For the Love of Money: FINAL UPDATE

Sold on 03/15/10 for $592,500

After seven months trying to get $729,000 for a self-proclaimed "fixer," this dipshit lost his house to the bank in in November 2009.

Notably, the bank took it back at auction for $603,500. Remember, the house sold for a mere $225,000 in '93, meaning instead of building 17 years of equity this reckless fool racheted up nearly $400,000 in HELOCs and second mortages!

Anyhow, the bank threw it on the MLS in December and finally sold this month for a $10,000 loss, plus about $36,000 in commissions, and however much was spent sprucing it up (not much by the looks of things). There could have been much more than $600,000 in loans against this thing, but without that information it seems like Joe and Jane Taxpayer dodged a bullet on this one. It could have been much worse.

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For a small piece of paper it carries a lot of weight,
Oh, that mean, mean, mean, mean, mean green.
Almighty Dollar!
Talkin' bout, talkin' bout - cash!
I know that money is the root of all evil,
Do funny things to some people.
Give me a nickel, brother can you spare a dime?
Money can drive some people out of their minds.

For the love of money.
No good, no good, no good.

For the love of money.
Don't sell ya soul for the money - no, no.

-The O'Jays, For the Love of Money


Address: 5216 E. Vista, 90803
Asking Price: $729,000
Year Built: 1941
Size: 3 beds, 1 baths, 1,243 sq. ft.
$/Sq. Ft.: $586
Purchase price: $225,000
Purchase date: 10/1993
MLS#: P684522
On Redfin: 62 days
Down Payment: $146,000
Monthly Payment: $4,200
Income Requirement: $208,000
Description: This 3 bedroom 1 bath fixer property is in heart of Belmont Park. Walking distance to many restaurants, shops, just minutes from the beach and the marina. Hardwood floors throughout, 1/2 block to Lowell Elementary

LOL: "Listing Price Excludes: Dining room light, entry hall light"

SCREW THAT, DEAL'S OFF!

The word "fixer" should never be a descriptor for a house asking $586 per square foot. Not that that nugget of common sense would ever stop delusional Long Beach sellers from their delusional ways.

But don't worry about it, pal, I'm sure there are plenty of doctor/lawyer couples looking to shell out $4,200 a month for the privilege of sharing a bathroom and paying for all of your (obviously substantial) deferred maintenance.

Incredibly, this asking price of $729,000 is a $79,000 increase from the original April demand of $650,000!

Great sales tactic!

Here is where my jaw hit the floor: This (outwardly) cute little house was purchased in 1993 for $225,000, but even if they found a buyer for $729,000 IT STILL WOULDN'T COVER THE LOANS!

WTF?!

If serial refinancing were heroin, before his fatal short-sale overdose this guy was in the "turning-tricks-on-Santa-Monica-Boulevard-and-shooting-up-in-between-his-toes" stage.

The amazing thing is, if he hadn't taken out so much money against the house, a few years from now he would probably own this place free-and-clear.

FREE-AND-CLEAR!

He would have absolute financial freedom and could retire in this absolutely amazing neighborhood with no house payment. But instead of monetary liberty, our avarice-fueled seller chose a life of unchecked greed, rampant consumerism, and living above his means. The implacable desire for cash money can truly drive people out they damn minds.

There are no other pictures provided, so for the sake of alacrity I'll keep this short. I just thought you'd like to see where your hard-earned tax dollars are going: To myopic, irresponsible turds like this one.

Well, It Was Worth a Shot: UPDATE

Not sure if you remember this dump from October 2009, but it turns out just a month after my post a flipper swooped it up from the bank for $225,000 (the lender ate a $200,000 loss on that one).

As crusty as it was, $225,000 was a pretty good deal (in October I said I thought $250,000 penciled out). And like most sales so close to downtown, it represents a 2002 price.

Anyhow, this flipper, instead of taking a shitty property, sprucing it up, and extracting a reasonable profit, has turned out to be just another gluttonous pig with his greedy, money-grubbing snout buried deep in the quick-money trough.

After slapping on some paint, pergo floors, and cheap carpeting, he dumped it on the market with a $114,000 built-in profit.

$114,000!

