The Bubble is Back!

Thanks to the always eagle-eyed Katy in LBC for sending this one in.

Address: 384 Santiago Ave, 90814
Asking Price: $2,000,000
Year Built: 1986
Size: 5 beds, 6 baths, 4,436 sq. ft.
$/Sq. Ft.: $451
Purchase price: $974,687
Purchase date: 3/2009
MLS#: P693962
On Redfin: 4 days
Down Payment: $400,000
Monthly Payment: $12,000
Income Requirement: $571,000
Description: Spectacular custom pool home well located in prestigious Alamitos Heights. Two master bedrooms, one on entry level and the other upstairs. Spacious rooms with abundant closets. Quality construction with extra wide foundations, R-30 insulation throughout including interior walls, two waterfalls for black bottom pool and spa, backyard pool house with shower and toilet (6th bathroom), solar electric feedback (BP), solar pool heating, inside pool computer to regulate pool and spa, wide hall downstairs and ramp from garage for wheelchair access, roof 5 years old, new Air Conditioning, huge stairwell skylight, and many other amenities including multiple fireplaces, huge bonus room, dramatic foyer, large breakfast room, and step-down conversation area with fireplace adjacent to living room and formal dining room. The upstairs master suite also has a step-down seating area with its own charming fireplace. There are inviting balconeys front and rear. This is a home to treasure and enjoy.

Ah, they were so close! And then it all fell apart with "balconeys." I still keep reading it as "baloneys." Mmmm...baloney...

Speaking of "treasure," for $2 million there better be some motherfuckin' gold dubloons buried in the backyard.

Wait, what?

There's no back yard to speak of?

Really?

Oh.

Bummer.

And thanks for the quality pictures of all the bullshit "amenities" you so lovingly described. You're a marketing genius!

And the one picture you provide is of...a tree?

I think there's a house in the background of that photo but it sure as shit isn't a $2 million property. Nice rotting garage door and wood shingles (ugh, sick).

You are trying to actually sell this thing, aren't you?


Anyhow, the previous owner purchased in October 2004, just as the bubble really got cranking, for $1,100,000. $248 per square foot for a custom home shaped like a pool (that's what they meant by "custom pool home," right?) in this neighborhood actually sounds like a decent deal for 2004.

Anyhow, the loanowner (admirably) made it five years before that crushing $7,000+ monthly payment overwhelmed him.

A job loss is the most likely explanation, as he wasn't really that underwater. I say that because the bank took it back at auction in March for $974,687--which pretty much makes it the market price. Plus, the nearby listings are asking way more than a million bucks (nearby sales are a different story--according to Redfin there have been ZERO recent sales).

Was it an exploding Option ARM?

Hmm. Even with 0% down, the most ridiculous teaser rate, and making the bare minimum payment, five years of writing checks still would have managed to pay down several hundred thousand dollars--not just the paltry $125,000 difference between purchase price and debt outstanding.

So what happened here?

Mortgage Equity Withdrawal?

A second mortgage that was completely wiped out?

Who the hell knows.

The real point of this post is that the bank, after discovering the true market value of this home at auction (after all, nobody else bid on this house--otherwise the bank would have gladly let them have it for what was owed, right?), somehow determined this house more than doubled in value during the last three months.

WHATTHEFUCK?

Just how stupid does this bank think buyers are?

Answer: Incredibly.

That's a Helluva Sales Strategy You've Got There

Address: 416 Roswell, 90814
Asking Price: $426,000
Year Built: 1922
Size: 3 beds, 1 bath, 956 sq. ft.
$/Sq. Ft.: $446
Purchase price: $533,000
Purchase date: 2/2006
MLS#: P686872
On Redfin: 500+ days
Down Payment: $85,000
Monthly Payment: $2,400
Income Requirement: $122,000
Description: APPROVED SHORT SALE. Charming 3 Bedroom Bungalow with Hardwood Floors, Spacious Kitchen, Indoor Laundry, and Private Back Patio.

Hilarious. This thing has been rotting on the market since February of 2008 with absolutely no interest. Recently, the asking price was reduced to $399,000, which was obviously still way too much because it continued to collect dust.

The bank finally got around to approving a short sale a few days ago...ASKING $27,000 MORE THAN THE LAST RIDICULOUS WISHING PRICE!

Smart move!

I mean, how does that logic play out? A place that can't garner any interest whatsoever at $417 per square foot is suddenly going to be attractive at $446 per square? WTF?

