REOdiculous: FINAL UPDATE
Sold on 7/8/10 - $315,000 ($6,000 above asking price)
As I said in May:
...so I'm not terribly surprised by the sales price (especially given the bevy of Fed and State tax incentives that essentially reduced the sales price by $20,000). But I still think the new owner overpaid (dude, burglar bars). Congratulations on purchasing the most expensive house in a one-mile radius!
The good news for the bank is that it recouped some of its money, but the bad news is overall they are still in the hole about $180,000.
+++++++++++++++++++++++++++++++
705 East 8TH St, Long Beach, CA 90813
Asking Price: $309,900
Beds: 2
Baths: 1.5
Sq. Ft.: 1,310
$/Sq. Ft.: $237
Lot Size: 5,000 Sq. Ft.
Year Built: 1918
MLS#: P733349
On Redfin: 2 days
Down Payment: $62,000/$13,000 FHA
Income Requirement: $70,000 (mortgage amount/3.5 = income requirement)
Monthly Nut: $1,700/2,000
Description: CHARMING CRAFTSMAN HOME BLENDS THE NEW WITH THE OLD. ORIGINAL BUILT INS AND WOOD FLOOR PLUS A NEWER BEAUTIFUL REMODELED KITCHEN AND SOME NEWER WINDOWS. THE FRONT PORCH HAS BEEN ENCLOSED FOR A LITTLE EXTRA SQUARE FOOTAGE. THERE IS A LAUNDRY ROOM WITH A DRPO DOWN IRONING BOARD AND 1/2 BATH OFF OF THE KITCHEN. IT SHOWS VERY LIGHT AND BRIGHT. LARGE BACKYARD COMPLETELY FENCED AND ON A CORNER LOT.
What the fuck is a "DRPO"?
About six weeks ago the bank took back this property for $238,169 and is now attempting to gouge buyers--ERRR...earn a substantial profit.
About $70,000 before commissions to be exact.
How does a bank convince itself that despite the fact nobody was willing to pay a paltry $238k ($182 per square foot!) on the courthouse steps, the market will somehow deem a $70,000 markup as a "deal" once it hits the MLS? I'll never understand that one.
Who knows...maybe the bank has it priced correctly for today's low-inventory, low-interest-rate environment. I think $309,000 is straight up Jocelyn Wildenstein crazy for this shite neighborhood, but given all the manipulation and interference in the market, it's tough to determine the true "value" of anything these days.
But let's give it a shot anyway.
Setting aside the obvious implication of the market already determining the value of this property at $238,169, let's look at the pricing history for clues:
May 03, 2010 - Listed $309,900
Mar 15, 2010 - Sold $238,169 (-14.0%/yr)
Sep 15, 2005 - Sold $470,000 (40.9%/yr)
Mar 03, 2005 - Sold $391,000 (10.9%/yr)
Feb 24, 1994 - Sold $125,000
Holy crap! This place once sold for nearly half-a-million dollars?! A year before the peak?!
Wow.
For some perspective, this testament to the idiocy of the Great Housing Bubble sold for a mere $125,000 near the last housing bottom. Now, given, it likely didn't have the upgraded kitchen and look as polished, but this place ain't that nice either (they couldn't even be bothered to upgrade all the windows. But, at least they have burglar bars on them! Bonus!) and it's fair to say it didn't nearly triple in value during the last 16 years.
If we remove the bubble and the crash and extrapolate a generous 4% appreciation rate (which, in this crime-riddled 'hood, is beyond generous) since 1994, today's value would be $234,123.
Hmm...that's weird. That's almost exactly what it sold for at auction -- aka the "value" determined by the market.
How about rent vs. own calculations? I defy you to find a comparable house in this area renting for $1,700 (or $2,000 if the buyer goes FHA, which, let's be honest, is exactly what's going to happen in this neighborhood). Hell, fully restored bungalows near Belmont Heights can barely get $1,700!
Listed comps? This is one of the most expensive listings in the area.
Local incomes? Try $27,375, about a third of what's required to stretch into this mortgage.
My point is, it doesn't take a whole lot of research to figure out this thing is overpriced.
And I realize some people prefer corner lots, but this location looks particularly miserable. This gets the worst of both worlds: A set of stop signs intersecting with a busy, stopless thoroughfare. You get the sounds of squealing brakes and post-stop launches combined with the sounds of cars and trucks hauling ass down 8th. Ugh.
Not to mention the inevitable T-bone accidents caused by the lack of a four-way stop. No thanks.
And click on the Street View and check out the dead grass on the sidewalk. If the city can't even bother to keep its grass alive, how reliable do you think the police patrols are in this 'hood?
Look, I don't blame the bank for trying to swing for the pricing fences. After all, they loaned out $470,000 (!) on this joint...why not try to alleviate the pain as much as possible?
But $309,000 seems woefully out of line with reality.
However, my brief house-hunting adventure this weekend proved it really is the Wild West out there. I stopped by a small fixer-upper on a tiny lot, in a decent neighborhood, which sold for about $360 per square foot in 2001. I wasn't that impressed, but other than the ridiculous asking price it had potential. Given the 185-day, stale-ass asking price, I was thinking about submitting a lowball offer.
Yeah, it just went under contract for $550 per square foot.
Did I mention it's a small fixer-upper on a tiny lot?
As the Shins once said, logic will break your heart. It's crazy out there. Choose wisely.
