Irvine Prices in Long Beach: FINAL UPDATE

6/14/11 - Sold $305,000

After years of bullshit wishing prices, this turkey has finally been put out of its misery. In the last update, I said, "...$277 per square foot seems reasonable enough to nab a buyer." It ended up going for $281 per square.

Of note, the robo-appraisal was actually dead on!

$207,276

$300,400

$414,552

I don't take much joy in being right anymore -- I mean, who really cares? The delusional realtards have long since accepted the truth expressed on this blog and conceded defeat.

Plus, it doesn't take a whole lot of effort to make these accurate predictions. As I've said since the beginning, it's just a simple matter of what local incomes can support. This price is now generally in line with the median income, so it found a buyer -- not exactly a shocking development.

For the record, this sales price represents a $240,000 discount from the original batshit-crazy asking price. Delusional? Yeah, just a tad.

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


Here's an oldie but goodie.

In one of the maiden posts on this blog (don't forget the update), I featured this property, sporting a mind-boggling $545,000 wishing price. That 2008 post prompted a decent amount of hate mail (including this idiot whose soaked-diaper logic I eviscerated in a response. The result? We never heard from him again).

Although much has changed since 2008 (not the least of which is the disappearance of whack job bubble-deniers and wrong-headed realtors spitting their delusional venom on this blog) but what has not changed is my ability to ascertain "true values" based on the facts, the numbers, and good old fashioned common sense.

At the time I said:

At $454 per square foot and 260 days on market, this thing isn't going anywhere. Sometimes I get the feeling owners just aren't serious about selling. I don't care how close you are to Belmont Heights, in this zip code the median household income is $30,353. This house is probably slightly above median considering the minor updates, but even if the median income were $50,000 a year, this thing wouldn't be priced more than $250,000.

Well, now it's back on the market as a short sale, priced at $299,000.

Although it remains to be seen whether it will actually drop to $250,000 (honestly, I doubt it. First, when I made that comment very few could foresee the insane amount of taxpayer cash the government would throw at the housing crisis to keep prices inflated. Second, although it's a short sale -- which as we all know means it isn't really for sale by any heretofore relied-upon measure -- $277 per square foot seems reasonable enough to nab a buyer), my craaaaaazy comment two years ago(!), which seemed so controversial at the time, ultimately wasn't that far off.

On the other hand, how did this rambling, incoherent prediction from "HagenindaGHETTO" work out?

Keep the OC folks in OC! Besides, there is more to do here, it's more fun and you don't have to DRIVE everywhere! We deserve to be more expensive! (unless they are buying all cash... then they come first...LOL)

FYI: This home was not a FIXER FLIPPER, the sellers fixed it for themselves but got transferred to Irvine (now that's ironic is it not?). By the way, I know the sellers, they HATE Irvine (even though they are Conservatives) they miss our GHETTO and the fun, and the walking, and the beach and the marina.....

The listing agent will be thankful the stuffed shirt Self Righteous writer of of this BLOG for a PRICE DROP....it always attracts more potential buyers.

As for the Price:
Half the price...??? Good thing you're an accountant. Just run the comps and talk about the FACTS...
The last thing we need are mendacious comments that give a skewed picture of realty. Dig?

Well, dummy, I ran the comps and I talked about the FACTS and it looks like you were, are, and always will be

DEAD.

ASS.

WRONG.

(How does that feel? Be honest.)

P.S. I can't help but thinking how pathetic it is that these fucking idiots waited so long to get real and price to reality and not fantasy. If they hadn't been so ignorantly focused on getting their greasy mitts on their "well-deserved" bubble profits, they might have had a shot at walking away with actual profits. Oh well.

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

One of my first blog posts featured a stunning, if controversial, example of Avarice is Bliss.


This house exemplified the entire premise of this blog: Long Beach, while a great city in its own right, pales in comparison to Orange County regarding schools, low crime rates, incomes, and cleanliness, and therefore cannot possibly justify asking prices that match (and in some cases exceed) the premium levied in OC.

However, Kool-Aid knows no bounds and Long Beach sellers (particularly those in less desirable areas of Long Beach) got drunk on Equity Juice and priced homes in less desirable neighborhoods like they would in Irvine, Huntington Beach, or much nicer cities in LA County.

By putting their greed on display, they held themselves out for ridicule and humiliation. Hence, the impetus and inspiration of this blog.

So, here we are today, more than a year after the home was first listed on the MLS at a laughable $454 per square foot. Like many others, the seller gave up and the property has since been taken off the market ("MY HOUSE IS SPECIAL, DAMN IT! IF THESE BUYERS ARE TOO STUPID TO REALIZE THAT, THEN I WILL JUST TAKE IT OFF THE MARKET. I REFUSE TO BE INSULTED!") and now they are attempting to rent it.

