The Terrible Twos: FINAL UPDATE
Sold on 2/18/2010 - $338,000
To all the people who claim "renting is just throwing away money," I give you this seller who just ate a bone-crushing -$57,000 loss thanks to the glorious pursuit of home "ownership." You really showed those lowly renters!
I'll tell you one thing about which I am 100% confident: In hindsight, this lady would have much rather been "just throwing away money" renting than standing above a big, smoking crater where her bank account used to be.
Frankly, I think she's lucky to get out alive. This tidy, but tiny, little apartment has much further to fall and she's fortunate she found a sucker before the losses got any worse.
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Today's featured seller is yet another 2007 buyer who, after finding herself underwater just two years after purchasing, is scrambling to abandon ship before her terribly timed investment blows up in her face like an IED.
Will she find the comfort of a buyer's life raft in time, or is she just rearranging the deck chairs on the Titanic?
370 WISCONSIN Ave #304, 90814
Price: $348,000
Beds: 2
Baths: 1
Sq. Ft.: 957
$/Sq. Ft.: $364
Year Built: 1967
MLS#: P709366
On Redfin: 2 days
HOA: $187
Down Payment: $69,600 ($12,180 FHA)
Income Requirement: $99,000
Monthly Nut: $2,000 ($2,400 FHA)
Description: Remodeled 2-BD Belmont Heights condo. Secluded Top, Back, Corner unit is in the Best Location in the building! Enjoy great views from the living room picture window. Spacious, open floor plan includes oversize bedrooms with large closets (with closet organizers), Bamboo flooring and dual pane vinyl windows (with nice blinds). Beautiful Kitchen has Silestone counters and ceramic tile floors. Large bathroom features both a shower and a soaking tub. Contemporary colors throughout. 2 deeded parking spaces with 4 large storage lockers! Attractive building has a sparkling lap pool, a nice BBQ area, a community garden and is pet friendly. Walking distance to trendy Portfolio coffee house and retro row on 4th St. Close to Belmont Shore & Pine Ave.
Egregious Title Case abuse aside, that is a fairly good listing description.
I think it's funny to refer to anything in a 957 square foot apartment "oversize," but considering there's only ONE bathroom, perhaps there is a bit more available square footage to play with.
Yuck, nice Pepto-Dismal countertops.
The nabe is pretty good and the (awful looking) building is well insulated from busy 4th Street.
And browsing through the photos, I'm pretty impressed with this interior. Nothing spectacular, but very clean and simple.
Furthermore, the $187 HOA fee actually gets you a pool! When was the last time you saw that?
The problem, as per usual, is price.
First, this matchbox is one of the most expensive in the area (although to be fair, it's nicer inside than the competition).
Second, the comps are playing for the Bad News Bears:
$350,000 2500 E 4th St Apt 308 Sold on Jul 24, 2009
0.05 miles 2 bd / 2 ba 1,093 Sq. Ft.
$308,741 2767 E 3rd St Apt 26 Sold on Sep 02, 2009
0.21 miles 2 bd / 2 ba 805 Sq. Ft.
$375,000 232 Junipero Ave Apt C1 Sold on Jul 07, 2009
0.31 miles 2 bd / 2 ba 1,175 Sq. Ft.
$214,000 2075 E Appleton St Unit 9 Sold on May 29, 2009
0.33 miles 2 bd / 1 ba 913 Sq. Ft.
$191,250 2033 E 3rd St Unit 3A Sold on Aug 19, 2009
0.33 miles 2 bd / 2 ba 953 Sq. Ft.
$360,000 2055 E Broadway Unit 207 Sold on Jun 19, 2009
0.38 miles 2 bd / 2 ba 1,197 Sq. Ft.
$320,000 2101 E 2nd St Unit 201 Sold on Jul 07, 2009
0.38 miles 2 bd / 2 ba 1,118 Sq. Ft.
Notably, the only three units that sold for more than $348,000 during the last six months sported an extra 200 square feet and a second bathroom. This place, as nice as it is, can't possibly compete with that in this price range.
And those sales were in June and July! Now that we are entering the winter months and holidays, the market will slow down a bit, making selling a much different ball game. This seller, if she's serious about minimizing the damage caused by these terrible two years of mistimed ownership, needs to get it in gear and hit the nitrous on price reductions.
First, the asking price is out of line with local incomes. Even if we're generous and calculate 4x income instead of my usual 3.5x, the household income requirement is still $87,000. That's $36,000 more per annum than the median income!
And because of the solo lavatory and the cramped quarters, this is not really designed for a couple, meaning the solitary occupant would have to make nearly $90,000 a year to afford this place--and even then he'd be stretching to do it.
Second, asking $364 per square foot is a pipe dream that Mario and Luigi would be proud of. We're talking pipe dream BY ANY MEASURE:
MEDIAN CONDO VALUES (List $, $/Sq. Ft.)
Alamitos Beach: $241,000, $300
East Side: $207,500, $256
90814: $247,500, $307
Long Beach: $243,000, $263
LA County: $365,000, $317
Sorry, lady. I hate to break it to you but your place isn't special and can't possibly justify the premium.
But one look at the pricing history and it becomes clear why she's reluctant to accept pricing reality:
Nov 02, 2009 - Listed $348,000
May 10, 2007 - Sold $375,000
May 22, 1987 - Sold $90,000
As it stands, if she found someone willing to make the same mistake she did and severely overpay for this tiny unit (sounds like a line from the next Deuce Bigalow movie), her loss after commissions would be -$47,000.
OUCH.
Hopefully after two years of payments she has at least that much in equity, and (assuming she finds a buyer at this ridiculous price) will break even .
But if she got an interest-only loan (which were still available in '07), she needs to be prepared to write a big fat check when she finally finds a seller (at a significantly reduced price).
I think it's going to be interesting to see what happens as 2007 buyers, many of whom listened to the "experts" about the worst of it being over and the housing crash being contained only to subprime riff-raff, unexpectedly creep underwater. It will be interesting because they won't go underwater by nearly as much as their 2004, 2005, and 2006 counterparts, but I posit many will be underwater "enough" to bail.
I'm curious to see how many '07 "owners" hang on through the downturn and years of flat appreciation, and how many pull a monkey-see, monkey-do and moonwalk away from their obligations.
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