As I said in May:
Who knows...maybe the bank has it priced correctly for today's low-inventory, low-interest-rate environment. I think $309,000 is straight up Jocelyn Wildenstein crazy for this shite neighborhood, but given all the manipulation and interference in the market, it's tough to determine the true "value" of anything these days.
...so I'm not terribly surprised by the sales price (especially given the bevy of Fed and State tax incentives that essentially reduced the sales price by $20,000). But I still think the new owner overpaid (dude, burglar bars). Congratulations on purchasing the most expensive house in a one-mile radius!
The good news for the bank is that it recouped some of its money, but the bad news is overall they are still in the hole about $180,000.
+++++++++++++++++++++++++++++++
705 East 8TH St, Long Beach, CA 90813
Asking Price: $309,900
Beds: 2
Baths: 1.5
Sq. Ft.: 1,310
$/Sq. Ft.: $237
Lot Size: 5,000 Sq. Ft.
Year Built: 1918
MLS#: P733349
On Redfin: 2 days
Down Payment: $62,000/$13,000 FHA
Income Requirement: $70,000 (mortgage amount/3.5 = income requirement)
Monthly Nut: $1,700/2,000
Description: CHARMING CRAFTSMAN HOME BLENDS THE NEW WITH THE OLD. ORIGINAL BUILT INS AND WOOD FLOOR PLUS A NEWER BEAUTIFUL REMODELED KITCHEN AND SOME NEWER WINDOWS. THE FRONT PORCH HAS BEEN ENCLOSED FOR A LITTLE EXTRA SQUARE FOOTAGE. THERE IS A LAUNDRY ROOM WITH A DRPO DOWN IRONING BOARD AND 1/2 BATH OFF OF THE KITCHEN. IT SHOWS VERY LIGHT AND BRIGHT. LARGE BACKYARD COMPLETELY FENCED AND ON A CORNER LOT.
What the fuck is a "DRPO"?
About six weeks ago the bank took back this property for $238,169 and is now attempting to gouge buyers--ERRR...earn a substantial profit.
About $70,000 before commissions to be exact.
How does a bank convince itself that despite the fact nobody was willing to pay a paltry $238k ($182 per square foot!) on the courthouse steps, the market will somehow deem a $70,000 markup as a "deal" once it hits the MLS? I'll never understand that one.
Who knows...maybe the bank has it priced correctly for today's low-inventory, low-interest-rate environment. I think $309,000 is straight up Jocelyn Wildenstein crazy for this shite neighborhood, but given all the manipulation and interference in the market, it's tough to determine the true "value" of anything these days.
But let's give it a shot anyway.
Setting aside the obvious implication of the market already determining the value of this property at $238,169, let's look at the pricing history for clues:
May 03, 2010 - Listed $309,900
Mar 15, 2010 - Sold $238,169 (-14.0%/yr)
Sep 15, 2005 - Sold $470,000 (40.9%/yr)
Mar 03, 2005 - Sold $391,000 (10.9%/yr)
Feb 24, 1994 - Sold $125,000
Holy crap! This place once sold for nearly half-a-million dollars?! A year before the peak?!
Wow.
For some perspective, this testament to the idiocy of the Great Housing Bubble sold for a mere $125,000 near the last housing bottom. Now, given, it likely didn't have the upgraded kitchen and look as polished, but this place ain't that nice either (they couldn't even be bothered to upgrade all the windows. But, at least they have burglar bars on them! Bonus!) and it's fair to say it didn't nearly triple in value during the last 16 years.
If we remove the bubble and the crash and extrapolate a generous 4% appreciation rate (which, in this crime-riddled 'hood, is beyond generous) since 1994, today's value would be $234,123.
Hmm...that's weird. That's almost exactly what it sold for at auction -- aka the "value" determined by the market.
How about rent vs. own calculations? I defy you to find a comparable house in this area renting for $1,700 (or $2,000 if the buyer goes FHA, which, let's be honest, is exactly what's going to happen in this neighborhood). Hell, fully restored bungalows near Belmont Heights can barely get $1,700!
Listed comps? This is one of the most expensive listings in the area.
Local incomes? Try $27,375, about a third of what's required to stretch into this mortgage.
My point is, it doesn't take a whole lot of research to figure out this thing is overpriced.
And I realize some people prefer corner lots, but this location looks particularly miserable. This gets the worst of both worlds: A set of stop signs intersecting with a busy, stopless thoroughfare. You get the sounds of squealing brakes and post-stop launches combined with the sounds of cars and trucks hauling ass down 8th. Ugh.
Not to mention the inevitable T-bone accidents caused by the lack of a four-way stop. No thanks.
And click on the Street View and check out the dead grass on the sidewalk. If the city can't even bother to keep its grass alive, how reliable do you think the police patrols are in this 'hood?
Look, I don't blame the bank for trying to swing for the pricing fences. After all, they loaned out $470,000 (!) on this joint...why not try to alleviate the pain as much as possible?
But $309,000 seems woefully out of line with reality.
However, my brief house-hunting adventure this weekend proved it really is the Wild West out there. I stopped by a small fixer-upper on a tiny lot, in a decent neighborhood, which sold for about $360 per square foot in 2001. I wasn't that impressed, but other than the ridiculous asking price it had potential. Given the 185-day, stale-ass asking price, I was thinking about submitting a lowball offer.
Yeah, it just went under contract for $550 per square foot.
Did I mention it's a small fixer-upper on a tiny lot?
As the Shins once said, logic will break your heart. It's crazy out there. Choose wisely.
Comments
Post a Comment