What a jackass.

Let's see...community laundry, only one parking spot, and located all the way the hell down on Esperanza? For $339,000?!

The average price per square foot in this neighborhood is $274 and he's asking $355?

What the fuck for? Fake wood floors and repainted cabinets (oh, you didn't think we'd notice that)?


And he might have just painted over the pink tiles!

Other than money spots on Ocean, nearby properties don't even come close to asking this kind of money. What a dolt.

Look, I'm cool with flippers improving rough properties (and, in some cases, improving the neighborhood as a result) and making a little dough. Hell, in this environment you gotta have a set of dangling bowling balls to try your hand at flipping, and you should be rewarded for the risk you're taking. As far as I'm concerned, party on Wayne.

But what I can't get over is the utter contempt some of these flippers have for potential buyers. I mean, he truly believes you and I are complete rubes and that he deserves $100,000+ for doing little more than putting lipstick on a warthog.

Hey, Flippy, Price Reduction's on line #2. Says it's urgent.

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I'm back from Chicago, and let me tell you, there aren't many better cities to celebrate your birthday. And speaking of cities with a condo problem:

1329 E 1st St #18, 90802
Price: $250,000
Beds: 2
Baths: 2
Sq. Ft.: 954
$/Sq. Ft.: $262
Year Built: 1959
MLS#: T09106531
On Redfin: 5 days
HOA: $150
Down Payment: $50,000
Income Requirement: $71,000
Monthly Nut: $1,500
Description: 2 bedroom, 2 bathroom front, corner unit condo in the Startdust Condo Building with city lights view from private balcony and master bedroom and view of the ocean from the rooftop deck. Located in gated community with underground parking and only 1 block from the beach. Unit has a lot of closet and storage space. Conveniet location. Close to park, shopping, public transportation, downtown Long Beach, Belmont Shore, Shoreline Village and the Pike Center.

"Conveniet"?

It appears the bank took this puppy back in February of 2008 for $375,000. The play seemed to be, "Bubble pricing will be back in no time...let's just wait this out. It can't possibly go any lower!"

Well, they successfully kept it off the market for ONE AND A HALF YEARS (Anybody still believe shadow inventory doesn't exist? Really?) before throwing it on the MLS for--take a wild guess!--$375,000.

I guess it was worth a shot, eh?

Because yesterday (just four days after relisting at that hilarious wishing price) the price was dropped a mind-blowing -$125,000. Ploy to garner a bidding war? Typo? Or the result of actually looking at comps and accepting reality?

Who knows, but that is one hell of a price cut. Check this out this history:

Oct 06, 2009 - Price Changed $250,000
Oct 02, 2009 - Listed $375,000
Feb 22, 2008 - Sold $375,000
Nov 04, 2007 - Delisted
Sep 30, 2007 - Listed
Mar 09, 2006 - Sold $418,000
Sep 27, 2002 - Sold $227,500
May 08, 1990 - Sold $132,500
Apr 19, 1989 - Sold $120,000

Yep, this is a 2002 price! And it's still no guarantee of selling in this market. Because regardless of that aggressive pricing, there is no escaping how dumptastic this place is:



Good grief, Charlie Brown, what a crap shack.

BUT, it's approaching rental parity, so this might be a decent buy.

Think about it: Get an FHA loan, use the (coming) $15,000 homebuyer tax credit for your down payment, and when you fall deep underwater, stop paying and live rent-free for a while, and just walk away with a wad of saved cash and a dinged credit score when they finally kick you out. If anybody gives you static about your FICO, just tell them, "Hey man, it was 2010."

Believe me, everyone will understand.

A Different Kind of Double-Dip

By way of Jim the Realtor's excellent blog, the California First-Time Homebuyer tax credit has been extended. For about a month, if buyers time things perfectly, they may be able to "double-dip" and receive both tax credits. From the WSJ:

Tuesday, we told you that the (financially troubled) state of California is poised to offer home buyers up to $10,000 to get off the fence and to the dotted line. The $200 million program, split between first-time buyers of existing homes and new units, should keep the Golden State’s sales moving along post spring-selling season.

