A Man's Sport: FINAL UPDATE

Sold (2/04/2010) - $580,000 ($599 per square foot)

I have to give him credit for playing Russian roulette and flipping as the mid- to high-end started cracking, but unfortunately he caught a slug to the temple.

For those of you looking for your daily dose of shadenfreude, this flopped flipper lost $60,000 plus minor upgrade costs (remember, he bought it with the kitchen, patio, backyard, interior paint, and hardwood floors already done).

I bet he didn't remotely fathom a hideous loss like this when he bought "at the bottom" in 2008. And he paid dearly for that lack of analysis.

And so will the new owner unless he's planning to stay here for a very long time and can easily afford those ~$3,100 payments. Because he sure as hell won't be able to rent it out to cover his monthly payment, and as this segment of the market continues to suffer from the lack of move-up buyers, he'll watch his downpayment slowly disappear. But if he has a long-term outlook and a stable income (and isn't claustrophobic), he'll be able to enjoy this amazing neighborhood for years to come.

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The status was "Active" and changed to "Contingent"

Fingers crossed.

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The list price was "$639,000" and changed to "$599,900"

For those keeping score at home, this failed fliptard is now $5,000 below his 2008 purchase price. After commissions, we're talking about a $36,000 loss plus however many tens of thousands of dollars in upgrades and improvements.

Man, what the fuck were you thinking paying $625 per square foot last year? By that point you had been inundated by the media about the Great Housing Bust for at least six months!

This is going to end very, very badly for him. It's too bad he wasn't a reader of this blog back in '08. He could have saved himself a lot of money and heartache.

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After reading some recent posts, a dear friend noted that I'm awfully negative and really bash the hell out of sellers. I tried to defend my position and explain that delusional sellers put themselves out there for ridicule and that harsh treatment by yours truly is not only well deserved, but necessary.

I mean, imagine if there weren't countervailing voices out there? Buyers (especially those in Long Beach, which is a seemingly forgotten real estate market--largely devoid of newspaper coverage) might get suckered into a financially perilous situation, as so many former "owners" did when they listened to biased, one-sided, commission-driven, largely unchallenged horseshit like "they're not making any more land," "we're definitely at the bottom" and "prices always go up."

I thought I had recently lightened up--especially since the early days of the blog--there was some real venom in those days--but from his outside perspective I was still oozing with negativity. So from now on I promise to be more positive.

Well, actually, I promise to be more positive after today. Because...

WOULD YOU LOOK AT THIS GREED-FACED, MONEY-HUMPING, KOOL-AID-MAINLINING, GOLDBRICKING SHIT BIRD?

261 GRAND Ave, 90803
Beds: 2
Baths: 1
Asking Price: $639,000
Sq. Ft.: 968
$/Sq. Ft.: $660 (!)
Lot Size: 3,696 Sq. Ft.
Year Built: 1919
MLS#: P701487
Source: SoCalMLS
On Redfin: 85 days
Down Payment: $127,800
Income Requirement (4x income): $160,000
Monthly Nut: $3,500
Description: 2 bedroom, 1 bath + office; Remodeled 2009 Modern Craftsman Style home on a quiet street in Belmont Heights, 1/2 Mile to the Beach. Exterior features include, custom paint work, new window screens, newly painted porch, easy to maintain landscape, Custom Dual Pane Front Glass, Custom made front/back screen doors, Beveled glass added to front/back door. Timed sprinkler system and Malibu lights to show off this great exterior!Interior features include, refinished hardwood floors, new electric system to include recessed lighting, dimmer switches, TV swivels, ceiling fans and Custom Wiring for your Entertainment Systems. Architectural styles preserved; rebuilt china hutch, closet doors and molding. Bathroom features include new copper plumbing, Body Wash Sprayer Shower & new tub with Air Bath System. Kitchen upgrades include custom made crown molding , Under mount lighting added, Frosted Kitchen Panel glass and Glass Tile Back Splash finishes this beautiful kitchen.

