are Manhattan loft sellers more in sync with buyers this year? not really …

original loft asking prices are working with about the same frequency

To my mind, an asking price for a Manhattan loft is successful when it generates an offer from a qualified buyer that leads to a contract (more successful if it leads to multiple offers, but stick with basic success here, please). Another way to look at it is that owners of lofts that sell off an original asking price have done a better job of anticipating what buyers are willing to spend than owners who have to discount the ask to get a deal, and a much better job than owners who don’t succeed in attracting offers from qualified buyers. I believe that in periods of changing market conditions (especially, in markets in which buyers have relatively more leverage) it can be difficult for sellers to accurately predict where the buyer pool will bite. (Hence, my reference to sellers “chasing the market down” in 2009 in my June 16, Manhattan Loft Lab at 40 West 15 Street features building record, failed marketing, opposite styles, + more!.)

I have suspected that recent loft sellers were relatively better at predicting the sweet spot for the buyer pool than a year ago, but when I tested that surmise against my data … no deal! One the one hand, it hurts to be wrong; on the other hand, it is nice to have a data-driven answer to the question.

If you’ve spent any time with the Google Drive spreadsheet on which I share my Master List of downtown Manhattan loft sales below $6mm, you see a lot of color. For present purposes, the key color is blue, which I use in the original asking price column to highlight downtown Manhattan lofts that sold with no reduction in asking price. I generally add the colors after I do a update to the Master List, eyeballing the two asking price columns (“I” and “L”) for matches. (If I were a spreadsheet ninja I could automate that, I assume, but … never mind.)

The physical act of adding a fill color to a column, and then seeing how much that column fills with the fill color, can be startling, with sequences of five or six blue lines in a row. Hence, when I just completed a large update to my master List of downtown Manhattan loft sales, I added (what felt like) a lot of blue.

Going back to March 1, 2017, I counted this weekend 62 blue original asking prices, 44 not blue (or 58% of completed downtown Manhattan loft sales succeeded without reducing the original asking price). I looked at a similar period in 2016 and found … (wait for it) … a 55% success rate (86 blue, 70 not blue). (There were more data points in my 2016 set mostly because it takes a while for deeds to be filed, and if I ran this exercise again in a month for the period March 1 to June 8 there will be more data points, as more deeds reflecting closings in this period are filed.)

First reaction: hmmm, that’s hardly different. Second reaction: humility, with a touch of gratitude that I now have a factual basis regarding a previous suspicion.

Because I tend to get a bit anal about such data (once I look for it, ahem), I ran the same count for the same period in 2015: 97 blue listings and 41 not blue (or a success rate for original asking prices for downtown Manhattan lofts of 70%). Now that’s different! You don’t want such limited data sets (these are still small numbers, after all) to lead to rigid conclusions, but these limited sets imply that owners of Manhattan lofts were more successful at predicting where buyers were in a 100-day period two years ago than in the same 100-day period last year and this year.

Fascinating (to me)! But Your Mileage May Vary.

you may prefer different numbers to measure the Manhattan real estate market

I don’t compute the discount that successful Manhattan loft owners needed from asking prices to get deals that closed, but if you want to, the data points are in the Master List. Or, you could look to The Miller for the overall Manhattan market, as he reports the listing discount from last asking prices in his quarterly reports (for example, for the First Quarter of 2017, which shows 4.2%, compared to the prior quarter of 5.3%, and compared to the same quarter in the prior year of 2.1%). Good stuff, from a much larger data set, collected a bit more rigorously and comprehensively (ha!) than my Master List, measuring a slightly different thing.

More data is good!

the Manhattan loft marketing efforts that are invisible in this analysis

Permit me to make a distinction about what closed sales data reveals that is both obvious (in that it is definitional) and subtle (in that it is easy to overlook): closed sales data is not the only data in any market, as it omits, most specifically, Manhattan lofts that are offered for sale but not yet sold in any given period, as well as Manhattan lofts that were offered for sale and then taken off the market without selling.

The selection bias in my blue / not blue Column “L” as a window on how well loft owners predict buyer price interest is that it considers only loft owners who originally (blue) or eventually (not blue) predicted what asking price would lead to a deal that closed. In other words, only successful owners (those who become “sellers”) are included.