ADDRESS: 1533 E. BROADWAY AVE. (BROADWAY/CHERRY)BEAUTIFUL, LUXURY 2BED/2BATH HOUSE FOR RENT! Immaculate Hardwood Floors throughout House. Skylight in Large Living Room. Fireplace located in Living Room. Luxurious Kitchen with Stainless Steel Appliances. 2 Full Bedrooms with AIR CONDITIONING! Large Attic for Storage. Stacked Washer/Dryer. Wiring available for Direct TV and Surround Sound System! Charming, Large Backyard with Firepit and Entertainment Area. Great Location!!1 YEAR LEASEGardener ProvidedNo PetsTenant Pays ALL UTILTIES EXCEPT WATERMUST SEE!!!!

You are welcome to come into our office and pickup keys to view this unit M-F between 9am-4pm. WE ARE NOT OPEN OVER THE WEEKEND. Please feel free to contact me via email or at the office for further questions.

Actually, they've been attempting to rent it for more than a year, offering a "LEASE or LEASE TO OWN!" scheme--ERR, agreement from the get-go. No bites.

But, I thought "this is a NEW HOUSE." Well, if anything from 1918 could be considered new, I guess they're on to something. By the way, I can give you a sweet deal on a "NEW" Nash 681.

They seem a bit thick-headed, no? They refused to lower their asking price to a reasonable figure and the property didn't move. They refused to ask a reasonable rent and it's still vacant after a year.

I'm going to let this seller in on the most closely-guarded secret known to man. This wisdom is guaranteed to save the housing market in one fell swoop, but it has been elusive to all but those who travel in the darkest, most remote corners of the universe. But now I will unleash it upon the world for all to see, so that our housing market and the current misery and financial hell may end once and for all. And here it is:

Lower the price, dick.

You may have read there has been an uptick in sales recently. There is no complicated, macro economics-heavy explanation for this other than prices are cliff-diving. And when people can afford homes without bullshit, negative-amortizing, interest-only, Harry Houdini loans, homes start selling. Real simple, folks.

And if this seller had accepted this truism from the outset, he could have saved himself a year's worth of carrying costs, which at the time I estimated at $3,500 per month ($42,000 in a year!), and a lot of stress. Assuming this termite tent could get $2,000 per month in rent (which, judging by the time it's been sitting unoccupied, is yet another case of this individual's greed-faced lunacy), they are still bleeding cash to the tune of $1,500 per month! OUCH!



Incidentally, the Irvine property I compared this house sold for $540,000 in March. That was only $9,000 off the original asking price. Yikes, for a corner location? How much "equity" do you suppose that buyer has lost since his purchase?

The point is, Irvine can clearly get away with those prices, but our Long Beach seller learned after a year on the market that Alamitos Beach ain't Irvine.

If you'll recall in the original post, a local realtor and an offended resident posted invective comments with absolutely no analysis or data to support their misguided, rose-colored assessment of Long Beach real estate. They instead offered personal attacks and meaningless insults, but couldn't refute my opinion that:

"At $454 per square foot and 260 days on market, this thing isn't going anywhere. Sometimes I get the feeling owners just aren't serious about selling. I don't care how close you are to Belmont Heights, in this zip code the median household income is $30,353. This house is probably slightly above median considering the minor updates, but even if the median income were $50,000 a year, this thing wouldn't be priced more than $250,000."

I mean, it doesn't take Dionne Warwick and her psychic friends to call that one.

The fact is that homes are still overpriced and prices have a way to go before they meet market fundamentals (I'm not talking about the much-vaunted "bottom," I'm just talking about when a home purchase is a sound investment) and as long as banks have a large inventory of REO properties and that tidal wave of Option ARM resets is looming just off the coast, buying a property today is nothing more than a backstage pass to the Financial Agony show at the Wiltern (I heard Slayer is opening).

Irvine Prices in Long Beach: UPDATE II

Here's an oldie but goodie.

In one of the maiden posts on this blog (don't forget the update), I featured this property, sporting a mind-boggling $545,000 wishing price. That 2008 post prompted a decent amount of hate mail (including this idiot whose soaked-diaper logic I eviscerated in a response. The result? We never heard from him again).

Although much has changed since 2008 (not the least of which is the disappearance of whack job bubble-deniers and wrong-headed realtors spitting their delusional venom on this blog) but what has not changed is my ability to ascertain "true values" based on the facts, the numbers, and good old fashioned common sense.