He's got a set of brass balls attempting to sell in this environment for such a precious sum, I'll give him that. This System of a Down lyric immediately came to mind:

I play Russian roulette everyday, a man's sport,
With a bullet called life, yeah mama called life,(sugar)

It's always a bad idea to have the most expensive (second-most, in this case) listing in a given area, but that didn't stop this guy:

	$425,000 3422 VISTA St	0.2 miles 2 bd / 1.75 ba 850 Sq. Ft.
	$589,000 3626 East VERMONT St	0.25 miles 2 bd / 1 ba 1,180 Sq. Ft.
	$459,000 3601 East 6TH St	0.46 miles 2 bd / 1.25 ba 1,028 Sq. Ft.
	$579,000 325 PROSPECT Ave	0.47 miles 3 bd / 2 ba 1,100 Sq. Ft.
	$450,000 3034 East BROADWAY	0.47 miles 2 bd / 1 ba 864 Sq. Ft.
	$409,000 4512 East VERMONT St	0.54 miles 1 bd / 1 ba 888 Sq. Ft.
	$749,000 273 ROYCROFT Ave	0.57 miles 2 bd / 1 ba 1,200 Sq. Ft.
	$529,000 4437 East 6TH St	0.65 miles 2 bd / 2 ba 1,044 Sq. Ft.
	$435,000 781 ROSWELL Ave	0.73 miles 3 bd / 1 ba 902 Sq. Ft.
	$379,000 760 FREEMAN Ave	0.76 miles 2 bd / 1 ba 1,030 Sq. Ft.

Mind you, during the last six months, nothing has sold for anywhere close to $639,000. Not by a long shot.

	$505,000 372 GRAND Ave Sold on Nov 18, 2009	0.26 miles 2 bd / 1 ba 1,006 Sq. Ft.
	$390,000 3637 East VERMONT St Sold on Jun 05, 2009	0.28 miles 2 bd / 1 ba 888 Sq. Ft.
	$460,000 3226 East VISTA St Sold on May 31, 2009	0.32 miles 2 bd / 1 ba 924 Sq. Ft.
	$451,000 537 TERMINO Ave Sold on Oct 30, 2009	0.45 miles 2 bd / 2 ba 937 Sq. Ft.
	$410,000 615 LOMA Ave Sold on Oct 06, 2009	0.48 miles 2 bd / 1 ba 1,068 Sq. Ft.
	$451,800 627 LOMA Ave Sold on Aug 08, 2009	0.5 miles 2 bd / 1 ba 1,088 Sq. Ft.
	$486,000 602 CORONADO Ave Sold on Nov 03, 2009	0.53 miles 2 bd / 1 ba 1,134 Sq. Ft.

So what was this guy thinking coming on the market at a belief-suspending $660 per square foot?

"I'm special," that's what.

Don't get me wrong, this is a nice house in a great neighborhood. It features every flipper accoutrement, including granite, (too much) tile work, stainless appliances, hardwood floors, and crown molding. I think it's a bit over-upgraded and looks too much like a paint-by-numbers flip job, but the fact remains you wouldn't need to put one thin dime into this place. And for that he deserves a premium.



But he's been rotting on the MLS for nearly three months with no price reductions--the calling card of someone with a case of Greedfluenza (Swine Fool?).

And speaking of pigs, you can slap on as much lipstick, mascara, and rouge as you want, but it's still only a 2-bed, 1-bath plus office crammed into 968 square feet. Do whatever you want to spruce up and upgrade a property, but the one thing you can't do is make it bigger.

And how about a picture of the front of the house? 16 photos and not one shot of the curbside view? Really?

This seller purchased in March 2008 for $605,000 (after the property had spent nearly a year on the market). After putting some work into the house (the listing from the 2008 sale shows the kitchen, patio, backyard, interior paint, and hardwood floors had already been upgraded), it went on the market this September for $639,000.

Some might say 17 months is a long timeline for a true "flip," but it's clear this person never really intended to live here long-term. Or at least could never afford to.

I have no idea how much this guy put into upgrades, but it's safe to say that after commissions he will be staring at a big, smoking crater in any bank account reserved for anticipated profits.

And that's assuming he can find a buyer for this crazy, please-someone-come-along-and-answer-my-prayers-for-breaking-even-on-my-horrendous-malinvestment asking price.

This thing is way overpriced. Or maybe I'm missing something about this property? What I do know is that the average price per square foot of sold properties in 90803 is about $470.

Is this place worth an extra $190 per square foot? Only the market knows for sure, but I'm going to say no.

What I find most interesting is this house sold for $515,000 in 2003, before all the upgrades. For '03 that's a lot of money for 968 non-upgraded square feet!

As you know I love these little bungalows. But some sellers are straight up smoking Plymouth Rocks if they think they can get these insane prices.