My excuse is that I am not as interested in those data points and that they are, in any event, relatively more difficult for me to track. (So much data, so little time ….)

about the colors …

The Master List also has green fill in Column “F” to highlight lofts that sold above the last asking price, yellow fill in Column “I” to highlight lofts that sold at the last asking price, some reddish fill in Column “K” to indicate if the loft found a contract within 30 days of the original listing date, and even a purplish fill in Column “B” if I have blogged here about that loft sale. You will also find the occasional red numbers (not fill, but character colors) which i have started to use to highlight a number that I think is weird, or interesting, or otherwise special; though I leave it to you to figure out why in each particular.

Posted in market trends Tagged with: , , , ,

Manhattan Loft Lab at 40 West 15 Street features building record, failed marketing, opposite styles, + more!

the good news: loft #6A overcame an awkward footprint to sell over ask

The sale a month ago of the “2,100 sq ft” Manhattan loft #6A at 40 West 15 Street is a fascinating window on a variety of topics, but let’s start with the one that made these ballsy sellers happy: to market on March 17 at $3.125mm, they found a buyer (several buyers?) and a contract by April 5, and closed on May 15 at $3.325mm, two million dollars more than they paid eight years earlier.

Here’s what they sold: a ‘no details overlooked’ renovation that features ‘painstakingly restored wood beam ceilings’ and that, with a renowned architect’s help, made lemonade out of lemons by “embody[ing] the essence of open-plan large living while incorporating separation and privacy in its well-designed floor plan”. The market fact that this space is worth 20% more than any loft in this longtime Flatiron coop is confirmation that The Market will love design and finishes that are quintessentially loft-y, even if the “well-designed floor plan” means the two sleeping areas lack windows.

the oh-so-lofty loft, with kitchen way in the distance, restored beams, exposed piping, 12 windows of north light and views (Empire State!) (photos by Sotheby’s, obvs)

Here’s that well-designed floor plan (and awkward footprint):

the 2 (or 3) BRs have skylights, the master + BR/library have glass doors (as in the LR photo above), but light back there has to be an issue

That 900+ sq ft great room is a (errr …) great space for entertaining, with crowds no doubt drifting north to the 12 windows (Empire State Building + lots of sky), with this beautiful large kitchen in the corner:

’nuff said: “top-of-the-line appliances, Caesarstone counters and stainless steel rolling breakfast bar”

If people tell you that “no one” will buy a loft with bedrooms that lack windows, you show them this loft (and you’re welcome).

one neighbor is jealous

When loft #6A was brought to market on Green Beer Day at $3.125mm, the other folks on this top floor were three months past a marketing campaign that was brief (at two months) and unsuccessful (at $2.95mm). The “2,000 sq ft” next door loft #6B is beautiful in its own right, but so different in style as to be surprising that the pair are in the same building. From the ceilings to the flooring, this is more a black and white palette, with a single cast iron column establishing classic loft cred.

and all that south light! (pix here by Douglas Elliman)

The footprint is equally awkward as next door, but all but the guests sleep with windows:

again, lemons from lemonade

Will the success of #6A bring these folks back to market? Maybe, but the #6B owners were on from October 21 to December 22 at $2.95mm, well more time than it took #6A to negotiate multiple offers into a contract $375,000 higher. For present purposes, what is striking to me is the quick success of one loft and the lack of success of the other. Well, that, and the fact that these two lofts look completely different.

there is yet another Manhattan loft style on display, 3 floors below

The folks who sold loft #3B just two months before #6B came to market made very different style choices than in either  of the top floor lofts and they ‘solved’ the awkward footprint in a very different way than the #6B owner. That, and they were successful at a price that should have given the #6B owner confidence in coming to market at $2.95mm.

They squeezed a lot of utility into (almost exactly) the same awkward footprint on the third floor:

no kids here, just a master + 2 guest rooms, plus den, plus LR, plus office (not the same grand entertaining space as upstairs, IMHO)

This layout manifestly worked for the woman who just sold it (possibly, for the new owners as well), but the result leaves a reduced sense of ‘volume’ than in either of the 6th floor lofts.

looking through the LR to the DR and the light, with the den on the left

Volume or no, this loft flew off the shelf: to market on June 3 last year, in contract two weeks later, and closed on August 25 at the full ask of $2.75mm.

Hence, the #6B owner came to market two months later at ‘only’ a $200,000 premium to this sale, with arguably a more sophisticated layout and renovation and the light from being three floors higher (with One WTC views). I, like him, no doubt, am surprised that #6B couldn’t negotiate to a deal after this neighboring sale.

