply artificially restrained and prices from falling. And maybe they're right (of course, if they were then we would have never entered the double dip in the first place, but I digress).

Maybe the banks and Fannie/Freddie and FHA can indeed keep their massive pools of inventory off the market for years or decades and interest rates will hover under 5% for years to come (they've certainly pulled it off so far).

But suppose just for a moment that they can't pull it off. If interest rates rise by 1 or 2%, or supply increases by 15 or 20% -- or both -- what effect do you think that will have on prices? Until we are in a more normal market with real inventory and serious sellers, nobody -- and I mean NOBODY -- can be confident in their predictions of 2011 (or 2012, 2013, or 2014) being the true bottom (just like they were all wrong in '08, '09, and '10)

Here's the bottom line: If you are buying a place right now because you are confident you will be there for 10 years or longer and your finances and job are reasonably stable, then go for it. The Rent vs. Buy equation has become a no-brainer in most areas by now and these rates are incredible.

But if you think there's even a remote chance that you'll need to sell in the next few years, renting would be the most logical choice (if nothing else than for mobility's sake). Property values have likely seen the last of the big, gut-churning drops, but that is very different than a resumption of gains. And considering you'd be 6% underwater from day one, if you needed to sell in 2013 there's no way you'd get out for break even.

Yes, a home can be an investment, but it is also an expensive consumer good that must be viewed as a liability. If you don't believe me, why don't you ask the seller of this apartment which of the two he believes he bought.

Wooden Teeth: UPDATE III

Since there is no new inventory to speak of, out of "Where Are They Now?" curiosity I've been revisiting past Long Beach Housing Blog properties. Although most RE in the LBC victims--ERRR...featured sellers have since pulled their properties after unsuccessfully pursuing insane wishing prices ("Well, I'm not going to just give it away!"), a few deluded soldiers continue marching on.

Like this idiot:

This dreadful piece of doodie is now entering its FOURTH YEAR on the market. The good news is that after more than 1,100 days of wholly ridiculous prices and slack-jawed market chasing, this dolt seems to be finally waking up to reality. To wit:

Jan 05, 2011 Relisted - $223,000 ($210 per square foot)

But take another look at the photos and ask yourself if $223,000 is even that great of a price for this shit hole. Even if it was asking $50,000 -- the 1981 sales price -- I still don't think it's worth it. In addition to the property taxes and insurance, you have to factor in the significant (and mandatory) teardown and rebuilding costs. But look at the shitty lot and horrible neighborhood -- is that really where you want to build your dream home?

Exactly.

Still overpriced.

At this point I'm beginning to wonder if any price would garner a sale.

But, thanks to foreclosure moratoriums and can-kicking HAMP HAFA HARP BARF FART programs, properties like these are about all we've got. Right now in Long Beach we literally have the cream of the crop as far as wildly delusional sellers. The chaff has already been separated from the market and now we're left with the real kooks.

It's like if you took a stadium full of Raiders fans and systematically began whittling them down:

"All fans who have completed high school or college, please leave the stadium."

"Okay, now everyone with a job please head home."

"Anyone with a credit score above 500 please head for the exits."

"All of those without criminal records, please disperse."

Imagine what you'd be left with! That stadium would be the scariest goddamn place on earth. And sometimes I feel like most of the current Long Beach sellers are those scary, unstable nutjobs.

Think about it:

Longtime owners with assets, equity and/or stable, fixed-rate loans (like this guy) don't need to sell, and so they won't. They pull their properties off the market and we never see them again (it may seem like a good thing to get fair-weather sellers off the MLS, but they are sometimes the most willing to deal because they have equity and will still clear a huge profit if they decide to get real).

Most ticking time-bomb mortgages already blew up and went back to the banks, but the few remaining with resetting and recasting mortgages are busy playing the loan-mod, extend-and-pretend lottery. They (like this moron) are most definitely distressed sellers, but they are not really on the market because they will game the system for as long as they can before their loans explode and they moonwalk away (or a miracle buyer bails them out of their foolishness).

As we all know, short sales are not actually for sale -- that inventory is technically on the MLS, but given the length of time it takes for banks to approve short sales (not an accident), you might as well check the "Exclude Short Sales" box on your Redfin searches (I sure as hell do). Short sales are just a way for banks to delay recognizing losses associated with foreclosure and prevent the property from falling apart (keeping a deadbeat in the place is better than letting it sit abandoned) in the meantime. Short sales (like this fool, at 481 days) may technically be on the market, but in reality they have left the stadium.