At the time I said:

At $454 per square foot and 260 days on market, this thing isn't going anywhere. Sometimes I get the feeling owners just aren't serious about selling. I don't care how close you are to Belmont Heights, in this zip code the median household income is $30,353. This house is probably slightly above median considering the minor updates, but even if the median income were $50,000 a year, this thing wouldn't be priced more than $250,000.

Well, now it's back on the market as a short sale, priced at $299,000.

Although it remains to be seen whether it will actually drop to $250,000 (honestly, I doubt it. First, when I made that comment very few could foresee the insane amount of taxpayer cash the government would throw at the housing crisis to keep prices inflated. Second, although it's a short sale -- which as we all know means it isn't really for sale by any heretofore relied-upon measure -- $277 per square foot seems reasonable enough to nab a buyer), my craaaaaazy comment two years ago(!), which seemed so controversial at the time, ultimately wasn't that far off.

On the other hand, how did this rambling, incoherent prediction from "HagenindaGHETTO" work out?

Keep the OC folks in OC! Besides, there is more to do here, it's more fun and you don't have to DRIVE everywhere! We deserve to be more expensive! (unless they are buying all cash... then they come first...LOL)

FYI: This home was not a FIXER FLIPPER, the sellers fixed it for themselves but got transferred to Irvine (now that's ironic is it not?). By the way, I know the sellers, they HATE Irvine (even though they are Conservatives) they miss our GHETTO and the fun, and the walking, and the beach and the marina.....

The listing agent will be thankful the stuffed shirt Self Righteous writer of of this BLOG for a PRICE DROP....it always attracts more potential buyers.

As for the Price:
Half the price...??? Good thing you're an accountant. Just run the comps and talk about the FACTS...
The last thing we need are mendacious comments that give a skewed picture of realty. Dig?

Well, dummy, I ran the comps and I talked about the FACTS and it looks like you were, are, and always will be

DEAD.

ASS.

WRONG.

(How does that feel? Be honest.)

P.S. I can't help but thinking how pathetic it is that these fucking idiots waited so long to get real and price to reality and not fantasy. If they hadn't been so ignorantly focused on getting their greasy mitts on their "well-deserved" bubble profits, they might have had a shot at walking away with actual profits. Oh well.

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

One of my first blog posts featured a stunning, if controversial, example of Avarice is Bliss.


This house exemplified the entire premise of this blog: Long Beach, while a great city in its own right, pales in comparison to Orange County regarding schools, low crime rates, incomes, and cleanliness, and therefore cannot possibly justify asking prices that match (and in some cases exceed) the premium levied in OC.

However, Kool-Aid knows no bounds and Long Beach sellers (particularly those in less desirable areas of Long Beach) got drunk on Equity Juice and priced homes in less desirable neighborhoods like they would in Irvine, Huntington Beach, or much nicer cities in LA County.

By putting their greed on display, they held themselves out for ridicule and humiliation. Hence, the impetus and inspiration of this blog.

So, here we are today, more than a year after the home was first listed on the MLS at a laughable $454 per square foot. Like many others, the seller gave up and the property has since been taken off the market ("MY HOUSE IS SPECIAL, DAMN IT! IF THESE BUYERS ARE TOO STUPID TO REALIZE THAT, THEN I WILL JUST TAKE IT OFF THE MARKET. I REFUSE TO BE INSULTED!") and now they are attempting to rent it.

ADDRESS: 1533 E. BROADWAY AVE. (BROADWAY/CHERRY)BEAUTIFUL, LUXURY 2BED/2BATH HOUSE FOR RENT! Immaculate Hardwood Floors throughout House. Skylight in Large Living Room. Fireplace located in Living Room. Luxurious Kitchen with Stainless Steel Appliances. 2 Full Bedrooms with AIR CONDITIONING! Large Attic for Storage. Stacked Washer/Dryer. Wiring available for Direct TV and Surround Sound System! Charming, Large Backyard with Firepit and Entertainment Area. Great Location!!1 YEAR LEASEGardener ProvidedNo PetsTenant Pays ALL UTILTIES EXCEPT WATERMUST SEE!!!!

You are welcome to come into our office and pickup keys to view this unit M-F between 9am-4pm. WE ARE NOT OPEN OVER THE WEEKEND. Please feel free to contact me via email or at the office for further questions.

Actually, they've been attempting to rent it for more than a year, offering a "LEASE or LEASE TO OWN!" scheme--ERR, agreement from the get-go. No bites.

But, I thought "this is a NEW HOUSE." Well, if anything from 1918 could be considered new, I guess they're on to something. By the way, I can give you a sweet deal on a "NEW" Nash 681.