On a side note, however awkward I find the “B” line footprint to be, it is evidently rather flexible. Look at the very different locations for the kitchens in the two “B” floor plans above. This is just one reason why I love real Manhattan lofts (in buildings converted from prior non-residential use, mostly in the 1970s and 1980s). Take virtually any “apartment” building, or most (if not all) newly built “loft” buildings, and the kitchen on one floor is going to be in exactly the same place (and likely be exactly the same size and configuration) as in every other unit in the same line. And if there were the possibility of different layouts, the coop or condo board is likely to rely on a no-wet-over-dry rule to prevent much variation. (Rant, ended, resuming ….)

sellers well rewarded, and they earned it

Did you forget that italicized number in the opening sentence, way up top? The folks who just sold loft #6A above ask at $3.325mm bought the loft on June 23, 2009 for … (you can guess, by now) … (but let’s draw it out) … $1.3mm. That full listing history is a doozy, and merits a column for annotations:

Mar 17, 2008 new to market $2.195mm 1Q08 was The Peak of the Manhattan market to that time
Sept 4 contract took too long to get to contract (11 days before Lehman’s bankruptcy filing)
Oct 21 back on market $1.795mm buyer got cold feet, or lost wealth as stocks dropped??
Oct 22 $1.85mm seller re-thinks pricing, mis-perceiving the peril
Oct 24 hiatus more re-thinking??
Dec 5 back on market $1.795mm “chasing the market down” was a saying back then
Feb 4, 2009 $1.695mm still chasing …
April 15 contract seller relieved, but unsure if deal will close, right?
June 23 sold $1.3mm 40% off original asking price

(I’ve ignored the week in February that StreetEasy has the loft “sold”, as it didn’t; this was likely someone hitting the wrong key in updating a listing.)

If you weren’t paying close enough attention to the overall Manhattan real estate market at that time, you won’t remember qhite how traumatic the market was after the stock market (and “lending” institutions) reacted to Lehman’s bankruptcy filing on September 15, 2008. Properties that closed in that first calendar quarter of 2008 recorded the highest prices ever observed in Manhattan (at a time when the overall US residential real estate market had been in a trough for five or more quarters), and by the end of the third quarter the bottom fell out. Having blogged it in real time (check the archives!) I know there was a constant tension faced by buyers as 2009 played out: yes, prices are down, but how much lower will they go?? The only sellers who closed in the six months after Lehman were sellers who really needed to sell; everyone else went to the sidelines.

Of course I have no idea what the June 2009 seller was really thinking, or what pressures (financial or otherwise) he may have been under then. But there’s a good chance that his real estate life wasn’t too bad, compared to many other early 2009 sellers. You won’t find it on StreetEasy, but our listing system shows when he bought loft #6A (because it was a Corcoran sale). The 2009-seller-at-$1.3mm bought the loft way back in 1990 for $551,511. So unless he over-leveraged this asset in between, he actually walked away from that June 2009 closing table with a pile of cash and a capital gains tax bill. (Because of our listings system’s rich history, this sort of detail is included on my Master List of Manhattan residential loft sales under $6mm.)

Buyers who went into contract when the recent #6A sellers did (mid-April 2009) were, indeed, ballsy. They didn’t know it, but what I came to call The Thaw was just beginning. (I didn’t know it either.)  Hence, they just sold at $3.325mm the loft that they bought eight years earlier for $1.3mm. Sure, they did a lovely upgrade in between, spending more than a few bucks, but if any loft owners ‘earned’ a huge return, it is these June-2009-buyers-turned-May-2017-sellers.

I actually talked about these sellers as buyers, as an aside in a blog post about the next sale in the building, when loft #5A sold for $1.8mm nine months later. My April 9, 2010, closing at 40 West 15 St relieves ALL shareholders, is worth a read, if I do say so myself. If you lack the patience at the end of this long blog post, here’s the last sentence:

In a rational market, #5A and #6A would not trade 9 months apart with a half-million dollar gap.

Point being, there was no rational market in those days.