You can also disregard listings of those who overpaid during the peak but are gainfully employed. They are severely underwater but can still make their mortgage payment if they really stretch themselves. The tell is they ask peak pricing plus exactly enough to cover sales commissions (like this guy or this dummy), or they are juuuuust below their peak purchase price but after a few reductions have been stuck at the same price for months because further cuts would mean writing a big check at closing or becoming a short sale (like this dreamer). These house-poor suckers won't get anywhere near peak pricing, but they have no choice but to hope for a miracle because they're stretched too thin and have absolutely no room to negotiate. They are technically on the MLS, but they, too, have left the stadium.

So really we're left with only a handful buyers who actually intend to, and can (financially speaking) sell, who don't budge on price because they know they're in the power position, and a mob of delusional die hards at 500+ days on market (like this asshole), populating the MLS with their insane wishing prices and demands for nothing short of jackpot-sized prices.

It's a sad state of affairs out there. Realtors I've spoken to believe inventory will start coming back on the market in March (the "seasonal" thing never really made sense to me in SoCal -- sure, in Des Moines I get that people don't want to go house shopping in January, but it's 75 degrees in Long Beach! I would love nothing more than to check out houses on a day like today!). Sure, inventory might pick up in Spring, but the real question is: What types of sellers will they be?


I guess we'll find out.

What are you seeing out there?

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

Days on Market: 911

NEVER FORGET!

+++++++++++++++++++++++++++++++++++

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:

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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

"HUGE PRICE REDUCTION!!!"

JUDGING BY THE LOOKS OF THIS THING, YOU'RE GONNA NEED A LOT MORE!!!

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.

YNGFL: FINAL UPDATE

Sold on 12/17/2010 - $200,900

Wow. What a ride for this welted chunk of excrement.

More than 1,000 days on the market and the bank finally approved a short sale at the price it should have been at all along.

Just look at this lesson in incompetence:

Dec 17, 2010	Sold (MLS) (Closed)		$200,900	--	Inactive CARETS #P701097
Jul 31, 2010	Pending (Backup Offers Accepted)		--	--	Inactive CARETS #P701097
Jul 19, 2010	Price Changed		$199,900	--	Inactive CARETS #P701097
Jun 23, 2010	Price Changed		$219,900	--	Inactive CARETS #P701097
May 19, 2010	Price Changed		$225,000	--	Inactive CARETS #P701097
Mar 03, 2010	Price Changed		$250,000	--	Inactive CARETS #P701097
Dec 30, 2009	Price Changed		$289,000	--	Inactive CARETS #P701097
Dec 30, 2009	Relisted (Active)		--	--	Inactive CARETS #P701097
Dec 03, 2009	Pending		--	--	Inactive CARETS #P701097
Nov 12, 2009	Price Changed		$239,000	--	Inactive CARETS #P701097
Oct 30, 2009	Relisted (Active)		--	--	Inactive CARETS #P701097
Sep 23, 2009	Pending (Pending Sale)		--	--	Inactive CARETS #P701097
Sep 18, 2009	Price Changed		$249,000	--	Inactive CARETS #P701097
Sep 14, 2009	Price Changed		$270,000	--	Inactive CARETS #P701097
Aug 28, 2009	Listed (Active)		$319,900	--	Inactive CARETS #P701097
Aug 01, 2008	Delisted		*	--	Inactive CARETS #3
May 06, 2008	Listed		*	--	Inactive CARETS #3
May 06, 2008	Delisted		*	--	Inactive CARETS #2
Mar 30, 2008	Listed		*	--	Inactive CARETS #2
Mar 29, 2008	Delisted		*	--	Inactive CARETS #1
Feb 29, 2008	Listed		*	--	Inactive CARETS #1
May 25, 2004	Sold (Public Records)		$329,000	--	Public Records

Unbelievable.

In Saturday's post I mentioned that most Long Beach properties are selling for 2003 prices or lower, but that's in prime areas. In less desirable areas, like this one, the pricing is much closer to 2001.

Congratulations to the new owner for sticking it out for so long. Friends of mine just closed on a condo in Huntington Beach after TEN MONTHS spent wrangling with the bank. Because the bank was so slow to get off its ass, they missed out on the homebuyer tax credit and the record-low rates from the last few months.

But they, like this buyer, are paying less to own than it would cost to rent -- and that's cause for celebration.

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The price was "$219,900" and changed to "$199,900"

$220 per square foot for an apartment just 1,000 feet from the sand. This is officially cheaper to own than rent -- even before the tax write-off.

But the bank has no intention of letting the property go for this bargain basement price. Because that would mean recognizing a horrific loss on the books.

So I expect this charade to go on and on and on...with a few price increases thrown in along the way to restart the process. It's been two-and-a-half years so far...I wouldn't be surprised to see this go on until 2012. As long as there are acronym-filled horseshit government programs left to exploit, this could go on indefinitely.

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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.