See no Evil, Hear no Evil, Speak no Evil

A reader suggested I feature today's property and I am glad he/she did. In case you were starting to believe sanity was creeping back into Long Beach real estate, this specimen of delusion will change all of that.

You see, greed still rules the day. And this delusual "seller" (I use quotation marks because judging by the avarice-induced asking price, it's abundantly clear this flipper has no intention of ever selling) wants to party like it's 2005.

I mean, who doesn't want to relive those days?

You know, the days when $500 in new bathroom tile translated to $4,300 in added value. Those glory days when installing $5,000 worth of stainless steel appliances earned you $10,000 in equity. Those days in the sun when you could buy a property, hold it for less than a year, and pocket hundreds of thousands of dollars for doing absolutely nothing.

But, unfortunately, our f**ked flipper decided to kick off that '05-themed celebration in fall of 2007, when the housing market was already tanking. And he carried on the 2005 theme party with the bubble-era asking price, asking 20 to 40% more than nearby homes. Oops.

Address: 655 Ultimo Ave, 90814
Asking Price: $999,500
Size: 3 beds, 3.5 baths, 2,100 sq. ft.
Year Built: 1959
$/Sq. Ft.: $476
Purchase price: $575,000
Purchase date: 10/2007
MLS#: P626435
On Redfin: 188 days
Down Payment: $199,900
Monthly Payment (Principle, Interest, Insurance, Taxes): $6,000Income Requirement: $250,000
Description: A MUST SEE, RARE TO FIND THIS NEW A HOME, WITH THE HIGHEST QUALITY OF WORKMANSHIP AND STYLE WITH INTEGRITY. PRICED TO SELL... This MidCentury Ranch offers LARGE YARD, and a seamless interface of indoor-outdoor lifestyle with unmatched elegance and open-space of modern architecture perfect for the casual entertainer. It is newly finished with 3 bd (EACH WITH A BATHROOM), 3.5 bath, and enhanced by a complete restoration using the highest qualities of: custom cabinetry, exotic wood floors, appliances and fixtures, stylishly appointments, plus new services and utilities, pl, el, heat/air, windows, etc.. It is situated on a large Lot in Alamitos Hts. perfect for access to commuting highways 605,22,405.. and conveniently locating for just a short walk to schools, parks, golf crse, shopping, restaurants and Long Beach State. LIKE NEW with MidCentury authenticity

I mean, is this place a converted bomb shelter? The exterior is so 1950s Cuba!



This is an interesting area of Long Beach that I have not featured on RE in the LBC before. Property values in this neighborhood have remained sticky and it appears there have been very few foreclosures (so far). I don't know much about the area other than it's pretty expensive for what you get (square footage, and location-wise). In fact, there is no real consensus on what neighborhood this is officially called. This listing agent refers to it as Alamitos Heights, but it's on the other side of the lagoon and actually closer to the Marina. Anyone know if this area has a particular nickname?



ANYHOW, this is a prime example of someone who genuinely believes their neighborhood is special. Totally immune from market forces and the bloodletting all around them. So, they slap an offensive price on a so-so property and spend their days being appalled that "bottom feeders" fail to appreciate how unique this particular neighborhood, out of every nice Long Beach neighborhood, truly is (Note: A vast majority of homes for sale in this area are well over 120 days on market--this moron isn't the only one drinking the Kool Aid).

To give you an idea of the level of idiocy (and possibly brain damage) we are dealing with here, please turn your attention to the pricing action during the last excruciating, sweat-inducing, gut-wrenching 188 days:

Mar 10, 2008 - $1,199,000
Apr 17, 2008 - $1,095,000
Jun 30, 2008 - $999,000
Aug 09, 2008 - $999,500

So, as you can see, they started out in March '08 asking a cool 1.2 mil, and lopped off almost 10% after only five weeks on the market.

Then, when the alleged Spring Bounce(tm) failed to materialize, in June they lopped off another $96,000.

As the Supposed Summer Selling Season(tm), led by those droves of wealthy Hong Kong residents we kept hearing about, passed them by with no activity, they decided to get serious about attracting a buyer by increasing the price by $500.

Sure, why not?