Sam Elliott's Doppleganger

I asked if he wanted a shot, but he just glared and gruffly said:

"The Dude abides. I don't know about you, but I take comfort in that. It's good knowin' he's out there, the Dude, takin' her easy for all us sinners."

Tardy to the Party

ADDRESS: 1720 East 2ND St #5, 90802
ASKING PRICE: $350,000
BEDS: 1
BATHS: 1
SQ. FT.: 667
$/SQ. FT.: $525
YEAR BUILT: 1955
MLS#: 09-408895
ON REDFIN: 93 days
HOA: $177
DOWN PAYMENT: $14,000 (FHA)
INCOME REQUIREMENT: $100,000 (3.5x income)
MONTHLY NUT: $2,300
DESCRIPTION: This small complex is perfect for those who like to enjoy a beach life style. .. .just two short blocks from the water. Excellent unit for a single person or a couple seeking a good and affordable life at the beach. Please do not disturb tenants. Submit all offers subject to interior inspection.

There were many losers in the Great Housing Bubble. Whether driven by greed, materialism, ignorance or a basic desire to attain a better life without working for it (that, I would argue, is the real "American Dream"), the bloodied, battered victims (and “victims” alike) are scattered about the landscape, a grim reminder of the past due bill for unchecked avarice, reckless lending policies, and easy, greasy money.

However, there were also some certifiable winners. Those that watched their “value” skyrocket during the bubble and wisely (or just by dumb luck) sold before the crash made out like bandits. Vast fortunes were created out of thin air, with bank accounts suddenly bloated beyond imagination thanks to simply living in a house.

Those who got in before the bubble, avoided the terminally seductive clarion calls to refinance or take out lines of credit against their newfound equity, and sold right before the crash are to be applauded for playing the game to perfection.

Today’s seller got the first part right, but failed miserably at the crucial “getting out in time” part. You see, he got in before the true insanity of the bubble got underway, but is about two years too late to the profit party.

And judging by his absurd listing price of $350,000, he is operating under the misguided belief that he’s one of the winners deserving of his six-figure profit margin--despite the fact that the market has crumbled like Lindsay Lohan's willpower at a coke party.

In 2003, homeboy slapped down $147,000 for this rental property and watched his equity rocket up like a Death Valley thermometer. And for some reason, three months ago he suddenly decided now would be an ideal time to cash in on his richly deserved bubble money.

But apparently he’s been in a drug-induced coma during the last two years when everyone’s perceived bubble equity was largely erased. So, here he is in the middle of the worst housing crash known to man, fully expecting to more than double his investment.

Good luck with that, Gomer.

I guess he hasn’t noticed that most Long Beach properties are selling at 2003/2004 prices. And I guess he failed to realize that his asking price per square foot of $525 is DOUBLE the going rate in this neighborhood. And I guess it slipped his sharp observational skills that other than one Ocean Blvd. unit, his is the most expensive apartment in the area by a long shot.

Although it is clear to everyone (but him) that this idiot won't fulfil his dreams of an unearned windfall, it's worth taking a look at a few people who knew how to play the game:

Nov 03, 2009 - Listed $350,000
Jun 12, 2003 - Sold $147,000 (39.2%/yr)
Feb 21, 2003 - Sold $133,000 (21.0%/yr)
May 06, 1997 - Sold $44,000 (5.5%/yr)
Aug 04, 1989 - Sold $29,000

Although he sold way too early, the 1997-2003 owner probably (and wisely) thought something was fishy about 21% annual appreciation and took the money and ran. Well done. It’s always better to be two years early than two years too late.

Hell, just ask today’s seller.

Although he clearly doesn’t realize it, our delusional seller is overpriced by more than $150,000. I mean, the appraisal attached to his tax bill is only $190,800 . Even if the bedrooms and baths were doubled, he still wouldn’t be able to get $350K in this market. That ship has sailed (and sunk), captain.

Check out the sold comps:

$141,600
1604 E 2nd St Unit 1C
Sold on Jan 08, 2010 0.07 miles
1 bd / 1 ba
777 Sq. Ft.

$182,997
1535 E Ocean Blvd #10
Sold on Dec 03, 2009 0.14 miles
1 bd / 1 ba
752 Sq. Ft.

$235,000
1728 East 3RD St #5
Sold on Nov 30, 2009 0.16 miles
1 bd / 1 ba
705 Sq. Ft.

$310,000
1750 East OCEAN Blvd #108
Sold on Dec 04, 2009 0.17 miles
1 bd / 1 ba
689 Sq. Ft.

