REO Deathwagon

Address: 1250 E Ocean Blvd #406, 90802
Asking Price: $275,025
Year Built: 1958
Size: 2 beds, 2 baths, 1,103 sq. ft.
$/Sq. Ft.: $249
HOA fee: $249
Purchase price: $200,000
Purchase date: 4/2002
MLS#: P690211
On Redfin: 4 days
Down Payment: $55,000
Monthly Payment: $1,800
Income Requirement: $79,000
Description: TOP FLOOR CORNER UNIT IN THE ELDORADO WITH PARTIAL OCEAN VIEW FROM THE LIVINGROOM. UNIT HAS HAD SOME RECENT UPDATING FROM THE PREVIOUS OWNER. NEWER DUAL PANE VINYL WINDOWS, CENTRAL AIR AND HEAT, AND BUILT-IN APPLIANCES IN THE KITCHEN.

I REALLY LIKE THE WINDCHIME HANGING IN YOUR KITCHEN. DOES THAT COME WITH THE HOUSE? BECAUSE IT TOTALLY MAKES SENSE THAT IT WOULD BE THERE. IN THE KITCHEN. DO YOU LIKE GOLDFISH?

Dude, banks aren't screwing around. Yesterday's REO might seem like a good deal, but today's lender-owned condo is asking $249 per square FOR OCEAN VIEWS!

BANK: "Hey comps, die in a fire!"

Further, in addition to dual-pane windows and other mild upgrades, the square footage is relatively gernerous for the beach and the HOA is a comparitively reasonable $249.


It doesn't have a balcony or an extra parking spot in the garage, but there's no denying this is a pretty decent deal compared to the tired crap being peddled by delusual Long Beach sellers.

The value still has further to fall in the coming years (it's an old building and the unit is a bit outdated) so even buying at this seemingly reasonable price is still catching a falling knife. But, I think the partial ocean view will help to keep the value remain somewhat sticky.

Come on, admit you're getting excited for 2011. Assuming your job doesn't get shipped off to Bangalore, if the last two featured REO properties are any indication, there is going to be some amazingly dirt cheap, high-quality inventory to choose from in the future.

**UPDATE: Backup Offers Accepted**

Yeah, no shit. At that price I'm surprised it took that long.

Signs of Hope?

I've featured units in this building before, and today I have one of particular interest for those patiently waiting for the inevitable return to sanity in real estate prices:

Address: 420 Redondo Ave #207, 90814
Asking Price: $150,000
Year Built: 1970
Size: 1 beds, 1 baths, 883 sq. ft.
$/Sq. Ft.: $170
HOA Fee: $242.32
Purchase price: $307,000
Purchase date: 8/2006
MLS#: S576939
On Redfin: 3 days
Down Payment: $30,000
Monthly Payment: $1,000 (@6%, because, well, it's inevitable at this point)
Income Requirement: $43,000
Description: Ideal and Clean 1 bedroom for a one party occupant, newlyweds or investors! Well maintained Belmont Heights building. A few blocks from the beach. Balcony with morning sun. An easy walk to Belmont heights restaurants, night life, shopping and attractions. Association pays water and trash. All electric, clean living.

"All electric, clean living"? What the eff does that mean?

I imagine that's how an robot, fresh out of rehab, describes its menial, 12-step existence.

SOBER ROBOT-/-MISSES TASTE-/-OF SWEET, SWEET BOOZE.

BUT-/-SOBER ROBOT-/-LOOKING FORWARD TO NEW LIFE OF ALL ELECTRIC, CLEAN LIVING.

SOBER ROBOT-/-MICROCHIPS SWEATING-/-THINKS ONE BEER CAN'T HURT.

SOBER ROBOT-/-NOW BUZZED ROBOT-/-HAVING HARD TIME-/-COMPUTING HOW ONE HEINEKEN-/-CAN TASTE-/-SO DELICIOUS.
BUZZED ROBOT-/-ON BEER #9.344-/-LOSING CONTROL.

DANGER!

DANGER!

M4LFU..NC/T1O:N!1!

KILL! KILL! KILL!

Uh.

Sorry.

As you can see, this place is pretty much all orginal:

One custom touch that caught my eye was the handicap handles in the bathroom (well, those and the sexy pink tiles):


I guess an elderly person lived here? There doesn't appear to be a shower, so add that to the list of improvements you'll need to make right from jump street.

Anyhow, here's the deal: Priced at $150,000, this Belmont Heights condo is slightly cheaper to buy than to rent. Yep.

There it is.

This is pretty encouraging and even the perma-bears have to perk up and take notice. At first I thought the $150,000 price tag was a typo and it was supposed to be $250,000. But, a neighbor a few doors down sold two months ago for 190k:

420 Redondo Ave Unit 212
Sold on Apr 08, 2009 - $190,000
0 miles 1 bd / 1 ba 884 Sq. Ft.

So $150,000 is a realistic price for an REO (Real Estate Owned) unit, which tend to significantly undercut nearby sellers. And considering the ragged condition of this unit, the 20% discount seems about right.

At this price, the bank clearly wants this property off its books--comps be damned. I think it will get bid up somewhat from this price, but considering it has surpassed rental parity and is easily affordable on the local median income, I imagine this condo will go quickly.

Here's some background:

In August 2006, the former owner inexplicably decided to buy this outdated one-bedroom for an eye-bulging $307,000.

Um.

Wow.

It appears that the property went back to the bank in April 2009 for $232,405. If this place sells for the current asking price of $150,000, the loss to the bank will be -$91,000 (including $9,000 in commissions).

The former owner is likely out around -$75,000, based on two years of mortgage payments and any down payment. And they say renting is throwing away money!

