Everybody Must Get Stoned
Wow, two whole photos!
Address: 564 North BELLFLOWER Blvd #201, 90814
Asking Price: $345,000
Beds: 2
Baths: 2
Sq. Ft.: 1,028
$/Sq. Ft.: $336
Year Built: 1970
MLS#: P721365
On Redfin: 2 days
HOA: $357
Down Payment: $14,000(FHA)/$70,000 (20% down)
Income Requirement: $100,000
Monthly Nut: $2,400 (FHA)/$2,100 (20% down)
Description: Completely remodeled Stoneybrook Villas 2 bedroom 2 bath condo overlooking main greenbelt & pool area. Close to elevator & parking. Enter to gleaming hardwood floors, totally remodeled granite kitchen, updated bathrooms, large bedrooms, both with walk-in closets, huge patio with access from both bedrooms & living room. You will truly enjoy this great location and excellent condition.
In The Year of The Cock (2005), today's seller purchased this little apartamento for a cerebellum-melting $450,000. That's right, almost half a million clams.
And now, after almost exactly five years (anybody else smell an Option ARM recast?), he's got it on the block for $345,000. Including commissions, Scuba Steve here (get it? Because he's underwater? Hey-ohhh!) stands to lose $125,000.
This, I'll remind you, is not a short sale (yet). And even if he had a conventional loan (which I seriously doubt, given the purchase date), there's no way he has enough equity to escape without a brutal hit to his pocketbook.
Below is the listing history. I want you to pay particular attention to the activity between 1988 (near the last peak) and 1999 (near the beginning of the new bubble):
Feb 11, 2010 - Listed $345,000
Jun 09, 2008 - Delisted
Apr 24, 2008 - Listed
Jul 25, 2005 - Sold $450,000 21.7%/yr
Sep 27, 1999 - Sold $143,000 -1.2%/yr
Nov 17, 1988 - Sold $163,000
That's right. The housing collapse in the early 90s wiped out that owner's value to the point where it took him 11 years to approach his purchase price. And he still had to cough up tens of thousands of dollars to get rid of it.
You are seeing the future of those who purchased during the peak years of The Great Housing Bubble. And this time around it may take even longer for a return to peak prices.
By the way, get a load of the 1999 buyer's impeccable timing. He bought at a good time, unloaded to this sucker at a great time, and walked away with three times the amount he initially invested six years earlier. Wow. (Of course, he probably just leveraged that money into another woefully overpriced property and is now in a similar situation under the sea.)
As far as this property goes, it seems alright. Nothing special. The kitchen doesn't seem to be much to write home about and although the floors look nice, I don't see much to differentiate this apartment from any number of nearby, similarly priced properties.
I guess you get two garage spots, a pool, and tennis courts (which you will never, I repeat, never use), but you also have a $357 HOA, two common walls, and those garage spots are tandem. Yuck.
Oh, did I mention the community laundry? DEAL KILLER.
Given those significant disadvantages, it's clear this asking price is way out of line with reality. Hell, Stoney Brook two-bedrooms are renting for only $1,625! That means to pencil out in a rent vs. buy calculation, the price would need to be around $230,000!
Think that's too low?
Well, consider that the median income for this zip is $57,182. If you calculate 4x income (which is stretching it, but common for Southern California buyers) you get a value of $229,000.
Need more evidence this asking price is nuttier than squirrel shit?
If you apply a 4% annual appreciation (ignoring the bubble and subsequent crash) to the 1999 purchase price of $143,000, the current value would be $220,000. Add in some money for minor upgrades (the claim that this place is "completely remodeled" is "completely made up") and you're at about $230,000.
Still need more convincing?
On a $230,000 property, the monthly nut with a conventional loan would be about $1,500. Assuming a family makes the median income of $57,182, if you apply a 31% debt-to-income ratio (which even the governement is now using as its absolute cutoff for most mortgage modifications) would be...drumroll please...$1,477.
Well would you look at that? Four unbiased (albeit quick and dirty, so give some wiggle room to those figures) calculations versus one delusional seller. Who you gonna believe?
And given the relatively high HOA fee and dreadful apartment living offered here, $230,000 is about what I'd pay.
But I'm smart.
Many people are not.
Which is why I expect this flat to sell relatively soon to a stoney buyer for about $315,000. And although he'd be buying at a significant discount to the peak price, he'll quickly learn, just as the 1988-1999 owner did, that prices have to hit a bottom before they can start climbing to the top again...and that can take a very, very long time.