I understand why the lender wants to squeeze as much blood from this turnip as possible, especially since the short seller purchased this microscopic beach bungalow for an astounding $533,000 (for this place?!) in February 2006. But if the bank's upper management thinks they're getting out of this with only a $131,000 loss, are out of their Kool Aid-snorting minds.

Hell, even the listing agent knows there's no way in holy hell it'll go for $426k: That property description has to be one of the most uninspired, lackluster examples of seeing-the-writing-on-the-wall I've seen in a while.

At a certain point the bank needs to get realistic. Today is not that certain point.

Happy Fourth of July

The 4th of July is a time to celebrate not only our independence, but also our right to point out just how imperfect this republic is. It's healthy (and indeed essential) to call out the actions and hypocrisy of our leadership and question who we've become, and who we're becoming as a country.

But even reluctant acknowledgement our flaws as individuals and as a nation reminds me that there is no place on the planet I'd rather live.

Dave Smallen - America

God bless you and your loved ones.

For Sale: A House That's Not For Sale

There seems to be a lot of discussion about the existence of "shadow inventory" and what it means to the future of home prices.

The story goes that a substantial number (like, 80,000 in California) of foreclosures are intentionally being kept from the market by banks and lenders. Either by delaying foreclosures or taking their sweet ass time to get properties to market, the claim is that if this enormous tidal wave of inventory were to suddenly hit the market, home values would plummet due to an over-saturation of discounted supply. Therefore, if the banks withhold this bargain-priced inventory, they can keep inventory at the current low levels, spur demand, and keep house prices propped up.

It seems the debate centers on how much shadow inventory is really out there and whether it would make much of a difference if it actually made it to the MLS in bulk. Some say those waiting for a "tsunami" of shadow inventory to flood the market and put devastating downward pressure on prices will be sorely disappointed.

Anyhow, what qualifies as "shadow inventory" seems a bit muddled. When discussing S.I., it is most commonly applied to foreclosures. But then some consider underwater and distressed homeowners at risk of foreclosure (tick-tocking Option ARMs, etc.) as part of the shadow inventory. Makes sense I guess.

My only question is, do greedtarded sellers count as "shadow inventory?"

It's inventory and it's counted, so it's not really in the "shadows" per se. But it's not "real" inventory either because these sellers are obviously greedfaced dolts with no intention of actually selling.

Like today's "seller":

Address: 329 Redondo St, 90814
Asking Price: $999,900
Year Built: 1919
Size: 2 beds, 2 baths, 3,000 sq. ft. (including 1,400 sq. ft. flower shop)
$/Sq. Ft.: $333
MLS#: P606108
On Redfin: 621 days
Down Payment: $200,000
Monthly Payment: $5,000
Income Requirement: $285,000
Description: Upgraded home with approx. 1,600 Sq.Ft. 2Bed/2Bath/Office/Central Air/2-car Garage/French Doors/2 Decks/Family Kitchen/2 Fireplaces/Formal Dining Room/Inside Laundry/Long gated driveway/backyard with fruit trees - In addition,an attached 1,400 Sq.Ft. commercial storefront currently used as a Florist/gift shop facing Redondo Ave. A unique property with lots of charm and possibilities/High traffic area 3 blocks to the beach. PLEASE CLICK ON MEDIA 21 OR MAIN PICTURE TO ACCESS NEW VIRTUAL TOUR AND PICS!

"High traffic area"? Yeah, you could say that. It's literally right on top of busy-ass Redondo. Just so we're clear, the house "for sale" is a back house attached to a flower shop, but you would take ownership of the whole kit and caboodle.

So, uh, yeah, I guess living in a "high traffic area" is good for business. Terrible for your quality of life, but hey, those Gerber daisies and Mylar balloons pay the bills!

Anyhow, one look at the pricing history and it's obvious this property isn't actually for sale:

Oct 20, 2007 - Listed $1,300,000 (WTF?)
Mar 10, 2008 - Price Changed $1,100,000 (five months after list, we finally see our first price cut)
Jun 21, 2008 - Price Changed $1,200,000 (a price increase! Smart!)
Dec 04, 2008 - Price Changed $1,175,000 (six months after the price increase, and we're still higher than the March price!)
Jan 31, 2009 - Price Changed $1,100,000 (almost two years on the market, and we're still at the March 2008 price)
Mar 10, 2009 - Price Changed $999,900

This oblivious pricing "strategy"--if you can call it that--just reeks of greed and stupidity. If the seller had originally priced at $999,900 in October 2007 (it's been 621 days on market, for fuck's sake!), and chased the market down from there, he might have actually relieved himself of this albatross.

