Back From Kentucky

Regular(ish) updates will resume soon, but in the meantime I want you to see what you can get for under $350,000 in Lexington, KY:


And in Long Beach, CA?

A Face Only a Flipper Could Love

Address: 5571 E Vernon, 90815
Asking Price: $670,000
Year Built: 1952
Size: 7 beds, 5 baths, 3,675 sq. ft.
$/Sq. Ft.: $182
Purchase price: $155,500
Purchase date: 11/2000
MLS#: S568175
On Redfin: 87 days
Down Payment: $134,000
Monthly Payment: $3,900
Income Requirement: $191,000
Description: UPGRADED!! Beautiful two story house, upgrades throughout including granet, hardwood floors and covered patio.

"Granet"? Oh I get it, those "UPGRADED!!" counter tops must be from France.

I mean, what is this place? Ugh, this monstrosity is just about the ugliest house I have ever seen. And although some dough was clearly spent on the interior, it's still not my thing.

I don't know how you guys feel about crown moulding, but I am firmly in the less-is-more category. Otherwise you start applying that crap to staircases:


Next thing you know you're unwittingly applying it to mailboxes and bathtubs.

The worst is when slanted roofs create awkward application and the air conditioning vents are too high on the wall. Then you end up with head-scratchers like this:

And you absolutely must check out the Aerial View of this house. The kitchen is in the emergency lane of the 405.

Remember how I sarcastically suggested this guy should raise the price by $100,000 to lure a seller?

Well today's idiot ACTUALLY DID! In March the original asking price was $575,000, but two months later it was jacked up to $680,000.

What a jackass.

It should be noted that the day after balooning the asking price to a WTF $680,000, he (pointlessly) cut a whopping $10,000 from the asking price. Why bother?

Anyhow, this delusual Long Beach seller, who purchased for $290,000 in 1998, actually believes he deserves $380,000 in profits (not including commissions and however much he spent perpetually adding on to this oddity), which would earn him almost $35,000 per year of ownership!

That's one hard working house!

And even if he gets that ridiculous sum of money, this mulligan of a house will still be a short sale!

What?!

So during the course of 11 years, he somehow managed to rack up something like $400,000 in Home Equity Lines of Credit and cash-out refinances? Wow, this is going to get ugly.

Uh, uglier, that is.

And the listing agent sure isn't doing the seller any favors with photos like these:

Uh, you couldn't just move that crap out of the way?

And how about a pic of some of the seven bedrooms? Or how's about a pic of just ONE of the five bathrooms?

Man, as if the asking price and lackluster description weren't bad enough? Have you ever actually sold a house?

Here's my favorite part of the listing:
Listing Price Excludes: All Viking Appliances

Taking your ball and going home, eh?

How the seller can justify that greedtarded price of $670,000 while simultaneously promising to rip out the best feature on eviction day is beyond me. I guess I've once again underestimated the greed-faced delusion of Long Beach sellers.

Great find, Carl!

Dawson's Crock

Address: 531 Dawson Ave, 90814
Asking Price: $349,900
Year Built: 1923
Size: 2 beds, 1 baths, 764 sq. ft.
$/Sq. ft.: $458
Purchase price: $424,658
Purchase date: 7/2008
MLS#: P686838
On Redfin: 34 days
Down Payment: $119,000
Monthly Payment: $3,600
Income Requirement: $170,000
Description: What a gorgeous Craftsman! This property still features the built in cabinetry in the living area! Do not miss out on this opportunity to own a piece of history at an affordable price. This property features and updated bath with tile everywhere, wood flooring, baseboarding, an updated kitchen with what appears to be granite counters, small loft area, laundry hookups and a covered rear porch can be used as a carport. Priced to sell!

I don't know about owning "a piece of history," but this is definitely a piece of something...

From what I've been able to gather, the bank took back this little buddy last July and has been sitting on it ever since. I guess the lender was waiting for the market to "return to normal." Unfortunately, the misguided wager that bubble pricing would return post haste cost them dearly. By the time they got this green machine back on the MLS last month, the economy had already shed millions of jobs and real estate had been pummeled beyond recognition.

In a normal world, the decision-maker who played tricks to put off the day of reckoning would be cashing unemployment checks. In this world, homeboy probably got a promotion.

Anyhow, would you like to see the anatomy of a Bubble?

