Profile picture for Wonder Why

Bidding War in Long Beach

With the economy the way it is, why is there such a bidding war for homes in Long Beach, Ca and surrounding cities?  I would think it's a buyers market but from the looks of things, it's a sellers market.  There are multiple bids per property and going above asking price.  What is wrong with this picture???

Also, Long Beach has dropped approx 20%-25% in home values, how much lower can it go next year? Any thoughts? 
  • August 01 2009 - Long Beach
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Answers (30)

A quality home in a quality area still comands a relatively high price relative to its area.  It all depends on what you are looking for and what the price is relative to the value of the property.  I represent several buyers in the Long Beach and Lakewood area.  Actually it is both a buyers market and a sellers market.  Leaning more towards the sellers end right now because of low inventory.  This is where a good agent really has to shine.  Your agent needs to make sure you are ready to rock and roll with updated pre approval and incentive to get you out there to see properties as soon as they come on the market.  He or she needs to be contacting other agents that take a lot of listings in the area you are interested in to see if they have anything coming up that has not hit yet.  When you are interested in a property make your first offer your best offer if you really want the property. Have your agent make the offer in person if at all possible.  Not just to the listing agent,  I mean to the owner if it is a short sale or regular sale.  You have to be patient but do these things and it will happen. 
  • November 05 2009
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sorry! I don't remember the last median sold price in Los Angeles was $320k or $310k. ;-)
  • August 05 2009
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I take Megan McArdle'S 1 year old post for the data purpose only.
Los Angeles 1994 lowest point of real estate average price was $160k with 4.75% inflation rate as Wall Street estimates.
to 2009 the time line is 16 years, the average home price should be $336,190 by now, last I readed from LA times the average sold price was $320k. Almost 5% differential, The people buy the house with The Alt-A and Option Arm loans used to buy at overprices, if the banks retake and resold on the market (if any) then the price of those houses will not lesser than market prices.
  • August 05 2009
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Profile picture for Pherris
Come on now... that Megan McArdle posting is nearly a year old, and every argument it makes is completely and utterly dismantled in the comments under it.  Not exactly a reliable source.

Where in the world do you come up with something like, "- Late 2009 homes were under priced 7%" ??!!
  • August 05 2009
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Am I worrying about Alt-A and Option Arm loans? No, not at all! why?
Follow the link
http://meganmcardle.theat ... panic.php
Then "there are reasons for cautious optimism. Alt-A borrowers have better credit records than sub-prime debtors, and the pool of Alt-A mortgage backed securities is smaller - about $600bn for loans made between 2005 and 2007, compared with about $1,000bn for sub-prime."
The major of the reason for the deflate of the home's prices at 2008 was overprice of house values, which is unseen as today home values, and many of them (Alt-A and Option Arm) was go to foreclosures already, It may happen sometime, the affect will be unnoted however.
The different of 2008 and 2010 is:

* 2008 home was overpriced 35%.
- Late 2009 homes were under priced 7%.
* 2008 start deflate in prices and sells.
- Late 2009 start to improve in prices and sells.
* 2008 start of deflate of economy.
- 2010 start of improve of economy, since the new home buyers will purchase the furniture and repair their house, which is bring up the employments.
* 2008 -> panics
- Late 2009 -> more and more confidently.
  • August 04 2009
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Profile picture for Wonder Why
Youre right Pherris.  It costs more than 300k anywhere in socal if you want a decent home in a decent neighborhood.  You can find homes under 300k but youre going to have to make some sacrafices eg, run down homes, not so good schools, high crime rates, unfriendly neighbors, etc

In decent areas of LB, 1300 sq ft homes build in the 50's, 6000 sq ft lots are going in the 500's...I can never spend that much on a home.  Those days where your house should be 3X's your salary probably won't exist anymore.  Heck, 3x's the salary of most of the people I know would probably be able to get them a condo in todays economy...and that's stretching it.

Everything seems to rise in costs but our salaries remain the same.
  • August 03 2009
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Profile picture for Pherris
"if you check on www.realtor.com at any of area of Los Angeles and it's suburban, there are no home available at lower $300k range"

The simple fact is that it costs more than that to live here, unless you are willing to make one or more major concessions (dangerous neighborhood, bad schools, massive commute, house in really bad shape, etc.)
  • August 03 2009
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Hi Wonder Why,
Thank for the compliment, I may wrong however.

should be: tuoi la nguoi viet -> toi la nguoi viet    ;-)
  • August 02 2009
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Profile picture for Wonder Why
Hoang,

Thanks for taking the time out to share your wealth of knowledge. You seem very confident in your responses.  For the sake of many in this economy, I do hope you are right.  I don't want to see the negative effects of the ALTA and Option Arm loans...it sounds scary if causes another catastrophic wave of foreclosures. 