Anyhow, assuming the bank is serious about this price, it represents a significant turning point in Long Beach real estate and spells utter disaster for nearby sellers.

Failed Flip in the Ranchos: UPDATE

"The list price was $645,000 and changed to $624,500"

Long Beach Foreclosure Numbers

From RealtyTrac.com, here are some recent Long Beach foreclosure numbers (starting with the most distressed):

90802: 569

90813: 525

90810: 472

90806: 439

90804: 373

90815: 180

90803: 132

90814: 95

As you can see, downtown is getting absolutely inundated with foreclosures. Not surprisingly, downtown and the shadier areas of LB are experiencing a much larger influx of bank-owned properties and the resultant downward pressure on prices.

Better neighborhoods (Naples, Belmont Shore, Belmont Heights) are faring MUCH better on the foreclosure front, which explains the stickiness of prices there.

And yes, there will be added pressure in 90803 and 90814 during the next few years as "Classy-People Loans" implode. However, don't get your hopes up for $150 per square foot in The Shore. The Alt-A/Option ARM disaster will take YEARS to play out and we've already seen how skilled banks are at delaying REOs from hitting the market and how the .gov encourages banks to mark these troubled loans to fantasyland valuations.

Plus, unlike the crappy zips where any sub-prime knucklehead suddenly became eligible for home purchase, the good 'hoods have more established owners with equity. These people (although there are probably not many who resisted hitting the housing ATM) are MUCH less likely to bail simply because they're underwater--they actually have something to lose.

Not so for those who squeezed into Belmont Shore, Belmont Heights, and Naples during the Pick-a-Payment, no-money-down, live-way-beyond-your-means bubble years. I have no idea how many of those "owners" there are in the nicer areas, but you can bet your bottom (tax) dollar they'll moonwalk away from their obligations the second they realize the mid- to upper-tier housing market isn't coming back anytime soon.

There is No Quit on Mariquita!

Address: 2740 E Mariquita St, 90803
Asking Price: $519,999
Year Built: 1918
Size: 2 beds, 2 baths, 1,508 sq. ft.
$/Sq. Ft.: $345
Purchase price: N/A
Purchase date: N/A
MLS#: P624097
On Redfin: 466 days
Down Payment: $104,000
Monthly Payment: $2,900
Income Requirement: $150,000
Description: Check out the new low price on this once in a lifetime opportunity waiting for you. A craftsman style house sitting on a bigger than average sized lot(was originally two lots) on a cul-de-sac, zoned as an R2A, accesible from 3 sides (front, side and rear). The house is a very spacious 2 bedroom home with a large living and large family room with firepalce. It is in a prime location, walking distance to the ocean, schools and shopping. Needs work but with some love and care this house could be a dream come true. Must see to appreciate.

Good God, this place is depressing. It just screams probate sale.

The good news is the listing agent wrote one of the most unintentionally funny listings ever. Aside from failing to correct "accesible" and "firepalce" despite 466 days on the market, here are some other things I found amusing:

"Check out the new low price..."

Today is June 5, 2009. The listing price was last changed 47 days ago. Even on Planet Realtron, that's considered "new"?

"...on this once in a lifetime opportunity..."

When you say lifetime, are you referring to the amount of time this property has spent on the MLS?

"...waiting for you."

...in the shadows, with its grey, hollow eyes glinting in the candlelight as death's hand curls its cold, bloodless fingers around your throat...

"A craftsman style house sitting on a bigger than average sized lot..."

Come on. Everybody says theirs is bigger than average.

"...accesible from 3 sides."

Something I look for in a girlfriend.

"Needs some work."

Yeah, you can say that again. Holy Antiques Roadshow, Batman, get a load of those ovens!

"...with some love and care this house could be a dream come true"

With some love and a demolition permit maybe.

"Must see to appreciate."

Yikes, three pictures and I've already seen enough.

Here's my favorite part of the listing:

"Listing Price Excludes: Oil rights and chandeliers"

Are you sure they're excluded? Because your insane asking price sure seems to indicate access to the oil under that thar soil.

And those chandeliers...

...yeah, I can see why you'd want to hang on to those precious heirlooms.

Who the hell would want those nasty things anyway? Hell, I'll pay you to take them!

In fact, I'll throw in another couple grand if you promise to take the carpets, wood paneling (yes, the exterior too), blinds, ceiling tiles, kitchen cabinets, vinyl floors, feral dust bunnies, every single appliance, overwhelming sense of dread, and however many animal carcasses are left in the attic.

This place needs way too much work. It should really be listed as a Fixer-Upper because I can't imagine anyone would consider this "turn-key." There is a conspicuous lack of improvements/upgrades in the description, which leads me to believe there is substantial deferred maintenance. And on these 90+ year-old LB homes, that translates to major moolah in roofing, plumbing, insulation, and heating.

I'll never understand people like this. Never.

This place was purchased ages ago (the 2008 property taxes were $786, if that tells you anything) and has a metric ton of equity in it (and obviously no HELOCs were taken out for upgrades). Yet in the fall of 2008, just after the start of one of the worst financial crises ever witnessed in the history of the planet, this house goes on the market asking an astoundingly greedtarded (even for Long Beach sellers) $625,000.

WTF?

After a few meaningless price reductions, it sat there at $575,000 for a solid SEVEN MONTHS before the next price cut. And after the seller resumed their half-hearted attempt to chase the market down, here we are today still asking way too much for a house in this dilapidated condition.

It's all gravy at this point, so why not just price it competitively and take whatever the market gives you?

The answer, as always, starts with a G, ends with a D and isn't gerrymandered.

Say it with me kids:

G
R
E
E
D

As bogus talk of economic recovery reaches a fever pitch this summer, I wouldn't be surprised to see a $20,000 price increase.