$265,000
1750 E Ocean Blvd #303
Sold on Sep 25, 2009 0.17 miles
1 bd / 1 ba
632 Sq. Ft.

$265,000
1750 East OCEAN Blvd #1102
Sold on Dec 30, 2009 0.17 miles
1 bd / 1 ba
632 Sq. Ft.

Even properties smack dab on Ocean Boulevard aren't getting this kind of money! What is this toolbox thinking?!

During the bubble, people quickly became accustomed to tiny, outdated, run-down $350,000 condos and were made to believe that price was "about right" for what a single person should spend on housing. Nobody stopped to think about the fact that $350,000, although nothing compared to the $600,000-$800,000 for detached homes (which is perhaps the psychological reason for perceiving properties costing TEN TIMES the median income as "affordable"), is actually a hell of a lot of money.

So much money, in fact, that the aforementioned single person would need to pull in $100,000 per year to reasonably afford the payments. Even if you stretch to 4x income, that individual still needs to pull in $87,500 per year (which is more than twice the typical household income!) and make no significant retirement contributions/savings and have zero credit card debt, student loan obligations, car payments, or unforseen emergencies.

Friends, that is unsustainable.

But don't ask me, just look around you at the cratering real estate market. The reason why we've seen such dramatic declines in home values is precisely because these kinds of prices for tiny shitbox apartments are U-N-A-F-F-O-R-D-A-B-L-E and always have been, regardless of what real estate shills, commission-heads, and toxic loan alchemists would lead you to believe.

The myth that these prices were "the new normal" and "here to stay (so just get used to it or be priced out forever, loser!)" has been exposed as the fraud it truly is, and what we are witnessing is a wholly predictable return to fundamentals.

Back to the property at hand. Given the abject impossibility of getting such a redonkulous wishing price, his seven years of equity, and the likelihood the monthly rent income covers his payment, I think he’s much better off removing it from the MLS and continuing to rent it out. Unless he refinanced or took out crazy loans against it, he'll be able to weather the rent-deflation storm.

That's a rare position to be in this day and age, and something worth hanging on to.

Daily Nut Job: FINAL UPDATE

WTF Asking Price 9/9/09: $809,500
Final Sales Price 2/2/10: $629,000 ($362 per square)

Want to see something cool? Check out this quote from the original post:

Because even assuming this hovel appreciated at a (very generous) 4% per year rate since purchase, this dusty dung button would be worth--at most--$629,500 today.

Spoooooooooooooooooooooooooky.

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4422 East 2ND St, 90803
Price: $809,500
Beds: 2
Baths: 1.75
Sq. Ft.: 1,737
$/Sq. Ft.: $466
Lot Size: 4,373 Sq. Ft.
Year Built: 1954
MLS#: P702474
Source: CARETS
Status: Active
On Redfin: 56 days
Down Payment: $162,000
Income Requirement: $231,000
Monthly Nut: $4,400
Description: Great Belmont Shore/ edge of Heights Home! Original Hardwood floors throughout! Great floor plan with open living room that leads to dining room. Plus large Den that could be used as office or extra living room! Separate laundry room easily accesible off of kitchen. Covered patio with spa with plenty of backyard to spare. Additional side yard great for dog retreat or any retreat for that matter! Plantation shutters in living room with fireplace. Bedrooms are extremely spacious. Keep as one story home or add second story for full view of the shore and the ocean. Location is ideal; end of 2nd street while at the edge of gorgeous Belmont Heights!

You know what, for once I think this seller can get away with calling it "Belmont Shore." Most sellers try in vain to claim the nearest nicer neighborhood, attempting to glom off the higher values--but I think this guy is being unecessarily precise with the "edge of Heights" thing. Dude, you can claim the Shore. It's okay.

Whether it's the Heights or the Shore or whatever, there is little debate that this is a prime neighborhood. Which begs the question: If the nabe is so wonderful, then why the Ghetto Gate (to borrow a term from FreedomCM) on the front door?

Yikes! Judging by the absurd asking price of $809,000 for this dump, I'd say it's not so much to keep undesirables out, but to keep the batshit crazies in.

Let me just say, unequivocally, that there is not enough government intervention or free ponies in the world to make this a good deal. Sorry. It doesn't matter how great the "Belmont Shore/ edge of Heights" area is, the lot is horribly, horribly located.