I say "might have" because this House o' Clutter, as mentioned earlier, is on a very busy street. Plus, the kitchen is stunningly outdated and needs to be demolished:

Further, the bathrooms are abhorrent for a million dollar house (or, frankly, any house asking more than $250,000):

Come to think of it, what the hell are you thinking, guy? A million dollars for this pack rat palace? Really?

So, instead of being realistic with pricing during the last two years, here we sit.

And sit.

And sit.

With a seller who is convinced he is "special" and immune to reality. Hey, Chachi, you've been on the market for almost two years. You think maybe, just maybe, you're asking too much money? That thought never bounced around that thick skull of yours? Really?

I mean, it's not as if Belmont Heights properties aren't selling--what do you think to yourself when those nearby, reasonably-priced sellers sell? That they're the chumps?

Oy.

Look, this isn't shadow inventory in the classic definition of a place that should be for sale but isn't on the market. In fact, it's more like a house that's on the market but not really "for sale."

It might actually be the opposite of shadow inventory. Non-sellers like these actually mean there is LESS real inventory on the market to choose from. And with no governmental or regulatory agency (or even shareholders/board members, for that matter) forcing banks to get their REO stock on the market, it's creating hell for buyers because the few decent (in terms of condition and price) properties get bid up to the stratosphere.

Fence-sitters, including me, keep waiting for the shadow inventory to see daylight, but it's worth considering that perhaps the banks and .gov can keep this game of moratoriums and meting out one or two properties at a time going for a long, long time--killing the dire predictions of those betting on an enormous influx of supply in the coming months.

Bulletproof Vest Not Included

Address: 1780 W 25th St., 90810
Asking Price: $339,000
Year Built: 1977
Size: 7 beds, 3 baths, 2,224 sq. ft.
$/Sq. Ft.: $152
Purchase price: $315,000
Purchase date: 4/2009
MLS#: R903780
On Redfin: 16 days
Down Payment: $68,000
Monthly Payment: $2,000
Income Requirement: $97,000
Description: Nice Home in Nice Long Beach Area This Home Features 7 bedrooms , 3 bath ,2 car garage. Perfect for Large family At this price it willnot Last

In high school, the Carl's Jr. in the Rossmoor Center was the hangout spot. We would hang out after school, take advantage of the free refills, and talk about the trials and tribulations of our teen years.

Anyhow, there was a guy who worked there named Robert. He was mentally disabled but the management was really generous and gave him a job. His disability was such that he was limited to what duties he could perform but the one thing he ACED was delivering food and collecting those little A-frames with the order numbers on them (the kids with classic cars would always swipe the "67" or "68" depending on the year of their car). And he would always say, in his unique voice:

"WOULD YOU LIKE KETCHUP WITH YOUR MEAL?"

Patrons answering in the affirmative would receive piles upon piles of (body temperature--HORF!) ketchup packets from his cornucopia of an apron until politely mentioning they were just fine with 34 packets.

The point of this story? I just wanted to congratulate ol' Robert on finding a new career as a realtor! Nice work, buddy! That listing description is AWESOME! Way to go! Gold star for you!

You know how I know this neighborhood sucks? Robert refused to get out of his car to take listing photos:

And Robert has reason to fear for his life. Last month a police officer was shot just a few blocks from here.

And speaking of grade-A listing photos, check out this little before-and-after action. Now you see the used car (and shopping cart) dealership:


Now you don't!

That's some David Blaine shit, right there!

The previous owner, who purchased in June 2004, plunked down a pants-wetting $535,000. In this 'hood? Yikes.

To their credit, the "owners" of this seven-bedroom gem made it almost five years before the enormous debt service swallowed them whole. Judging by the number of cars in the driveway, they were probably renting out several rooms and moving in extended family members to make ends meet. That, or they were operating a valet company out of there:

Anyhow, purchasing a house at TEN TIMES the median income is unsustainable, and with a mortgage like that you're only one pay cut or a leaky roof away from balance sheet detonation.

Ka-boom.

The owners eventually moonwalked away (probably after living there rent-free for a while) and the house went back to the bank for $315,000 in April. Six days later the lender listed it for $339,000--just enough to break even after commissions--and it's been sitting there collecting dust ever since.

By the way, at its current asking price, this boarding house is 38% off the 2004 price! Yowza!

And considering Robert is too afraid to get out of the car and can't be bothered to move a shopping cart (sorry, that's just GHETTO) out of the way...what do you suppose Robert thinks the odds are of this place selling for $339,000?

About as good as Michael Jackson performing at his London concerts (too soon?).