But, it might not get off to a peaceful start on May 1: Get ready for a stampede early on as some buyers rush to overlap with the federal tax credit that’s dangling as much as $8,000 to buyers. (Yes, that’s up to $18,000 for buying a house.)

For the federal incentive, contracts must be inked by April 30, while closings have to happen by June 30. The California credit covers closings on existing or new homes on or after May 1, leaving a short window for double dipping. “We already anticipated increased contract activity in March and April due to the federal tax credit with scheduled closings in May and June,” writes Credit Suisse builder analyst Dan Oppenheim. “These buyers will now be eligible for both the federal and state credit and will likely consume a significant piece of the state credit given the first-come, first-serve allocation.”

There is apparently no income limit for the State credit, but there is for the Fed ($75,000 for individuals, $150,000 for couples I believe).

Here is some more information:

http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0151-0200/ab_183_bill_20100322_enrolled.html

http://www.federalhousingtaxcredit.com/

Ultimately, you're not knocking a whole lot off the price, but if you're set on purchasing this spring anyway you really have no excuse. It's free money (care of you, your kids, and your grand kids as they like to say).

Odds are that by August the home price will go down by at least as much as you "saved," but like I said, if you're poised to buy soon regardless, why not just have some free loot to furnish your new pad?

P.S. Expect home sales to jump substantially in California during the next few months.

P.P.S. Sales will need to rise substantially to absorb the (finally) growing inventory. Plus, I expect a lot of sellers, hibernating for the winter and hoping for a better tomorrow, to throw their properties on the market this spring. If that results in improved quality of inventory (it is absolutely dismal out there as it stands), you better believe I'll go out and kick some tires too.

Bungling Buffoon Badly Burned by "Bottom" Buying

2662 East 2ND St Unit G2, Long Beach, 90803
Asking Price: $399,000
Beds: 2
Baths: 1.75
Sq. Ft.: 1,292
$/Sq. Ft.: $309
Year Built: 1966
MLS#: P727352
On Redfin: 2 days
HOA: $213
Down Payment: $80,000
Income Requirement: $114,000
Monthly Nut: $2,300
Description: Look no further! You have found one of the nicest and most spacious 2 bedrooms PLUS office currently available in Bluff Park. This END UNIT boasts gleaming hardwood floors, plantation shutters, a formal dining area, a huge remodeled eat-in kitchen with amazing storage and counterspace, a large guest room, updated guest bath with spa-like feel, oversized master bedroom with a dressing area and remodeled bath, french door enclosed sunny office area, and an in unit stackable WASHER/DRYER. Finally, no community laundry!!! The condo also comes with an oversized parking space and additional storage above the space in the garage. One of the nicest and well maintained buildings in Bluff Park or Belmont Heights you will show. Just a pleasure! Pets are allowed and you are just one block to the beach, bike path, Long Beach Museum of Art and fine retail and restaurants. The perfect elegant and stylish neighborhood. This is a standard sale!

The 2008 losers just keep stacking up. Today's seller was yet another sheep who allowed himself to be misled by CNBC hyper-bulls and his commission-hungry realtor that he was "buying at the bottom" in late '08.

And now, predictably, he is being sent to slaughter.

Just a short 19 months ago he foolishly purchased this apartment for $451,000 from a pre-bubble owner who paid a mere $165,500 ("Thanks for the bubble profits, noob!). Considering the original asking price was $469,750, I bet he thought he was pretty slick negotiating a whopping 4% discount.

Sadly, he abruptly discovered that his negotiating skills were about as strong as Corey Haim's willpower (too soon?). Armed with the sudden realization that he grossly overpaid in a rapidly declining market(!) and could never afford such a monstrous payment in the first place, he threw it on the MLS for an ego-deflating $399,000 and is now begging for the market's mercy.

After commissions, that represents a -$75,000 loss. Ouch.

Hey guy, is the smoke bothering you?

You know, from the smoldering crater where your bank account used to be?

The thing is, I quite like this place. I think it's an "updater," a term I first became familiar with by way of Jim the Realtor's site. It's certainly not a "fixer," (by the way, have you noticed that hardly any properties are listed as a "fixer upper" on Redfin anymore? Here is a prime example of someone in "fixer" denial) but it's also not quite "turn-key" and requires $10,000 to $15,000 in lipstick and blush.