Posted in loft neighborhoods flatiron Tagged with: , , , , , , , , , , , , , , ,

65 West 13th Street loft owner bites bullet, finally becomes seller

how to make an impression on The Market

The mark of a serious seller is forcefully responding to negative feedback. The guy who just sold the beautiful “2,341 sq ft” Manhattan loft #3H at 65 West 13 Street (The Greenwich) probably had to swallow pretty hard, but was committed enough to find a market clearing price that he did this:

Jan 10 new to market $4.9mm
Feb 7 $4.3mm
Mar 9 contract
April 25 sold $4.2mm

He hadn’t quite been ready or willing five-plus years ago:

Sept 11, 2011 new to market $4mm
Jan 5, 2012 $3.95mm
Feb 17 off the market

Back in the day, dropping the price $50,000 didn’t do anything to generate buyer interest. (A 1% drop is purely cosmetic, as there are relatively few buyers who’d be interested in ‘the high 3s’ who wouldn’t consider an offering at 4-dot-zero.) Back in the day, he didn’t want to sell enough to compromise. (Presumably, he didn’t need to sell at all.)

Different story this year: instead of waiting four months to make a tiny change, four weeks was enough this time to prompt a 12% drop, and he then was willing to talk to the buyers who emerged, and cut another $100,000 off his ask to get a deal done. Contract signed within two months, 14% off the original ask, or $700,000 off.

Damn nice work.

when you love to renovate a loft, you might do it twice

The broker babble is very enthusiastic about the condition of this loft, but to my (jaundiced!) eye not over the top. There’s enough detail (so much detail!) that I suspect this loft is truly one that needs to be seen to be fully appreciated. (I won’t attempt to paraphrase, but it is worth a full read.)

Finishes aside (and they are wonderful), the scale of the place impresses me. The main part of the loft is wide (roughly 25′ by 78′) and ceilings are 13 feet. (It would be a classic long-and-narrow, but for the stub of the entrance gallery.) The ceilings are high enough that the front windows are ten feet. There’s not much in terms of structural elements that is classically loft-like (the one obvious column in the great room has been encased, alas, and if the three N-S supports are interesting, it’s not evident any longer), but the volume speaks for itself.

that’s a pretty big 2BR footprint, with a long gallery (foyer) to build suspense

 

can you feel the suspense??

If I had to quibble (force of habit!), I’d make two points about the layout: you have to walk through the dining area (around the table) to get to the great room and there’s no closet in the second bedroom (unless I’m mis-reading some squiggles on the floor plan). But otherwise, this is a wonderful layout.

I read the two sets of babble and the two floor plans as the same, with the exception of two triangles. The new triangle is the newly configured kitchen island, and looking at that photo reveals a new backsplash but not new cabinets or appliances. The old triangle was a raised platform in a corner of the great room on the circa 2012 floor plan. Otherwise, the walls and rooms seem the same, down to the Venetian plaster that was omitted from the more recent babbling, although the flooring is different (and runs E-W instead of N-S).

the present kitchen

the former kitchen (different lighting, too)

I love it when Manhattan loft owners spend money on things that increase their enjoyment of a loft, which is the way I interpret the change in the kitchen island. On paper, it’s not much of a change to take a rectangular island and make it a triangle, but these things aren’t constructed (or demolished) on paper. Personally, I love it as a triangle, more than the former island. And it makes me wonder if that was the first choice that was made, with the decision to replace the flooring one that followed. But I digress ….

Venetian plaster is another element that is ‘worth it’ if it makes you happy as a loft-dweller. The folks I’ve worked with who’ve done it have spent a fortune to do it, and they love the result. Not everyone appreciates it, however, so it is not necessarily an improvement that a seller can expect that a buyer will value enough to pay a premium for.

The texture is apparent (and lovely, to these old eyes) in the foyer / gallery photo above. But I wonder how the dining area looks in real life, after seeing this psychedelic lighting effect:

dramatic effect, but to your liking??

I really hope that the striations in this photo are the result of the camera interplay with a (too-bright?) light fixture ….

some loft owners are tempted to overly value their improvements aesthetic choices

The more care (and money) that a loft owner puts into renovations, and the more subtle the improvements, the greater the temptation will be for that owner to expect the general buyer pool to over-pay for the renovations. It’s not true in all cases, but the temptation is real, and it can result in a listing history like the one above in 2011-12.

Whether or not that was part of the owner’s thinking back in the day, it was certainly not the case this year, as demonstrated by the prompt $600,000 price drop. To repeat: damn nice work.

if only there were a nearby comparable loft from 2011 and/or more recent …

I’m curious about the degree to which loft #3H was over-priced the first go-round, and about how its market-clearing recent price fits into the overall market. Of course, neither life nor the overall Manhattan loft market is perfect, but sometimes things turn out pretty well. In this case, there is a single loft in the same building that has some significant similarities to loft #3H and that was on the market around the same time as #3H, twice. The 2-bedroom + 2-bath “1,898 sq ft” loft #8D is not a perfect comp, by any means, but it is good enough to talk about.

