Drawing a Blank

5585 East PACIFIC COAST Hwy #163, 90804
Asking Price: $200,000
Purchase Price: $100,000
Purchase Date: 6/2001
Beds: 2
Baths: 2
Sq. Ft.: 913
$/Sq. Ft.: $219
Year Built: 1970
MLS#: P688126
On Redfin: 236 days
HOA: $273
Down Payment: $40,000 (UPDATE: FHA unavailable in this building according to reader JK)
Income Requirement: $50,000
Monthly Nut: $1,300
Description: ...

No Description? Are you serious? I give realtors a hard time for taking hundreds of days to fix listing description typos, but you're too lazy to even write the description!

Oh, don't worry--it gets worse. Check out the other God-awful interior shots:


They look more like Rorschach tests than listing photos.

The history of this property sure is interesting:

Jan 07, 2010 - Price Reduced $200,000
Oct 14, 2009 - Price Increased $220,000 (price increase--smart!)
Oct 14, 2009 - Relisted
May 20, 2009 - Listed $215,000
Jun 11, 2001 - Sold $100,000
Jan 25, 1996 - Sold $92,500
Mar 31, 1995 - Sold $500 (WTF?)
May 30, 1989 - Sold $99,500

Of note, during the 12-year span between 1989 and 2001, this apartment only appreciated $500. Ouch.

But, the 2001 buyer (and current seller) lived through the bubble and saw "values," and his perceived equity, skyrocket. So in 2009, after eight years of ownership, he tried to cash in on that magical appreciation and double his investment.

After five months with no interest, he did what all smart Long Beach sellers do--he raised the price. I guess he conveniently chose to ignore the unprecedented housing implosion of the last two-and-a-half years. Anyhow, with this recent $20,000 price cut it seems he's finally woken up to reality.

Just for fun, let's also choose to ignore the unprecedented housing implosion when trying to figure out whether this is a decent buy. But, in fairness, I will also ignore the artificial, easy-money-fueled runup in prices during the bubble and calculate a flat (and generous) 4% appreciation rate for the last eight years.

$104,000 - 1 year
$108,160 - 2 year
$112,486 - 3 year
$116,986 - 4 year
$121,665 - 5 year
$126,532 - 6 year
$131,593 - 7 year
$136,857 - 8 year

Uh, yikes. At $200,000, this guy seems way overpriced.

And for those who would argue a present value of $136,857 seems too low in this "new paridigm" of real estate, well, I'd refer you to the State of California:

2008 Tax Basis: $138,067

However, as we've learned there is a vast difference between what something is truly "worth" and what someone with a subprime, no-skin-in-the-game FHA loan will pay for it.

So, although I believe $138,000 is about right as far as true value at the bottom, let's just look at the current asking price of $200,000 and objectively determine from a Rent vs. Buy perspective whether this is a good price.

The monthly nut, including Principal, Interest, Taxes, and Insurance/HOA will be roughly $1,300 with 20% down.

Asking rents are about $1,500 per month, so it appears this place pencils out (assuming they could get full asking rent and that rents don't deflate any further) if you go with traditional financing.

Well would you look at that!

This $200,000 price is only a few days old, so maybe it'll finally be enough of a price reduction to nab a sale. Good for them for dropping the price to what appears to be a reasonable figure. But...

WHAT TOOK YOU SO FUCKING LONG?

While you've been taking your sweet ass time ("I'm not going to just give it away! I'm entitled to my bubble equity!"), this is what happened to the price per square foot:

That's gonna leave a mark.

More bad news: You have competition. Another two-bedroom in this complex, which has been rotting on the MLS for 250+ days, claims to have a short sale approved for $200,000 (I won't even bring up the upgraded short sale asking only $159,000).

But, given the headaches associated with short sales, you're probably safe. With a 5-10% drop, I wouldn't be surprised to see this thing to go into contract very soon (whether it will continue to plummet in value--especially given its street-side location--is another matter altogether).