It appears this house went back to the bank for $721,885 in August 2007, and the flipper scooped it up two months later for $575,000. This flipper, like many knife-catching fools jumping into the market right now, believed he was getting a smoking deal at the bottom of the market. And you know what? On the face of it, 575k actually is a pretty good deal considering the nearby comps (however, given the laundry list of upgrades and renovations, I suspect this place was a wreck--calling into question just how good this deal was).

But this dumb-dumb had watched too many episodes of Flip This House, Designed to Sell, and other assorted real estate porn, and let dollar signs convince him his "smoking deal" could magically transform into a SuperLotto jackpot.

Yes, folks, for holding this property 10 months, slapping some flooring down, replacing the windows, repainting, and carting in some new appliances, this idiot expects you to believe he deserves $425,000 for his efforts.

You sir, have some massive brass balls.

And to be fair, the craftsmanship and quality of materials is top notch. I love the bathroom cabinetry, I like the patio tile, the hardwood floors look good, and I'm into the unique architectural elements.

However, the kitchen is awful, the staging decorations are weird, pretentious and off-putting, and what the holy hell is going on with that living room?



The main problem with this horrendously overpriced flip is that it's late 2008, and top-of-the-line upgrades fetch only a fraction of their initial cost. If this seller bought in 2004 and sold in 2005, it's likely any money put into the flip could have been doubled. But, as the late, great Biggie Smalls once said, "Things done changed."

Now that lending has dried up and money finally means something again, NOBODY is looking for this level of "unmatched elegance." How do I know this? Let's just say I have 188 little birdies whispering in my ear.

And while I can appreciate the "seamless interface of indoor-outdoor lifestyle," the fact is that tightening lending standards and significantly increased down payment requirements will further alienate potential buyers from a place like this.

My favorite photo of the entire listing is the Denial Monkeys on prominent display. This pretty much sums it all up for this flopped flip:


See no Reality.
Hear no Reality.
Speak no Reality.

Disappearing Acts: UPDATE

A reader asked for some MLS numbers for the Long Beach properties featured on Dr. Housing Bubble Blog last week.

Dr. HB was kind enough to get those to me. Here are the two remaining active listings:

R804042

R808109

Yikes.

Wanna Bet? UPDATE

Today we’re going to take a ride in the Way Back Machine and visit a rat hole featured what seems like ages ago.


Address: 1182 E. 9th Street, 90813
Asking Price: $199,000
Size: 2 beds, 1 baths, 600 sq. ft.
Year Built: 1923
$/Sq. Ft.: $333
Purchase price: $285,000
Purchase date: 7/2005
MLS#: S499815
On Redfin: 196 days
New Down Payment: $39,800
New Monthly Payment (Principle, Interest, Insurance, Taxes): $1,283
New Income Requirement: $50,000
Description: WOW $$$$$ HUGE PRICE REDUCTION... TRUE PRIDE OF OWNERSHIP ON THIS ONE!!! CHARMING HISTORIC BUNGALOW (1923). THIS BEAUTIFULLY UPGRADED 2 BEDROOM HOME FEATURES: REFINISHED HARDWOOD FLOORS, NEW TILE FLOORING,NEW PAINT INSIDE & OUT, ORIGINAL HISTORIC DECOR, ATTACHED GARAGE AND BAMBOO-SCREENED BACKYARD. NO MELLO-ROOS OR ASSOCIATION DUES! JUST A FEW BLOCKS FROM THE BEACH AND DOWNTOWN!

They tried to pull a little sleight of hand with the days on market, but this third-world hovel has been begging since late 2007! It's been a long year, eh?

What do you think, could you rent this place for $1,300? Unusable garage, 85-years-old, dirt field behind the house, a paltry 600 square feet, terrible neighborhood, burglar bars, security doors…I very much doubt it. Let’s face it, this is basically tenement housing.

However, this recent price reduction signifies they finally get it. The party is over and any remaining optimism is dead and buried. Remember, the original asking price for this “beautifully upgraded” compost pile was in excess of $315,000!

Just for perspective, the current asking price of $199,000 represents a 40% discount from the 2005 purchase price!

Holy housing meltdown, Batman!

Sadly, this infected wound still requires further price cuts if it hopes to sell. I mean, just check out the competition asking a mere $129,000.

That place is no prize either, but its rock-bottom price ought to make our seller at 1182 9th St. consider stocking up on adult diapers.