Check out the Aerial View on the listing and marvel at how the property not only sits right atop busy-ass Livingston, but ALSO gets the noise of the 2nd Street/Ximeno four-way stop (two of which are downhill, requiring harder stops)!

Ass-loads of traffic noise + weirdly shaped lot + no yard to speak of = Mondo Undesirable.

On top of that, when I went by last night I noticed it's flanked by two, two-story apartment buildings on either side.

Plus, IT'S ONLY A TWO-BEDROOM! For $810,000?! Really?

Hell, not even the pollyana uber-optimist dreamweavers at Zillow.com can muster up the strength:

$598,080(low); $712,000 (estimate); $776,080 (high)

Even their "high" estimate, which connotes a truly amazing property that's in spectacular shape and fully upgraded, is $33,420 lower than this nutter's asking price.

Does this look "truly amazing," "in spectacular shape," or "fully upgraded" to you?

What a fucking joke!

Speaking of jokes, here's a little listing history for that ass:

Sep 09, 2009 - Listed $809,500
Aug 15, 2001 - Sold $460,000 (+17.3%/yr)
Oct 28, 1999 - Sold $345,000 (+15.4%/yr)
Apr 26, 1996 - Sold $209,000

Look how dirt cheap this joint was during the last housing bottom! And anyone who needed proof that the bubble started before 2001 should take a gander at the difference between the 1996/1999 and 1999/2001 sales prices. Boo-ya!

So, considering our seller purchased for $460,000 eight years ago and the deplorable condition of the house, just how the hell did he come up with an asking price $349,500 more than what he paid?

The same reason people hoard cats, I would imagine.

Because even assuming this hovel appreciated at a (very generous) 4% per year rate since purchase, this dusty dung button would be worth--at most--$629,500 today.

And considering not one dime went into upgrades, I simply fail to see how this asking price is justified. I guess someone might be interested in it as a teardown, but the lot price is too expensive. I mean, take another look at the interior!

Halloween's over, guy. Stop scaring the kiddies!

I'm really looking forward to seeing what the inevitable price cut amounts to. This seller has tons of equity (assuming he didn't cash-out refi to the hilt) so he can afford to be aggressive. But I have a funny feeling the voices in his head will convince him his place is "special" and we'll have a LOOOOOONG time to ponder how people still exist that haven't heard about the collapse of the greatest housing bubble in history.

Bank-Owned Bargain

Address: 1080 TEMPLE Ave #102, CA 90804
Asking Price: $104,900
Beds: 2
Baths: 2
Sq. Ft.: 710
$/Sq. Ft.: $148
Year Built: 1986
MLS#: S583753
On Redfin: 185 days
HOA: $296
Down Payment: $4,000 (FHA)
Income Requirement: $37,000 (3.5 x income)
Monthly Nut: $900
Description: Great 2/2 condo with updated kitchen counters and appliances, newer bathroom counters and fixtures, laundry hook ups, wood and tile flooring, and balcony.

Anybody still think the bottom isn't here on the low end? This tidy two-bedroom is only asking $148 per square foot. We haven't seen these prices since the 1990s.

And for such a little place, it's nicely upgraded.


The fact is, the bank (read: the taxpaying public) is going to lose its ass on this one. The lender took it back at auction for $369,000 in 2008 and, as is typical with lenders during this horrific housing implosion, took its sweet ass time getting it back on the market. Nine months sitting off the market, to be exact.

Anybody still think Shadow Inventory doesn't exist?

Anyhow, in July 2009, the lender finally got around to adding it to the MLS with an asking price of $193,900.

I guess that was wildly optimistic because five price reductions and 186 days later and we still don't have a sale.

Ouch.

I don't care what you say about the neighborhood--two garage spots, granite sinks and countertops, and tile and flooring upgrades for only a hundred grand? That's a smoking deal.

Or is it?

Because the HOA is an astounding $296. Yikes! That's just a few hundred bucks shy of the monthly Principal, Interest, and Tax payment!

So what exactly do you get for that kind of coin?

Here's a comprehensive list:

1.
2.
3.
4.
5.
6.

So, uh, yeah...nada. No pool, no gym, no nothin'.

But a $900 monthly nut (which is closer to $800 if you put down 20%) still seems to make sense for a rental property.

On a final note, how bummed is this guy is to have bank-owned competition undercutting him by six-figures?

Note: I'll be in Planes, Trains and Automobiles on the east coast and in the mid-west all week, so probably not a whole lot of posting. I hope you had a great weekend y'all!