Again, thanks for the elaborate and detailed responses!  By the way, I can understand you because tuoi la nguoi viet....I think that's written correctly =)
  • August 02 2009
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''Why wouldn't you listen to me if what I speak is the truth''

Really? All I read is a bunch of hearsay. " my friend's friend got outbid blah blah blah'. Not going to cut it dude (dudette?). Blind optimism will get you no where. Face it, you boguht a condo and missed out on buying a home. Now you are the one shut out. I hope you don;t plan on having a family. that shack can be tight.
  • August 02 2009
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Profile picture for space_acer
"By the end of this year, prices for decent houses would have gone up in this area so to say you missed the boat in buying a nice house for cheap in this area is pretty much the truth."

Home prices are not going up anytime soon. 
http://www.housingbubblebust.com/OFHEO/Major/SoCal.html

Look what happened in SOCAL from 1990 to 1997...
  • August 02 2009
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Profile picture for Wonder Why
Tap- 

I'm listening to everyone that has responded to my question.  Everyone has a wealth of knowledge that I can take away with.  I'm open to thoughts and sugestions, that's why I created this thread. 
  • August 02 2009
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Profile picture for Optimus012
Why wouldn't you listen to me if what I speak is the truth. Good luck in finding a good deal under 350K in this area. It's not going to happen. If you have already been trying to find a place, you probably have been outbid several times and would realize this by now, which is why you are making this thread.

I have too many friends who are trying to buy right now and can't because they keep getting outbid. Unless you have alot of cash, you'll probably have to settle for a crappy house or an expensive nice house.

By the end of this year, prices for decent houses would have gone up in this area so to say you missed the boat in buying a nice house for cheap in this area is pretty much the truth.
  • August 02 2009
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When I say "if you check on www.realtor.com at any of area of Los Angeles and it's suburban, there are no home available at lower $300k range"
I didn't mean that "you should buy any house at any price", for example: from 3 to 6 months ago with $300k you can easy to buy 3 beds 2 baths 7,500 sqft lot on none busy street, livable house on my area, now at same house you must bid $330k, which is not guarantee you will get it.
if that house at same price is still on the website then it must be on pending sell, and you should not use $300k to buy "2 beds 1 bath 4,500 sqft lot on busy street, unlivable house", It's 90% available house under $300k at 6 months ago, it's 40% now, the available houses was inflated more than 10% over last 3-6 months, I'm not encourage WonderWhy to bid overprice on any house since she just bought her home in last few months.
I'm in buyer shoe in next few weeks (If the bank approved my application) and i'm not try to do so (overbid), needless to say you buy at the price you feel comfortable.
  • August 02 2009
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Profile picture for Mr Caveat
if you check on www.realtor.com at any of area of Los Angeles and its suburban, there are no home available at lower $300k range.

yet...

seriously if someone else bids against you, walk away. its a waste of 20,000 bucks when there are a hundred other homes
  • August 02 2009
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Profile picture for space_acer
"If the bottom was base on the normally cost of building"

Cost of material/labor have no relation to prices. We are seeing new homes built a few years ago, having current prices well under  original list price.
Nothing more than overpricing in past years and mismanagement on the part of builders.  
  • August 02 2009
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Profile picture for space_acer
There are always been multiple offers on property in Long Beach, if you believe REA. 