For example, the kitchen:

HORF.

But add some new countertops and mild updating and you'll be set.

And the master bath, while not horrendous, could use some freshening up. You might disagree, but remember this is a property demanding $400,000!

Don't get me wrong, this place is pretty slick. Crown molding, nice floors, two bedrooms plus an office, reasonable square footage, in-unit laundry, only one common wall, decent HOA fee...pretty impressive.


Plus it's in a great neighborhood in close proximity to those killer Long Beach waves.

I'd live here, no doubt.

However, I would never pay this much. Way overpriced for what you get.

But that's just me. I think some buyers will find $309 per square foot reasonable given the location and sold comps. Unfortunately, they, just like our seller, will be catching a falling knife.

Let's look at the fundamentals:

Rent vs. Buy: I seriously doubt it rents for anywhere near $2,300, but I'm open to being proven wrong. But most buyers probably focus on after-tax payments, so let's call this one a wash for the typical (imprudent) buyer.

Local Incomes: The median income in this zip is $82,765, and I would imagine someone looking at these beach-close units would earn above median. Let's say $100,000 per year. At 3.5X income, they would need to make $91,000 to reasonably afford the mortgage (assuming 20% down). However, if you calculate the more conservative figure of House Price/3.5X income, they would need to pull in $114,000 per year. Could be a wash depending on how you calculate the numbers, but a conservative buyer would be stretching too thin to make the monthly nut.

Pre-bubble pricing/fundamental value: Here's where it gets tricky. If you apply a generous 4% per year appreciation to the 1999 sales price (and remove the bubble and ensuing crash), today this apartment would be worth $255,000. Add in a little extra for the few upgrades it does have, how well-maintained it is, and the fact that the '99 price seems low, and at most you're looking at a 2010 value of $300,000 - $310,000.

"El Bee, you're smoking Plymouth Rocks if you think this place is only worth $310,000!"

Well then I guess I'm not the only one because a certain bank is robbing its sister for a taste of that sweet, sweet crack too. In the very same building a lender is trying to offload a larger unit and believes it's only worth $325,000 (FYI that's a $100,000+ discount from the 2004 price!).

How the shit is our featured beggar--ERRR...seller going to compete with that? He's not. And that means this joint won't be a "standard sale" for long.

Assuming the REO isn't a complete turd pile inside (thanks for the photos, dick!), this is horrendously bad news for our overly optimistic seller. If the bank-owned property sells for full asking price (which, frankly, I'm surprised it hasn't already), then that comp guarantees our seller eats a -$150,000 loss instead of the -$75,000 hit he was initially worried about.

How pissed do you suppose the residents are at that dastardly bank?

Anyhow, this dummy listened to the wrong people and thought he could beat the odds. But now he's just going to get beat down. Just like pretty much every other 2008 "bottom buyer" who tries to sell today. If only they had been readers of this blog.

Look, if you ignored my (absolutely correct) prediction that prices would continue to slide and bought during the last two years, I'm not trying to pick on you. There are a million reasons to buy in a declining market and a million more ways to fudge the numbers to justify it. Hell, I'm ready to get on with my life too!

But if you did your homework and paid close to rental parity, got a fixed-rate 30-year mortgage, have a healthy emergency fund, can reasonably afford your payments, and absolutely adore the place you live, then you'll be able to ride this thing out just fine -- and get to live in a house you love in the meantime.

But if you bought way before the bottom like this dude and want to sell in today's environment, just know that you are in neck-deep in shit and have no one to blame but yourself.