They seem a bit thick-headed, no? They refused to lower their asking price to a reasonable figure and the property didn't move. They refused to ask a reasonable rent and it's still vacant after a year.

I'm going to let this seller in on the most closely-guarded secret known to man. This wisdom is guaranteed to save the housing market in one fell swoop, but it has been elusive to all but those who travel in the darkest, most remote corners of the universe. But now I will unleash it upon the world for all to see, so that our housing market and the current misery and financial hell may end once and for all. And here it is:

Lower the price, dick.

You may have read there has been an uptick in sales recently. There is no complicated, macro economics-heavy explanation for this other than prices are cliff-diving. And when people can afford homes without bullshit, negative-amortizing, interest-only, Harry Houdini loans, homes start selling. Real simple, folks.

And if this seller had accepted this truism from the outset, he could have saved himself a year's worth of carrying costs, which at the time I estimated at $3,500 per month ($42,000 in a year!), and a lot of stress. Assuming this termite tent could get $2,000 per month in rent (which, judging by the time it's been sitting unoccupied, is yet another case of this individual's greed-faced lunacy), they are still bleeding cash to the tune of $1,500 per month! OUCH!



Incidentally, the Irvine property I compared this house sold for $540,000 in March. That was only $9,000 off the original asking price. Yikes, for a corner location? How much "equity" do you suppose that buyer has lost since his purchase?

The point is, Irvine can clearly get away with those prices, but our Long Beach seller learned after a year on the market that Alamitos Beach ain't Irvine.

If you'll recall in the original post, a local realtor and an offended resident posted invective comments with absolutely no analysis or data to support their misguided, rose-colored assessment of Long Beach real estate. They instead offered personal attacks and meaningless insults, but couldn't refute my opinion that:

"At $454 per square foot and 260 days on market, this thing isn't going anywhere. Sometimes I get the feeling owners just aren't serious about selling. I don't care how close you are to Belmont Heights, in this zip code the median household income is $30,353. This house is probably slightly above median considering the minor updates, but even if the median income were $50,000 a year, this thing wouldn't be priced more than $250,000."

I mean, it doesn't take Dionne Warwick and her psychic friends to call that one.

The fact is that homes are still overpriced and prices have a way to go before they meet market fundamentals (I'm not talking about the much-vaunted "bottom," I'm just talking about when a home purchase is a sound investment) and as long as banks have a large inventory of REO properties and that tidal wave of Option ARM resets is looming just off the coast, buying a property today is nothing more than a backstage pass to the Financial Agony show at the Wiltern (I heard Slayer is opening).

Love Letter from a Fan

In the comments section of A New Price Per Square Foot Record: UPDATE, I received a new dose of hate mail:

The photo...if that is you and this.....

You assume all risk for your own use of the information provided as the accuracy of the information is in no way guaranteed. As always, cross check information that you would deem useful against multiple, reliable, independent resources. The opinions, jokes, and sarcasm expressed on Long Beach Housing Blog are for entertainment purposes and should never be considered investment advice.

SAY IT ALL...

You are one of the most ignorant, misinformed imbeciles that I have had the displeasure of reading...try climbing out of of your dark hole, investigating and securting [SIC] the facts before you open that dark hole of a misinformed and ferstering [SIC] piehole of a mouth....Good Luck CAPTAIN REAL ESTATE!!!

Okay, I'll bite.

But I'll have you know I don't feel good about picking on individuals who seem so mentally unstable.

"The photo...if that is you"

Um, you mean this photo?

Of Randy Quaid?

Playing Cousin Eddie?

From National Lampoon's Christmas Vacation?

Are you serious?

And let me get this straight: You're criticizing me for having a disclaimer on my website that encourages readers to do their own research and be informed buyers when making the single largest purchase of their entire lives?

That's a bad thing?

What would you prefer? That I write:

I AM AN INVESTMENT GOD AND ALL INFORMATION ON THIS SITE IS GOSPEL AND SHOULD BE TREATED AS GOLDEN INVESTMENT ADVICE FOR EVERY POSSIBLE FINANCIAL SITUATION. I AM AN INFALLIBLE EXPERT AND YOU SHOULD LISTEN TO ME, AND ONLY ME, WHEN MAKING MAJOR FINANCIAL DECISIONS. IT IS IMPOSSIBLE FOR THE REAL ESTATE SITUATION TO CHANGE, SO EVERYTHING HERE SHOULD BE CONSIDERED COLD, HARD, IRREFUTABLE FACT.

Guess what? Realtors have been doing that for an eternity. How did that "infallible, expert wisdom" of realtors and mortgage slingers work out for buyers during the last few years?

Exactly.

