A Tale of Two Cities

As the real estate bubble violently bursts, some communities are left in shambles. Just look at parts of San Diego and Sacramento. Those cities were the first to experience the real estate bubble, so it only makes sense that these areas would be the first to collapse under the weight of their own misguided expectations of perpetual appreciation.

Orange County has been hit particularly hard, as sales have slowed and prices have dropped considerably just in the last six months. As more and more foreclosed and short-sale properties come on to the scene, asking prices dip, drop, and plunge until a sale is mercifully reached.

Unfortunately, although Long Beach also experienced unprecedented price inflation, many sellers didn’t get the memo about the ensuing housing crash. Because of that, some sellers’ pricing strategy is stuck in the halcyon days of unending appreciation and the belief that selling their piss poor properties should amount to hitting the lottery.

The very premise of this site is to expose the insanity behind Long Beach pricing in comparison to much nicer, more desirable areas in LA and Orange County.

Our first featured property is a 3 bedroom, 2 bath townhome in Huntington Harbor. Huntington Beach is one thing, but Huntington Harbor is the Belmont Shore of HB. Not only is this area of Orange County superior to Long Beach as far as schools, median incomes ($78,768!), cleanliness, and crime rate, but it is also in a great location relative to the beach, the harbor, and, well, it’s in Orange Freaking County.

Address: 16542 Blackbeard LN #101, 92649
Asking Price: $275,000
Size: 3 beds, 2 baths, 1,272 sq. ft. (built in 1980)
$/Sq. Ft.: $216
Purchase price: $136,990
Purchase date: 4/1998
MLS#: S505057
On Redfin: 147 days
Description: Immaculate, Highly Upgraded/Remodeled Ground Level Unit. Elegant Imported Italian Limestone Flooring Entry, Kitchen, Dining Room & Hallway. Scraped Ceilings, Recessed Lighting, Crown Moulding, Custom Paint. Master Bdr has Bose Surround Sound Included in Price! Completely Remodeled Master Bath, Inside Laundry, 1-Car Detached Garage. Very Private, Gated Community w/ Ponds, Fountains, Community pools, Spas, BBQ's & More, Only 1.5 Miles From Beach! Won't Last!

Hurry! According to the description this “Won’t Last!” Hmmm. It seems to have lasted for 147 days on the market, so I am fully confident in its staying power.



As you can see, this is a really nice place. This could be the nicest condo I've ever featured on this site. Other than the original kitchen, this townhome has been nicely upgraded, especially the bathrooms.


The only major drawbacks I see are that it’s in a huge condo community (180 units) and the HOA fine—er, fee is $400 per month. OUCH! Too bad you can’t write that off. That’s almost 5 Grand a year flushed down the toilet ($180,000 over the life of the loan! Wrap your head around that one for a second!).

Nice pool though!



Despite the faults, which every property has, I don’t think there’s any doubt that this is an attractive place in an attractive area. The price is still too high, judging by the days on market, but at $216 per square foot, it’s extremely competitive considering the upgrades.

The relatively low price can be attributed to the fact that this seller purchased back in 1998, before our recent once-in-a-lifetime real estate bonanza, for $136,990. As noted in my post yesterday, an owner with equity has a lot more room for price reductions than you do, and in addition to foreclosures and short sales, they pose a significant risk to neighborhood comps. Look out below!

Now let’s look what that same $275,000 gets you in Long Beach:

Um…

Nothing.







Seriously.

A 1200 square foot 3 bedroom/2 bath under $300,000 doesn’t even exist in Long Beach. You my friend, are eligible to buy in Huntington Harbor, but you are priced out of even the most ghetto neighborhoods in LB. Blows your mind when it's put that way, doesn't it?

However, if we lower our square footage requirement, a few gems pop up on our radar. Like this one:

Address: 1509 Stanley #108, 90804
Asking Price: $249,000
Size: 3 beds, 2 baths, 1000 sq. ft. (built in 0000)
$/Sq. Ft.: $249
Purchase price: $385,000
Purchase date: 11/2006
MLS#: P611732
On Redfin: 70 days
Description: Make an offer today!!! Seller needs this sold now!!! Willing to look at all offers. Unbelievable 3 bedroom 2 bath in this relatively new condo conversion. Great building with a beautiful courtyard, and 2 parking spaces available. Balcony available for outdoor space, and with a little TLC you can save thousands.