Dwelling on the Past

5576 East VESUVIAN Walk, Long Beach, CA 90803
Asking Price: $799,000
Beds: 2
Baths: 1.25
Sq. Ft.: 1,200
$/Sq. Ft.: $666
Lot Size: 2,400 Sq. Ft.
Year Built: 1957
MLS#: P719642
On Redfin: 53 days
Down Payment: $160,000
Monthly Nut: $4,300
Income Requirement: $200,000
Description: The Opdahl Residence, 1957 by Edward A. Killingsworth, FAIA. With the use of two 18 ft. tall redwood walls at the setback lines on both sides of the property, Killingsworth skillfully created an oasis of privacy for the glass walled structure, reflecting pond & peaceful gardens within. Considered by the architect to be his most important work, the house stands as a prototype for building with limited space, & as one of the purest, most sophisticated examples of mid-century modern architecture. As the SoCal chapter of AIA noted in it's [SIC] honor award, 'there is poetry in it's [SIC] restrained vocabulary of material and form-a precise artistry'. Winner of eight prestigious architectural awards & featured in countless publications, the Opdahl house gave Killingsworth international acclaim. Once thought to be lost to neglect, a meticulous restoration by the current owner has brought the house back to it's [SIC] original glory. The property is now recognized as an historic landmark by the City of Long Beach.

Ugh, yet another seller getting high on his own pompous bullshit. This dude and his realtor are obviously quite impressed with their inclusion in Dwell, that hipster bible of aspirational pretentiousness.

When I saw this listing, I immediately thought of Unhappy Hipster

It's a blog that takes those famously dour Dwell photos and adds amusing captions. An example:

"The black hole had sucked everything out of the playroom. Save his sister or the coloring books? He made a split-second decision."

I'm a big fan of modern design, but the trust fund snobs in that magazine take it to a whole 'nother level. Sometimes the total commitment to uber-minimalism can be overwhelming, leaving you with these cold, bland, mono-hued drabscapes.

And this house is no different.

This place just feels so precious, so sterile. Every piece of furniture looks uncomfortable and terminally fragile -- almost like props. I half expect Chris Farley to barge in and crush every table and chair in the joint.



Whatever the opposite of "that lived-in feel" is, this is it.

I mean, these photos are just begging for the Unhappy Hipsters treatment. Here's my take:

"After waiting four weeks for his Air Jordan Sky Highs to arrive from Thailand, Toby was thrilled to debut them at Glenda's loft party. But despite subtle attempts to get people to notice his shoes, like pointing to Glenda's concrete floors and asking various guests if they supposed the finish qualified as 'honed,' nobody at the party acknowledged Toby's rare kicks. Would he ever recover from this slight, he wondered."

It's worth noting that Toby here paid $730,000 in January 2003. The listing description mentioned this property is a result of "a meticulous restoration by the current owner." Considering this place was, according to the realtor, "Once thought to be lost to neglect," I'm willing to bet he dropped at least $150,000 into restoration. Minimum.

Presumably to offset the steep commissions, he is asking $799,000. Even factoring in seven years of payments, the significant restoration efforts will virtually guarantee a massive loss.

I appreciate his pricing optimism, but things don't look good. There's just too much competition in this price range. I imagine someone, somewhere in the world would be impressed by an utterly useless "decorative pond," but in this bang-for-your-buck buyer's market will they be willing to pay a significant premium?

Seriously, does anybody but this owner give a farting fuck about the honor award from the SoCal chapter of the AIA?

Plus, half the appeal of this property is the decoration and rare furniture -- and the listing makes it clear none of it is included in the asking price (neither is the washer and dryer -- how generous! $800,000 and I gotta go out and buy new appliances?!)

So, remove the magazine-worthy staging and you're left with a small two-bedroom one-bath that needs tens of thousands of dollars in furnishings, artwork, and appliances asking (an ominous) $666 per square foot.

For that kind of money, I'd be more interesting in saving a boatload of cash and buying a larger, cozier place like this.

I suppose it doesn't have the architectural pedigree or "poetry in its restrained vocabulary of material," but in this post-bubble world, I can't imagine buyers really give a steaming crap.

I guess the seller, who is actually a DJ and co-creator of one of my favorite jazz bands, is hoping there are plenty of other overpaid DJs or trust fund babies or well-heeled mid-century design nerds out there with an equally lacking concept of value or money or investment strategy. But I have to imagine in this environment most buyers are looking for deals, not overwrought monuments to cheap credit and money-to-burn bubble exuberance like this.

Frankly, this place is so unique he might pull it off. He'll probably have to start playing Quinceaneras in El Dorado Park to survive the financial loss on his foolish malinvestment, but still.