Dec 27, 1999 - Sold $83,000
Mar 14, 2001 - Sold $159,500 (71.4% appreciation/yr)
Jul 02, 2001 - Sold $171,000 (26.0% appreciation/yr)
Apr 01, 2004 - Sold $356,000 (30.6% appreciation/yr)

Yes, totally normal appreciation based on solid economic fundamentals, uh-huh, yep, nothing to see here, folks!

It looks like the 2004 owner tried to sell in June 2007, but ended up languishing on the market for a year until the bank finally took it back at auction. The weird part is, El Banco Estupido bought it back for $68,658 more than what the '04 owner paid. In 2008!

Que la chinga?

I have a sneaking suspicion the 2004 owner racked up a bunch of cash-out refi and/or HELOC debt (and the bank, believing that "real estate never goes down," gladly lent it to him) to pay for "what appears to be granite counters."

By the way, "what appears to be" should never appear in the description for something costing $350,000. FUCKING FIND OUT, DUMMY!

And speaking of questionable upgrades, this picture really says it all:

Dude, nice two-inch spaces between tiles. Imagine the buckets o' grout needed to fill in those cavernous gaps!

Man, when the agent says, "with tile everywhere," he really means WITH TILE EVERYWHERE.

This place is a wonderland of confusion. For example, are the bedrooms connected?

And why would the agent include a picture of the laundry hookups? Dude, I'll take your word for it. Does this photo really add anything to this listing? Hell, I can't even tell if the hookups are inside our outside.

Or how about this photo highlighting that the property has been tagged by gang-related graffiti:

WTF?

Speaking of indifferent laziness and retarded sales technique, someone please explain the marketing benefit of these shots:


That third one is especially egregious. Really, dude? You couldn't take .3 seconds to move the mop out of the frame?

I'll never understand realtors. You are salespeople aren't you?

Could you imagine if an Audi dealership ran ads on their website featuring photos of $65,000 cars with fast food wrappers littered in the foot wells, oil rags plopped on the dashboards and empty Pepsi cans in the cup holders? How long do you think those lazy shits would stay in business?

Scout's Honor!

Address: 3618 E 7th St., 90804
Asking Price: $595,000
Year Built: 1923
Size: 2 beds, 1 baths, 768 sq. ft.
Purchase price: $155,500
Purchase date: 11/2000
MLS#: P672892
On Redfin: 139 days
Down Payment: $119,000
Monthly Payment: $3,600
Income Requirement: $170,000
Description: Cute little 2 bedroom, 1 bathroom California bungalo with detached one car garage. Mixed use residential and commercial zoned, corner lot.

Price per square foot: $775
Dude, by my estimation you're juuuuuuust about finished with a softball-sized crack rock if you honestly believe this house is worth 600 grand. Really? You're entitled to $404,500 in bubble profits? REALLY?

Don't get out much, do you?

You see, pal, while you've been stuffing your face with mini corn dogs and watching American Idol (wait, that Lambert dude is gay?! GET OUTTA TOWN!), the country you live in has been hit by the worst economic crisis since The Great Depression.

No, seriously!

And I'm not sure if you've looked out your window lately, but your house is sitting on one of the busiest streets in Long Beach.

I swear!

And maybe you're not handy with a measuring tape, but it turns out your house is on a 50'x 45' lot.

For reals!

And by the way, you're asking $595,000 when the total taxable value on this house is only $178,383.

Believe it!

And the average price per square foot of Sold properties in this area is $260, a third of your asking price per square.

Crazy, I know!

And on top of that, if the bubble never occurred and your place appreciated at a generous 4% per year since purchase, it would be worth $221,000 today.

I'm telling ya!

And lastly, the most expensive nearby property is only asking $430,000 and it's a nice, clean, updated property in a highly-desirable area of Belmont Heights!

Scout's honor!

And, I'm not sure if you've been outside lately, but in comparison your house looks like this:

So, the point of all this is that you should raise the price immediately.

The reason nobody has so much as glanced at your house in 139 days is because it's too cheap for a house in such great shape, in such a stellar location, and with so many features worthy of a substantial premium. Buyers are probably assuming something is wrong with it when they see that super low price of $595,000.

It must be so frustrating to be this close to grabbing the bubble profits you're so obviously entitled to (dude, only $404,500 in profits? You deserve so much more for your time and effort), only to have the thousands of rich foreigners coming here to save the housing market think your place is too much of a bargain.

So, I think you should increase the ask by $100,000 immediately to let potential buyers know this place is truly special. After all, how many houses have this kind of access to 7th Street? And by "access" I mean RIGHT THE FUCK ON TOP OF.