So, let me get this straight. This is a tiny fixer upper with no upgrades in a terrible neighborhood, miles from the ocean, and they’re asking $250k compared to Huntington Harbor’s $275,000? Sure the HOA penalty is a third of our Huntington Harbor condo (with no pool or gym it should be less) and it’s slightly cheaper to buy (FYI, they were asking $280,000 in December), but where would you rather live?

If you say "this place," then you're either a really bad liar or you need to be removed from the gene pool IMMEDIATELY.

Someone please explain to me why Long Beach is so special and why its sellers act as if their market is immune to economic realities. I want nothing more than to live in Long Beach, but at this rate it looks like clean, beautiful, safe, prosperous Orange County is the CHEAP alternative. Next stop, bizarro world.

I can already hear certain commission-dependent visitors to this site saying, “But Orange County has more land, so it’s not fair to compare big, gorgeous, sprawling condo communities to condos in Long Beach—you have to compare OC condos to LB houses!” Um, okay. Here we go:

Address: 636 E 7th St., 90803
Asking Price: $310,000
Size: 3 beds, 2 baths, 1050 sq. ft. (built in 1913)
$/Sq. Ft.: $295
Purchase price: $130,000
Purchase date: 10/2000
MLS#: M08017417
On Redfin: 1 day (Hurry! This won’t last!)
Description: Fantastic house in excellent condition, best house in the area, with ceramic tile flooring, and overall in very good shape, long driveway, only 10 blocks to the Marina and Shoreline Drive, Must Sell!!!!!

Short but sweet. I guess the description is encouraging us to read between the lines.

Fantastic house in excellent condition (Sounds great! Can I see some pictures of this house you speak of?)

best house in the area (Sweet Jesus, if this is the best this area has to offer, a nuclear bomb must have gone off in this neighborhood)

with ceramic tile flooring (And there’s your one upgrade in the entire house. Enjoy!)

overall in very good shape (They couldn’t even bring themselves to take the laundry off the bed or tidy up the rooms before taking pictures, and you’re going to trust them about the “overall” condition of this ancient homeless shelter? Plus, “overall” is a hedge word that implies “kind of.” What are they not showing us?)

long driveway (You’re going to need it because otherwise you’ll be fighting for a parking spot along one of the busiest streets in Long Beach)

only 10 blocks to the Marina and Shoreline Drive (10 of the most dangerous, filthy, crime-ridden streets you’ve ever walked in your life. I’d rather walk 20 blocks in Baltimore. I used to live in this area, and there is NO WAY you’re walking with your family to the Marina)

Must Sell!!!!! (Look at the size of our flat screen TV!!!!!!! We’re financially f*cked!!!!!!!!!)

Gross:

Sickening:

My God, is this a prank? Ashton, where you at, man?

This place is an absolute dump. They live in filth and these are the people you want to buy a house from? Need I remind you this place is $35,000 more expensive than the Huntington Harbor property (or just about any other Huntington Harbor condo—not just our equity-rich seller’s place). Have I made my point clear?

Long Beach is living in fantasyland. There is no other explanation for the Wishing Price behind this 95-year-old, borderline-condemnable rat hole that sold just seven years ago for $130,000.

The point of this post is that Long Beach has not received the memo about the status of Southern California real estate. These informational and psychological barriers will come down, whether delusional Long Beach sellers like it or not. But my hope is that Long Beach stops fighting reality sooner than later, lest they further humiliate themselves with their offensive and frankly hilarious pricing strategies.

As people, with the help of blogs like mine, come to understand just how out of alignment Long Beach prices are with rents, local median incomes, and with much more desirable cities, the slowing sales will come to a grinding halt as they figure out how much more house, quality, security, and financial benefit they can get in less expensive communities like Huntington Harbor (Man, it’s strange to discuss LB and refer to Orange County as “less expensive,” but that’s where we are today). When that happens, Long Beach prices will undergo a severe correction just like LA and OC, and will return to basic economic fundamentals--suddenly and violently.

And my fellow intelligent, informed buyers will join me in swooping in on their distressed properties for dimes on the dollar.

Or maybe Long Beach sellers will redouble their commitment to ignorance and two years from now we’ll just end up choosing a “bargain” community like Newport Beach.

P.S. Readers, your challenge today is to find a Long Beach property as nice as the Huntington Harbor property for under $300,000. Hell, make it $315,000. Come on, prove me wrong.