Furthermore, everybody's situation is different, so why on earth would I proclaim to give blanket financial advice? I'm not a financial planner, I'm not a stock broker, I'm not a real estate guru, I'm not a commercial real estate broker...are you saying I should claim to be?

You don't seem very sophisticated, but I'll ask anyway: Have you ever read the fine print of supposed "financial experts"? Here's some fine print from TDAmeritrade:

As your agreement for the receipt and use of market data provides, the securities markets (1) reserve all rights to the market data that they make available; (2) do not guarantee that data; and (3) shall not be liable for any loss due either to their negligence or to any cause beyond their reasonable control.

Well, what do you know? They don't guarantee their information either!

You're obviously in denial about housing, so why don't we see what your perma-bull allies at the California Association of Realtors, who you think are more "informed" than me, have to say:

C.A.R. takes reasonable steps to maintain the accuracy and update the Content on the Site. However, C.A.R. does not make any representations or warranties regarding the accuracy of the Content, nor does C.A.R. make any commitment to update the Content. C.A.R. reserves the right in its sole discretion to add, remove or otherwise modify the Content and the Site at any time without notice.

10. DISCLAIMER. THE CONTENT ON THE C.A.R. SITE IS PROVIDED "AS IS" AND TO THE MAXIMUM EXTENT PERMITTEDBY APPLICABLE LAW, C.A.R. DISCLAIMS ALL WARRANTIES EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE, NONINFRINGEMENT OF INTELLECTUAL PROPERTY, SECURITY AND FITNESS FOR A PARTICULAR PURPOSE. C.A.R. DOES NOT WARRANT OR GUARANTEE THE ACCURACY, AVAILABILITY, RELIABILITY, ACCESS TO OR UNINTERRUPTED AND ERROR FREE OPERATION OF THE SITE OR THE CONTENT.

11. LIMITATION OF LIABILITY. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL C.A.R. BE LIABLE FOR ANY DAMAGES, INCLUDING BUT NOT LIMITED TO, ANY DIRECT,SPECIAL, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES, LOSS OF PROFITS, DATA OR PROGRAMS ARISING FROM THE USE, INABILITY TO USE, OR RELIANCE ON THIS SITE OR FROM ANY INFORMATION OR CONTENT DISPLAYED, UPLOADED TO OR DOWNLOADED FROM THIS SITE.

Hey, be sure to CC me when you send them a quasi-literate tirade criticizing them for not guaranteeing the information on their website and not being liable for bad financial decisions.

Quit acting like such a fucking idiot, Anonymous.

And if I'm "one of the most ignorant, misinformed imbeciles that I have had the displeasure of reading" THEN WHY DO YOU READ THIS BLOG EVERY SINGLE DAY? I'll never understand that one.

Furthermore, if I'm so misinformed, then please set me straight oh wise one. Seriously, I will publish anything from you that can refute my calculations or show how rip offs are actually a good deal.

I'm waiting.

In the meantime, let's get back to your love letter:

...try climbing out of of your dark hole

Junior, my life is so good I'm jealous of myself. My future is as bright as 100 suns and my hope is that one day once your foreclosure-related credit score has recovered and you learn to spell, you'll be able to enjoy a similar life path.

investigating and securting [SIC] the facts before you open that dark hole of a misinformed and ferstering [SIC] piehole of a mouth

Mmmm...pie...

So you're saying my facts aren't properly investigated or "securted?" I don't get paid to write this blog--I spend countless hours securting the facts because it benefits my readers and my own education about the real estate market. Why would I spend all that time and energy researching and writing this blog only to publish inaccurate and unsecurted information? If readers felt as if the facts, figures or charts were inaccurate (or not available to check against other sources), then they might feel insecurt about coming here.

I'm still waiting for your counterargument showing how your facts are more securted than mine, or how 1724 Bluff won't continue to go down in price. But you won't send those facts because you don't have them. You, like the other deniers-of-reality (realty?), have absolutely nothing productive or interesting to offer. Just broad, baseless personal attacks and nothing worthy of debate or discussion.

So, I look forward to your continued readership and I wish you a speedy financial recovery.

....Good Luck CAPTAIN REAL ESTATE!!!

Actually, I like this nickname. Mind if I use it?

"Keep Your Opinions to Yourself"

Anonymous strikes again:

"Hey retard.....this property just closed for $365,000 I dont [sic] see that as a problem do you? Maybe you should focus on combing the MLS for typos and keep your other opinions to yourself."

You seem awfully angry, little buddy. And yet you return every day to keep that anger alive. I assure you, it's not worth the stress. Be honest: How many times a day did you keep checking for my response to your comment?

BE HONEST.

