The Loser of Linden

Well, as I'm sure you know by now, the Deadbeat Homedebtor/Greedfaced Lender Bailout legislation is all but a done deal. I'm almost too depressed to comment about it. All I will say is that while I see the value in rescuing Frannie and Freddie, considering how the government has allowed them to become essentially the linchpin of the lending arena and how their dissolution would most assuredly cause market panic and a freeze in lending, I am disappointed that our representatives have embraced the idea of moral hazard as fiscal policy.

All this bill will succeed in doing is drawing out the housing crash longer than it needs to be; keeping responsible, hard-working people like me priced out of The American Dream(tm) and simultaneously rewarding stupid, uninformed, irresponsible behavior.

By the way, I lost $500 playing roulette last time I was in Vegas. The guy next to me, who told me he was an expert at betting, told me that after five reds in a row I was bound to hit black. Can I have my government bailout now?

Aaaaaaanyway, today's property is a prime example of someone who overpaid during the housing frenzy of 2005 and likely expects to be bailed out by you, me, and the rest of the American taxpayers.

Address: 35 Linden Ave #508, 90802

Asking Price: $374,900

Year Built: 1987

Size: 2 beds, 2 baths, 1,064 sq. ft.

$/Sq. Ft.: $352

HOA Fine: $275

Purchase price: $490,000

Purchase date: 7/2005

MLS#: Y803235

On Redfin: 85 days

Down Payment: $74,980

Monthly Payment: $2,600

Income Requirement: $94,000

Description: Location, Location, Location! You can move in this TOP FLOOR Charmer. Located just seconds from the water in the East Village Arts District. Walking distance to many of Long Beach's best attractions. This unit offers an open floor plan, breakfast bar, IN-UNIT LAUNDRY, and Secured Parking. Enjoy the view from almost every room in the condo. Appraised in 2007 for 560,000. Seller has already bought another home and needs this one sold ASAP.

"Seller has already bought another home and needs this one sold ASAP." Oh really? That absurd price doesn't exactly scream ASAP.

And why mention what it appraised for in 2007? Has anything been proven more unreliable, useless, and fraud-derived than appraisals? That's like telling us what color the living room paint was in 1993--completely irrelevant.

Furthermore, if the $560,000 appraisal from a year ago meant anything as far as determining value, then why isn't today's asking price $560,000? After all, that's what the place is worth, right?

Idiot.

I suppose the intention is to make you think you're getting a smoking deal. If you know anybody stupid enough to have recently bought a home then I can virtually guarantee you heard some form of, "Dude, I only paid $500,000 for $600,000 house!"

Sure, that's one way to look at it.

The other way to look at it is DUMMY, YOU OVERPAID $500,000 FOR A $300,000 HOUSE.

I guess which way you choose to view the purchase makes the difference between sleeping at night and wearing adult diapers every time you crack open a newspaper.

The fact is, the last few years of "appreciation" were a dream. Sorry, doesn't count. Take your 2003/2004 price, lop off 10%, and you might have a shot at selling. And regardless of the bailout, the current market and lending conditions guarantee further carnage. Where will the Wheel of Disembowelment stop? 2002? 2001? 1998?

Just take this sucker. He paid an astounding $490,000 in 2005. Yes, that's right. With a kitchen like this:

Yikes.

Anyhow, his current asking price represents a 20% discount from his '05 purchase price. "Hey dude, I got a $490,000 place for $375,000!"

Not so fast, Drooly McDumbstain. Instead of working back from the unbelievably inflated 2005 price, let's work forward from the sales price before that.

Yep, in 1999 this "TOP FLOOR Charmer" sold for a whopping $177,000. I'll be charitable and apply a 5% annual appreciation since '99. That gives us a 2008 price of around $260,000.

Well that's weird. It looks like you just paid $375,000 for a $260,000 shoebox.

And what a glorious shoebox it is. I mean, it has views of Ocean Blvd:


Plenty of nearby foliage:

It has an indoor tree house loft entrance for the kids (B.Y.O.L.--The ladder is going with the seller):

A huge half-moon window that will be impossible to find coverings for:

And so much more. But there's a problem.

You see, there's some unwanted competition at this Location, location, location! Unit #408 in the same building is also trying to unload but he's not foolish enough to rely on appraisals from 2007 that may have a misplaced decimal point (come to think of it, I didn't see a dollar $ign next to the appraisal figure. It's possible they meant 560,000 Zimbabwean bank notes).

Other than not having a tree house like #508 (which just eats up precious square feet) they are identical. Right down to the same disgusting, all original kitchen:

And this seller (likely the bank) is wisely pricing to sell at $224,900. Another look at the pictures and it's clear that even at that seemingly cut-rate asking price, this claustrophobia capsule (the pictures make the ceilings look about five feet high) is still a bit overpriced. But you get an "A" for Assho--I MEAN, effort.

$225,000 would represent an annual appreciation of 2% since 2001, meaning somebody got the memo about pricing properties aggressively if you want a sale. Note: If #408 (which appears to need about 20 gallons of Formula 409) sells for current asking, that will represent an astounding 50% off the 2005 price.

And worst of all for the Loser of Linden in #508, a sale of #408 will quickly set the new comp for the entire building, dashing any hope whatsoever of avoiding foreclosure.

But hey, these are the people the government is "working to keep in their homes." That makes me feel so much better about rewarding him and other delusional gamblers for their utter failures so they can move on with absolutely no consequences or personal accountability.