Address: 564 North BELLFLOWER Blvd #201, 90814
Asking Price: $345,000
Beds: 2
Baths: 2
Sq. Ft.: 1,028
$/Sq. Ft.: $336
Year Built: 1970
MLS#: P721365
On Redfin: 2 days
HOA: $357
Down Payment: $14,000(FHA)/$70,000 (20% down)
Income Requirement: $100,000
Monthly Nut: $2,400 (FHA)/$2,100 (20% down)
Description: Completely remodeled Stoneybrook Villas 2 bedroom 2 bath condo overlooking main greenbelt & pool area. Close to elevator & parking. Enter to gleaming hardwood floors, totally remodeled granite kitchen, updated bathrooms, large bedrooms, both with walk-in closets, huge patio with access from both bedrooms & living room. You will truly enjoy this great location and excellent condition.
In The Year of The Cock (2005), today's seller purchased this little apartamento for a cerebellum-melting $450,000. That's right, almost half a million clams.
And now, after almost exactly five years (anybody else smell an Option ARM recast?), he's got it on the block for $345,000. Including commissions, Scuba Steve here (get it? Because he's underwater? Hey-ohhh!) stands to lose $125,000.
This, I'll remind you, is not a short sale (yet). And even if he had a conventional loan (which I seriously doubt, given the purchase date), there's no way he has enough equity to escape without a brutal hit to his pocketbook.
Below is the listing history. I want you to pay particular attention to the activity between 1988 (near the last peak) and 1999 (near the beginning of the new bubble):
Feb 11, 2010 - Listed $345,000
Jun 09, 2008 - Delisted
Apr 24, 2008 - Listed
Jul 25, 2005 - Sold $450,000 21.7%/yr
Sep 27, 1999 - Sold $143,000 -1.2%/yr
Nov 17, 1988 - Sold $163,000
That's right. The housing collapse in the early 90s wiped out that owner's value to the point where it took him 11 years to approach his purchase price. And he still had to cough up tens of thousands of dollars to get rid of it.
You are seeing the future of those who purchased during the peak years of The Great Housing Bubble. And this time around it may take even longer for a return to peak prices.
By the way, get a load of the 1999 buyer's impeccable timing. He bought at a good time, unloaded to this sucker at a great time, and walked away with three times the amount he initially invested six years earlier. Wow. (Of course, he probably just leveraged that money into another woefully overpriced property and is now in a similar situation under the sea.)
As far as this property goes, it seems alright. Nothing special. The kitchen doesn't seem to be much to write home about and although the floors look nice, I don't see much to differentiate this apartment from any number of nearby, similarly priced properties.
I guess you get two garage spots, a pool, and tennis courts (which you will never, I repeat, never use), but you also have a $357 HOA, two common walls, and those garage spots are tandem. Yuck.
Oh, did I mention the community laundry? DEAL KILLER.
Given those significant disadvantages, it's clear this asking price is way out of line with reality. Hell, Stoney Brook two-bedrooms are renting for only $1,625! That means to pencil out in a rent vs. buy calculation, the price would need to be around $230,000!
Think that's too low?
Well, consider that the median income for this zip is $57,182. If you calculate 4x income (which is stretching it, but common for Southern California buyers) you get a value of $229,000.
Need more evidence this asking price is nuttier than squirrel shit?
If you apply a 4% annual appreciation (ignoring the bubble and subsequent crash) to the 1999 purchase price of $143,000, the current value would be $220,000. Add in some money for minor upgrades (the claim that this place is "completely remodeled" is "completely made up") and you're at about $230,000.
Still need more convincing?
On a $230,000 property, the monthly nut with a conventional loan would be about $1,500. Assuming a family makes the median income of $57,182, if you apply a 31% debt-to-income ratio (which even the governement is now using as its absolute cutoff for most mortgage modifications) would be...drumroll please...$1,477.
Well would you look at that? Four unbiased (albeit quick and dirty, so give some wiggle room to those figures) calculations versus one delusional seller. Who you gonna believe?
And given the relatively high HOA fee and dreadful apartment living offered here, $230,000 is about what I'd pay.
But I'm smart.
Many people are not.
Which is why I expect this flat to sell relatively soon to a stoney buyer for about $315,000. And although he'd be buying at a significant discount to the peak price, he'll quickly learn, just as the 1988-1999 owner did, that prices have to hit a bottom before they can start climbing to the top again...and that can take a very, very long time.
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