Of course I don’t have a problem with someone putting this seller out of their misery. Why would I? Knife-catchers are the only thing keeping this economy together!

You seem to be chalking this sale up as some kind of victory, but for whom?

Obviously not the seller, who lost $20,000, plus $23,000 in commissions and $20-$30,000 in upgrades and maintenance, not to mention four years of grossly inflated carrying costs. My OPINION was that they would lose money, and they did.

So, is it a victory for the new buyer? If they can afford the payment, can hang on to their job, and don’t mind bleeding equity for the next few years (and flat appreciation after that), then sure, I guess overpaying for this property is a victory. My OPINION is that they will lose equity in the coming years, and they will (and probably already have).

But unless you’re the buyer or listing agent (actually, that might explain it) what’s YOUR stake in this? This sale can’t possibly be a victory for you because I frequently acknowledge on this site that some properties are selling--even in this abysmal market. “AH-HA! IN YOUR FACE, EL BEE! I TOTALLY CONCUR WITH YOUR VIEWS!”

So, help me out here…what’s the point of your comment? I openly welcome differing viewpoints on the housing market when they are respectful and insightful (yours, on the other hand, is neither respectful, insightful, nor even an actual opinion as far as I can tell), but you have failed spectacularly in providing anything substantive for debate. You obviously have a distaste for my opinions, but you have failed to provide even one that you disagree with.

What I hear from you is: “A condo sold. Stop blogging.”

You're adorable.

And so you know, Skippy, the entire point of a personal blog is to NOT keep my opinions to myself. You must be new to this whole interwebs thing.

And if anonymously reading my opinions and analysis bothers you so much, why are you adding my blog to your Favorites, reading every single day, and following my featured properties like a hawk? Come to think of it, you getting so angry that you can't even spit out a coherent or worthwhile viewpoint is actually a victory for me and my readers. You're the entertainment, pal. You're the fool.

A little advice: They have this thing called a “mouse” and you can “click” to whatever “website” you like. Maybe you should religiously follow a site that soothes your soul, instead of one that creates stress. Like www.cuteoverload.com/, for example.

And by the way, you never answered my question about why short sales “don't count” as comps. We’re still waiting to be enlightened. Chop chop.

Does a Short Sale Count as a Comp?

In the comments section of Pricing Problems , Anonymous says:

"Retard, the one listed for 300,000 is a short sale. You can't compare the two."

Wow. I haven't heard that tired argument for quite some time. I thought that misguided thinking gave up the ghost in 2007.

There is some debate about this topic, no doubt. And every situation is different. In a normal market, one isolated distressed sale should not be considered a comp for an entire area. Doing so would be foolish.

But you also need to remember this is not a normal market.

In fact, foreclosures now account for 40% of all LA County sales. Are you arguing those distressed sales shouldn't "count" as comps?

Anonymous (if that is your real name), please enlighten us. I'm genuinely curious as to how you convinced yourself short sales, which are only approved when banks determine market value has been met (or did you think they just arbitrarily threw darts?), should be completely ignored as comparable sales.

New Hate Mail

From newquest:

Are you really a Long Beach native? I ask this because your claim that it is not such a good time to purchase there shows to anyone with a brain that you really have no idea what your [sic] are talking about. Your ignorance of the market place combined with your arrogance vis-à-vis the “commission earners” tell me that you probably are not a sales person and just another employee of some firm that has to pay you to blog because their business model is failing massively in this market while the seasoned and traditional brokers are actually prospering and growing! Having a 9 to 5 job is probably a good thing for someone like you but remember that everything that you are writing is putting you deeper and deeper in a hole. Your [sic] building a case against yourself with every post you write.



My Response:

Again with the gross assumptions and personal attacks. The last bastion of someone on the wrong side of a debate.

For the record, I write these posts on my own time.

I’m still waiting for the housing bulls posting rude comments on this site to address the issues at hand—the featured properties—and explain how buying a property according to market fundamentals is a bad idea. Trying to discredit the messenger instead of confronting the message is an obvious sign of someone afraid to debate the facts.

Although I strongly disagree, I honor your opinion that now is a fantastic time to purchase a home. My respect for your opinion is evidenced by my decision to post your invective comment in its entirety. However, I’m mature and civil enough to spare you personal insults.

In response to your position that now is a great time to buy, nearly every property I’ve featured here has dropped its price…to no avail. What does that tell you? A reasonable person would conclude home values ARE DECLINING, and unless you enjoy paying full price for an asset that will depreciate the day you buy it, that means it is most assuredly a bad time to buy.