Back in February, I said:

The willful ignorance of Long Beach sellers will get them through a few more months of insane pricing strategies but as inventory stacks up, sales decline, the Spring Bounce never materializes, the "Stimulus Plan" fails to make a dent, and the only people selling are those who chop prices significantly to meet the dismal economic realities, LB sellers will eventually give in to the same grim reality that their Phoenix brethren have painfully accepted.

I am going to make a prediction: This rat hole will not sell at $300,000, $250,000, or $200,000. In my estimation, this little gem won't so much as get a backup offer for anything more than $150,000. You may think that's a dramatic position, but I'll put my money where my mouth is: I'll put $1,000 on it. Any takers?

Needless to say, nobody took me up on the offer. Not even the True Believer realtors and commission-heads that used to spew invective comments on this site (but still read every week—Hi!) were willing to back up their sunshine and rainbow opinions about the state of the market. Because deep down they knew I was right.

And here we are, at the end of the Supposed Summer Selling Season(tm), asking $199,000 and this dump is still languishing on the MLS. That means more pricing pain is on the way.

And if you disagree and believe "Now is a great time to buy"(tm) then by all means, put your down payment money where your delusional mouth is. I can guarantee you'll end up losing an awful lot more than $1,000.

Confidence is Key

Atta boy.

Address: 2311 E 1st St, 90803
Asking Price: $1,749,000
Year Built: 1908
Size: 5 beds, 3 baths, 2,600 sq. ft.
$/Sq. Ft.: $673
Purchase price: $955,000
Purchase date: 3/2007
MLS#: P654248
On Redfin: 2 days
Down Payment: $350,000
Monthly Payment: $11,000
Income Requirement: $437,000
Description: Absolutely stunning Craftsman highly renovated Bluff Park showplace! This 100 year old home has had absolutely EVERYTHING done from the foundation, plumbing, electrical, roof, heating and so much more. This home features beautiful original hardwood floors throughout, wood beamed ceilings and craftsman window mouldings and castings throughout, original beautiful doors and knobs, a gorgeous formal dining room with built in hutch, brand new kitchen with Silestone countertops and Subway tile backsplash and d cor accents and a wonderful breakfast nook, 2 main floor bedrooms and large bathroom with his & her sinks, tons of closet space, 3 large additional upstairs bedrooms with 2 more completely remodeled baths, upstairs laundry room, secret tea room, huge rear yard with an oversized 2-car garage AND a 1,400 SqFt basement that could be used for many things! Truly too much to list! You must see this home to appreciate the detail at every turn.

Boo-ya!

Now that's how you flip a house! Pay top dollar for a run-down fixer-upper, put in some mediocre upgrades, give your bathrooms a cheap once-over reminiscent of the state of the art circa 1987, fix the crumbling infrastructure, and demand $794,000 for your troubles.



Bam!

And what timing! Buy in March of 2007, when the market is totally red hot, and sell at the end of summer in 2008--when the market it even hotter! Hot damn, this guy is good.

And you totally intimidated me with your staging. Teach me your ways, master! Nothing sells houses faster than that creepy, dead-grandparent-buried-underneath-the-pergo-floors vibe.

Nailed it!

Even better, you priced it 20% to 40% above nearby listings to let everyone know you are an aggressive, sophisticated investment strategist. Congratulations, you totally DOMINATED your neighborhood and let everyone know just how special your property is.


I believe!

Only pansies listen to that crap about price per square foot "anchored in the real world." You may not be on the sand, but that's even more reason to price it like you are. I mean, this is Long Beach! Are you going to let Laguna Beach, that wannabe city unworthy of the "LB" initials, outprice you? Hell no! You slap a $673 per square foot price on your house and show those "superior" beach cities that Long Beach is a world class city worthy of world class prices.



Don't let those naysayers and sissy bloggers push you around! No, you get right out there and show them that their "data" and "irrefutable facts" are just doom-and-gloom propaganda! I mean, hell, the National Association of Realtors, that unbiased, reliable source, says there are countless foreign investors earning $275,000 per year who are looking for a 100-year-old house just like yours. You can't throw a rock without hitting one in this hot market!

Man, with your aggressive style and savvy pricing strategy, I'll bet a bidding war starts like a forest fire this weekend! I am in awe.

$1.75 mil in your face! Suck on that, reality!

Disappearing Acts

Dr. Housing Bubble has an article today about the massive amounts of equity evaporating in the world of Long Beach real estate.

Brutal.