We’ll have to consider the appropriate adjustments for utility (#3H has the additional utility of a dining area and den, with lots of storage; #8D has an interior office), view (#3H doesn’t have one, while #8D is “flooded with western light”), and condition (a dicey element to compare based only on babble and photos), but the parallels are intriguing:

April 28, 2011 new to market $2.9mm
May 11 contract
July 6 sold $3,182,500
(pause)
June 9, 2016 new to market $4.25mm
June 27 contract
Aug 22 sold $4.175mm

It may help to compare and contrast these two in dollar per foot terms:

July 6, 2011 #8D clearing price $1,676/ft
Sept 11, 2011 #3H unsuccessful $1,709/ft
Aug 22, 2016 #8D clearing $2,200/ft
Jan 10, 2017 #3H unsuccessful $2,093/ft
April 25, 2017 #3H clearing $1,794/ft

Both times that #3H came to market the most recent 2-bedroom closed sale in the building was #8D, so whether the #3H owner considered the two lofts truly comparable or not, The Market was quite aware of the then-recent sales.

With the cold-hearted and clear-eyed perspective of hindsight, The Market absolutely thought that #8D was worth more on a $/ft basis in Round One, with #8D selling quickly above ask and #3H sitting for five months at a tiny premium (2%); while the contrast was even worse in Round Two, when both found clearing prices, but #8D was at a significant premium to #3H (23%!), before adjusting for time (fortunately, for purposes of this exercise, the StreetEasy Price Index for the overall Manhattan residential real estate market was up less than 1% from August 2016 to April 2017). In other words, The Market knew that #8D had cleared at $2,200/ft before #3D came out at $2,093/ft, and wouldn’t even grant #3H the $1,837/ft it was asking after that big price drop in February this year.

Like the #3H owner, I would not have predicted this, but we are all now in a position to rationalize the results. First, I take it as a given that #3H is in significantly better condition than #8D, though I concede that the superior quality of finishes in #3H may be a matter of taste (and that Venetian plaster is hard to value!).

Second, the light! As bright as #3D may be with those ten-foot southern windows, it can’t compare to open western light five stories higher that clears nearby buildings. For buyers who must have light, #3H can’t compete, and some of those buyers may ‘overpay’ for that feature. Third, for buyers who have to have two bedrooms, each loft will satisfy, but one could be bought for fewer dollars (price per foot notwithstanding); and for buyers who’d stash a second kid in a dark room, #8D can satisfy, while #3H cannot.

Fourth, while the layout of #3H is (to me) luxurious, and a far superior footprint for entertaining and grand living, for others the ‘extra’ space that makes it luxurious also makes it (somewhat) more expensive in absolute dollars. That parenthetical is carrying a lot of water, as the facts developed that the extra space in #3H was worth exactly $25,000 more than #8D (after netting out the light), but that detail wasn’t specifically proven until eight months after #8D sold.

The more I look at this, the more surprised I am. It is good that I am still young enough to learn ….

Posted in loft neighborhoods village Tagged with: , , , , , , , , ,

funny math as first Sterling Mason loft resells: when is a $200k gain not a gain?

(you know this) when your transaction costs far exceed the ‘gain’

The suburbanites who just sold the first loft to resell at the uber-loft conversion slash new construction Sterling Mason, the “2,042 sq ft” Manhattan loft #4A at 71 Laight Street, really wanted to sell (or they don’t care so much about money). Having bought in September 2015 for $3.9mm, they sold on April 28 for $4.1mm. In arithmetic, that’s a gain of $200,000. In real estate, however, the computation is not a simple A – B = C, because it cost them something to get that $4.1mm.

Reduce that $4.1mm by the big ticket expenses of $205,000 sales fee (5%, per our listing system) and again by the New York Star and New York City transfer taxes of $74,825 (1.825%) and they are slightly below water, at $3,820,175 in proceeds received at closing. But wait … there’s more! Figure they paid for title insurance when they bought (at least 0.6%, or $23,400) and Property Shark shows that they took a $1.4mm mortgage, on which the mortgage recording tax would have been $75,075 (at 1.925%). The new big ticket math (before round trip lawyer’s fees, condo fees, miscellaneous fees; did they have to make a capital contribution on purchase??) looks like this:

A = $4.1mm less $205,000 less $74,825 = 3,820,175

minus

B = $3.9mm plus $23,400 plus $75,075 = $3,998,475

equals

C = ($178,300)

In cash terms, they brought to the closing table to buy in 2015 (net of these expenses and the mortgage) $2,598,475 or so and got back at the closing table to sell in 2017 (net of those expenses, after paying the mortgage) $2,420,175 or so, realizing that loss of $178,300.