I would like to point out some recent media coverage of the ongoing housing mess:

http://biz.yahoo.com/ap/080116/earns_wells_fargo.html

http://www.forbes.com/2008/01/15/citigroup-merrill-closer-markets-equity-cx_er_ra_0115markets45.html?feed=rss_news

"Prospering and growing" eh? Wells Fargo and Citigroup sure seem pretty "seasoned and traditional" to me and I can't remember rampant layoffs ever being considered "prospering."

http://news.yahoo.com/s/ap/20080116/ap_on_bi_ge/bank_earns

http://biz.yahoo.com/ap/080116/economy.html?.v=8

http://search.forbes.com/search/find?MT=layoffs

Those took me about 55 seconds to find. I look forward to your supporting evidence demonstrating I (and Forbes) am wrong in concluding housing in Long Beach is in for a nasty spill.

Frankly, it’s AMAZING to me how much of a threat returning to simple investment fundamentals is to some of you! If I’m such a discredited source of information, or have “no idea what [I’m] talking about,” then why are you spending time here bothering to insult someone digging "a deeper and deeper" hole for themselves? Seems to me if my opinion is "ignorant," then someone like you who claims to be in possession of a stronger understanding of the market would have more productive things to do.

If the information and investing principles I discuss here are unsound, then please feel free to challenge them and explain how $450+ per square foot at 1533 East Broadway makes any kind of financial sense. As a prospective buyer, I want to be convinced.

I’m waiting.

Further, if now is such a great time to buy, as an expert like yourself suggested, then the numbers should speak for themselves right? Are prices going up in most areas of LB, are lending standards loosening, is there a positive outlook for the local and national economy, are there low days on market?

I look forward to you posting these figures in support of your claims.

Or, if that takes too much energy, please just dismiss my “misinformed” opinions entirely and erase my blog out of your Favorites. I sense the reason you are here venting your anger is because I’ve struck a very sensitive nerve, and deep down you know the fundamentals don't lie. And judging by your failure to disprove my evaluations, and decision to instead resort to insults, I sense you’re actually quite concerned about the implications of an informed home-buying public and are lashing out at me for daring to present a different viewpoint.

The condescending “you don’t know anything, leave this to the experts” attitude from the bulls posting here is exactly why I started this site. Armed with expanding media coverage, numerous informed housing blogs, and alternative property listing sites, buyers have never had more avenues to evaluate for themselves what’s really going on and to hear from unbiased sources with ZERO financial stake in the repression or sharing of information.

I respect those who work on commission and I'm not denigrating them whatsoever. I'm simply stating the obvious: someone whose livelihood depends on whether they can get someone else to buy something is clearly not an unbiased source.

You imply a person who is not in sales or real estate is not qualified to have data-supported opinions about the real estate market. By that logic, are people who are “just another employee of some firm” or not "a sales person" qualified to purchase a home?

I didn’t start this site to make enemies; I started it to spur discussion. But clearly not many of you are interested in the latter.

I do not claim that this site is the bible of real estate investing, or that my current analysis will apply to the future (when the market finally returns to fundamentals, I will purchase LB property and delete this blog). However, I strongly assert that home buyers, including me, need to encounter information and perspectives from ALL SIDES and process it for themselves before making the largest single investment of their lifetime.

Do you disagree with that statement?

Irvine Prices in Long Beach

Why buy in Orange County when you can pay Irvine prices right here in Long Beach? Now, I realize within the context of the massive housing bubble we just experienced, $545,000 doesn't make many people flinch. But, I want you to really think about that sum. Almost $600,000. More than HALF A MILLION DOLLARS.

Now, I want you close your eyes. Think about the house you would want to live in for that insane amount of money. Probably fairly big, lots of room to have your parents and friends over. Nice appliances, great neighborhood, decent schools. You've worked extremely hard and sacrificed a lot to save up the $54,900 down payment, and possibly put yourself through grad school to land a job paying the required $136,000 annual salary.

Now open your eyes. Is this what you imagined?

Address: 1533 E. Broadway, 90802
Wishing Price: $545,000
Size: 2 beds, 2 baths, 1200 sq. ft. (built in 1918)
$/Sq. Ft.: $454 (!)
Purchase price: N/A
Purchase date: N/A
MLS#: R704655
On Redfin: 260 days

Description: Buy, LEASE or LEASE TO OWN! OWNER WILL CARRY BACK with the right deal!All new windows, skylights, tile roof, new cooper plumbing, new electrical - this is a NEW HOUSE. Great back yard and patio too! This home has a 'dual land use' - check with city, but the commercial zoning allows you to operate a business such as Hair & Nails, Accouting/Tax Prep, Real Estate, Food Service, Etc. .. This is a wonderful home located in the heart of Alamitos Beach. (MOVIE AVAIL. On this Property)