Yeah, exactly.

And if in two weeks nobody has bit on your new aksing price, then it's still too cheap and you should raise it another $100k. Afterall, the Super Summer Selling Season is upon us, and you don't want to leave any money on the table do you?

Cracking the $100,000 Threshold

Address: 2507 E 15th St #213
Asking Price: $99,900
Year Built: 1988
Size: 2 beds, 2 baths, 842 sq. ft.
$/Sq. Ft.: $119
HOA Fee: [UPDATE FROM CARL]$442
Purchase price: $230,000
Purchase date: 12/2004
MLS#: P685972
On Redfin: 7 days
Down Payment: $20,000
Monthly Payment: $1,050
Income Requirement: $28,000
Description: End unit with upgraded bathrooms and flooring. Laminate wood flooring from the entry to living room and hallway. Ceramic tile flooring in the bathrooms. Indoor laundry. Balcony with a view of Signal Hill accessing to and from both bedrooms and living room. Complex has recreation room, community spa and BBQ. New painting of exterior in progress.

You have to love that cut-and-dry property description typical of short sales. Even the listing agent is rolling back his eyes and asking, "Ah, what's the point?"

"Condo. Has floor and roof. Toilet and shower. Bah, fuck it."

I mean, check out this tell-tale Waving the White Flag photo:


"Meh, whatevs."

And the agent's eyes aren't the only thing rolling back: The current asking price not only represents a 2000 price, it's actually the equivalent of a 1988 price!

Apr 06, 1990 - Sold $125,500
Jul 19, 1994 - Sold $133,996
Dec 16, 1994 - Sold $83,500
May 23, 2002 - Sold $115,000
Dec 01, 2004 - Sold $230,000
May 04, 2009 - Listed $99,900

Mind you, the 1988 price is what it cost when it was brand new!

OUCH!

Like a 2x4 to the face! Right, Hacksaw Jim Duggan?

If it weren't for the outrageous $442 HOA, this apartment would be dirt cheap. But even factoring the additional $442 month HOA (your HOA fines are almost as much as your principal and interest!), at $99,900, it still pencils out. Let's look at the fundamentals:

LOCAL MEDIAN INCOME: $38,705 (Check! Income requirement is $28,000)

3.5X INCOME: (Check! 3.5X $28,000 is $98,000)

LOCAL RENTS: $1,200 - $1,300 (Check! PITI+HOA is $1,050)

PRE-BUBBLE PRICING: $100,000 (Check! Asking $99,900)

This, my friends, appears to be the bottom for shitty Long Beach neighborhoods. If it gets any lower for 2-bed/2-baths, we're probably in a Depression--and you would have much bigger fish to fry than house-hunting (like, say, stocking up on ammo).

Or is it the bottom?

Just ask this guy who bought in this building late last year thinking the bottom was in:

$148,500 2507 E 15th St Unit 313
Sold on Nov 17, 2008
0 miles 2 bd / 2 ba 842 Sq. Ft.

If our featured squat sale is approved at the current asking price of $99,900, in just seven months the buyer of #313 would already be -$50,000 underwater. That's almost 35% underwater in half a year!

Or, ask this guy:

$149,000 2507 E 15th St Unit 215
Sold on Dec 08, 2008
0 miles 2 bd / 2 ba 877 Sq. Ft.

A mere six months after his "bottom" he's $50k in the hole.

Maybe we should give this 2009 buyer ("I'm telling you Martha, it can't possibly go any lower!") a holler and see how he feels about being $40,000 underwater in a matter of months:

$139,500 2507 E 15th St Unit 120
Sold on Jan 16, 2009
0 miles 2 bd / 2 ba 856 Sq. Ft.

Remember, friends, no matter how great deals may seem at the moment, nobody knows how much worse unemployment is going to get before it gets better. The unfortunate bottom callers I just highlighted obviously didn't think things could get any worse, and look what happened. Don't make the same mistake they did.

And especially considering the numerous short sales in this building (btw, according to the sales history our featured seller is "short" by $131,000!), it's quite possible these still have further to fall and will fall well below rental parity when the bubble finally, mercifully, deflates.

And even if you have no interest in properties in bad neighborhoods like these and are looking in neighboring zips closer to the beach, $100 per square foot for newer construction in 90804 is going to put significant downward pressure on adjacent neighborhoods with older inventory.

Right, tarp-covered Pac-Man?