Of course they will never provide confirmation or valid evidence.
  • August 02 2009
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Yes, you are right, since we talk about the foreclosures of real estate, I assume that we talk about majority of home buyers, which is average of first time buyers and investors, who buy the lower end and middle segment of real estate, if you check on www.realtor.com at any of area of Los Angeles and its suburban, there are no home available at lower $300k range.
  • August 01 2009
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Profile picture for Pherris
I wasn't talking about you, Hoang.  I think you've got some interesting things to say.  You just seem to be focused on a very specific slice of the market.  The forces acting on the houses in LA under $400k are different than the rest of the market.
  • August 01 2009
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Ha! At one point, Pherris was wrong, beside of I'm never dancing, I don't know how to dance let alone Tap-dance.
Of course after 90 days of moratorium ending, there are more homes on the market, but got the good deal as same as few months ago? I don't think so. The good deal happening only when the peoples panic, the next panic will be lesser damage than the last panic (only if it is happen).
  • August 01 2009
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Profile picture for Wonder Why
Thanks Pherris =)
  • August 01 2009
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Profile picture for Pherris
Wonder Why, don't listen to Tap-dance down there.  There are still plenty of deals to be had, and I'm sure you can find something that will work for you.  Patience and research will be rewarded.
  • August 01 2009
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Hi wonder Why,
Thank for read my posts, since rarely for anyone pay attention to them, because of they are not easy to read cause by my very bad English,
Unlike the others, who talking base on the fact, my views are base on the logic of human nature and on what happenings around of me,
On the road of recovery, you gonna see the bumping of real estate market as same stock market (which was happened few months ago when it go up and down hundreds points a day),
Of course the real estate trend will not up and down daily but monthly.
There is depending on how are we defining the bottom.
* If the bottom was base on the normally cost of building, the value of the land in urban area compared with the incomes of the peoples living in it, and the normally of the inflation rate that take from beginning of 1994, the lowest point of Urban and suburban of Los Angeles county real estate's market, then YES, WE AT BOTTOM.
* If the bottom was base on mood of the human? UNKNOW.
- Some are wanted to buy because of BUY <= RENT, some because of the willingness of become the owner of the place they are living as human nature as same as any living on the earth, etc...
- Some are not because there is not the right time in their view, their finance's situation, somes are just want to rent because of there are easier for them."What are your thoughts on the ALTA loans and the Option Arm loans resetting next year?", I'm put its in god's hand, since no way for I'm to know, it is depend on the economy's situation, our government, the mood of the peoples at the time, etc...
The foreclosures were happened Because of:
Sub-prime loans (bad credit and no down payment) -> in the past.
Unemployment -> depend on the economy's situation of next year.
ALTA and the Option Arm loans? -> I don't think there will be many, since 2006-2007, from large to least, trade-up buyers -> Sub-prime loans -> ALTA and the Option Arm loans.
Its may happen, however the government's intervention, more home price goes up, lesser the peoples willing to let their house go into foreclosures, etc...
For myself, I'm not to worry about it because of there are many investors will take over those houses, many of investors and first time home buyers will not repeat the mistake of "Don't buy at few month ago".
  • August 01 2009
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Profile picture for Wonder Why
Hoang- based on reading some of your threads, you seem to be very optimistic about our real estate market.  do you really believe that the market has hit bottom and in the process of turning around?  What are your thoughts on the ALTA loans and the Option Arm loans resetting next year?
  • August 01 2009
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Profile picture for edtilton
Welcome to the wonderful world of used cars and real estate. They lowball the price so they can start a bidding war.
  • August 01 2009
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My concern is Azrob and Socal bubble will come and post in this thread!
  • August 01 2009
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Profile picture for Optimus012
It is a bidder's war in southern CA. It has been since March of thisyear. Anything under 350K good luck in trying to win a good home. Too many investors are bagging the good deals busting out all cash offers.You can't compete with that.

You missed the boat in buying in this area. You should have bought back in January and even last december when prices were low and everyone was too scared to buy. That was the time when people with guts and money got the best deals and great homes.
  • August 01 2009
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Profile picture for Pherris
The banks are rationing out the foreclosed houses so they can manipulate sale prices and try to keep the market propped up.  It's a cheap tactic, and is delaying a true recovery.

Many of the lower-end neighborhoods in the LA area have dropped a lot, but prices in the mid and upper ranges still don't make any sense.  They've got to come down.

The Alt-A foreclosures are still coming, and LA certainly still has a ton of financial and employment problems.  It's hard to say how this will play out, but I think things will look different when the Summer ends.
  • August 01 2009
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Zillow's trend is the home's value where it should be.
The home sold prices at actually time are the prices that the today buyers want to pay.
  • August 01 2009
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It's hard to say on national scale because every market is differently, as my posts on the other thread.
http://www.zillow.com/adv ... s/262277/
On my Zip code, Zestimate's trend is still higher than actually real market value 7%, therefore even if the sell prices is increased 2% then the home's values still drop 5% per Zestimate,
I don't say the Zestimate was wrong, Zestimate is actually inline with the inflation rate, and the sell prices are lower the actually real market value, the today buyer's willingness are buy under (lower) the inflation rate, which is now it's the time their view (combined with buy <= rent),
Usually, the time from the offers was accepted to the closed escrows are from 1 to 3 months, and the time from the closed escrows go to Zillow data are from 2 weeks to 3 months, let alone the time that zillow needed to process the sell data into Zestimate, therefore Zestimate's trends was slower than real market (Drop or rise).
In my area, there is no home under $300k available for sale right now, therefore we can guess the median sold prices will go up for months ahead (no sells at lower range and many sells at higher range) which is not necessary the home's values go up as same as the median sold price (maybe just a little), maybe next month the home's value will go down 2% and the follow month go up 2.5% , in the end the home's value gonna meet at 4.75% inflation rate for Long Beach as same as Los Angeles as whole.
  • August 01 2009
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