Where do I begin? By the way, I know real estate agents and they are bright, hardworking people, but this type of listing makes me wonder if there are any standards at all for this line of work anymore. In fact, this listing is so bad, I'm going to pick it apart line by line:

Buy, LEASE or LEASE TO OWN! OWNER WILL CARRY BACK with the right deal! I WAS BETTING ON REAL ESTATE TO ALWAYS GO UP, JUST LIKE MY REALTOR AND "FLIP THIS HOUSE" TOLD ME. BUT NOW THAT MY LOAN IS RESETTING IN MARCH, I'M DESPERATE AND WILL DO ABSOLUTELY ANYTHING TO PUT A TOURNIQUET ON THIS BLEEDING, FESTERING WOUND OF A HOUSE. PLEASE!

All new windows, skylights, tile roof, new cooper plumbing, new electrical - this is a NEW HOUSE. A roof ain't cheap, and new windows definitely add serious value. I'm not sure what "cooper" plumbing is, but it doesn't sound like a good thing. "This is a NEW HOUSE"...just make sure to disregard the 1918 build date. Move along, nothing to see here.

Great back yard and patio too! Are those Christmas lights hanging from the roof? The back yard is a decent selling point, actually. Seems they should have spent more time staging it.

















This home has a 'dual land use' - check with city, but the commercial zoning allows you to operate a business such as Hair & Nails, Accouting/Tax Prep, Real Estate, Food Service, Etc. .. Awesome! Yet another property with a sizable "benefit" in addition to the considerable pride of ownership. I've never heard of "Accouting" but it's never too late for a career change. Food Service, eh? If the parking wasn't so horrendous in this area, I could open a Wendy's.

This is a wonderful home located in the heart of Alamitos Beach. UPDATE: There has been some debate on this blog about the actual borders of Alamitos Beach/Belmont Heights/Alamitos Heights, but I am of the opinion that sometimes listing agents will throw the name in of a more appealing neighborhood to benefit from the better connotations of that higher-valued area. For example, this listing,

http://www.redfin.com/stingray/do/printable-listing?listing-id=1235221

shouting distance from the featured property, lists "Belmont Heights/Alamitos Heights." But wait, didn't the seller of the first property claim it's in the heart of "Alamitos BEACH"--the more appealing neighborhood? Case and point. From what I see, the Heights area is improving, but generally, especially as the area creeps closer to downtown, it's not a place I feel safe walking down the street at night, and I certainly wouldn't park my car on the street.

(MOVIE AVAIL. On this Property) Huh?

The pictures are odd. It seems like a decent (if unbelievably overpriced) house. Nice hardwoods, decent cabinets and appliances (but awful hardware and too much Ikea furniture to qualify as a decent staging effort), yet they feature a crap-filled attic and strangely none of the bathrooms. For a supposedly "NEW HOME," doesn't it strike you as a little suspicious that no bathrooms are pictured?

With no sales data, I can only guess this is a flipper who watched too many TLC shows and got himself into a financial catastrophe he didn't anticipate. The monthly carrying costs on this place are more than $3,500. Do you think that sounds like a reasonable monthly rent? No? Then I'd surmise there's a hefty negative cash flow on this property. I'd love to find out what the flipper's--I mean, seller's, proposed lease rates are.

At $454 per square foot and 260 days on market, this thing isn't going anywhere. Sometimes I get the feeling owners just aren't serious about selling. I don't care how close you are to Belmont Heights, in this zip code the median household income is $30,353. This house is probably slightly above median considering the minor updates, but even if the median income were $50,000 a year, this thing wouldn't be priced more than $250,000.

That means this little buddy will need at least a 50% price reduction to make anything close to financial sense. That would put it at $208 per square foot. That may sound dramatic, but consider it's a big deal when Irvine and to some extent Huntington Beach drop below $300 per square foot. I love Long Beach, but if I could get a condo in a nice area of Orange County for less than a 90-year-old stucco box in a questionable LB neighborhood, there is no question where I'd live.

Quickly, here is a comparable property in Irvine with an asking price of 549,000.


















It's a 2 bed, 2 bath in a clean, safe area. It still may sound expensive for 1,100 square feet, but consider the $82,000 median Irvine income has a more realistic chance of supporting the price, as opposed to the Long Beach property.

Sure, I guess you can't open a nail salon in the back of the Irvine place, but this comparison clearly illustrates the informational/psychological barriers at work in Long Beach, and the inability to understand how the ensuing real estate deflation in nicer, more desireable surrounding areas will absolutely punish Long Beach prices.