In other words, taking a hit of $178,300 was preferable to remaining an owner of loft #4A. How painful this was depends on what $178,300 means to them.

They didn’t set out to do this, of course:

Feb 3 new to market $4.5mm
Mar 7 $4.25mm
Mar 24 contract
April 28 sold $4.1mm

But the numbers are close enough that even a full-price sale at the discounted ask in March would have resulted in a net loss.

cold comfort is out-performing The Market

The owner’s financial hit aside, the loft appreciated in value over the time they owned it (that apparent $200,000 gain). From the time they bought (September 2015) to the time they sold (April 2017), the overall Manhattan residential real estate market, as measured by the StreetEasy Price Index, was up 2.39%. The $200k gain represents just over 5% of the purchase price. Congratulations!

But new development sales are fuzzy for these stats, as they typically have an abnormally long time between contract and closing compared to coop or condo resales. In this case, the StreetEasy history shows that loft #4A was already in contract by the time it hit public awareness in July 2014. If you looked back at the StreetEasy Price Index for September 2014, The Market was up 7.6%. This is just one of the ways that new development sales distort market stats.

neighbors may not appreciate the dirty laundry being aired

There is no question that the recent sale was an arm’s length transaction, one that is a specific market fact from which comparisons will be drawn. For neighbors, the #4A resale is a Bad Comp, most specifically in the “A” line. Click on the Past Sales tab for Sterling Mason on StreetEasy and you will see that two neighbors paid well more than the recent #4A sellers for their identical units (#3A was bought for $4,067,908 20 days before #4A was purchased, and #5A was bought for $4,276,650 two months later), while one on a lower floor (which would be expected to be worth less, at least to an appraiser) paid the same (#2A, bought at $3.9mm two weeks before).

If another similar unit in Sterling Mason were to come to market soon, that unit would face the headwinds that #4A cleared at (only) $4.1mm on April 28. Unless a buyer really wants to live in this building, it will be a while before the upstairs and downstairs neighbors will walk away from the closing table with meaningful (net) gains. Assuming, of course, that The Market is rational.

meanwhile, back in the loft …

The next “A” line buyer might really love the place. For a 33-unit condo, the amenity package is rich (per the building babble):

Library Lounge, Interior Courtyard, Private Fitness Room with Yoga & Exercise Studio, Children’s Playroom, Parking Garage, Private Storage, Bike Storage, Concierge, Doorman, Full-Time On-Premise Resident Manager

The amenities are priced accordingly, at $1.61/ft for common charges per month for loft #4A, with another $1.11/ft for real estate taxes.

The interior of the loft is consistent with its heritage and era: a Morris Adjami design, sold in the latest generation of Tribeca uber-lofts, with only the most proper proper names for appliances and materials. The coffered ceilings and cast-iron columns provide classic cred, and the layout (not quite a long-and-narrow, as the bedroom wing is much wider than the public wing) provides volume: “2,042 sq ft”, with only two bedrooms.

With all this deluxe luxe, it seems churlish to point out that the sense of volume is not enhanced by ceiling height, but … 9’6″ (ouch).

The “A” line is the smallest in the building, and appears not to have gotten the premium layout (note the window count in the floor plan). Other units are much larger, and seven neighbors paid more than $9mm to own here. As I said, the next “A” line buyer might really love the place, but the #4A data point will be a Bad Comp for a while.

a final note, courtesy of Mike Myers

I hit many of the new development points above in my March 27, Mike Myers doesn’t care about super luxury Tribeca loft market, because (money), featuring an even larger loss on a new development resale. But these paragraphs are pretty good, I think:

File this one under The New Development Market Is Different Than The Resale Market. This project (443 Greenwich Street) looked a lot better in the Fall of 2014 than it did two years later, or now. Perhaps the story is the simple one, oft repeated in the media in the last year: softness in the luxury market. After all, at least ten lofts were sold at 8-figure prices in this single project (a quick scan of the Past Sales tab on StreetEasy tells you that). Apparently, the supply of $10+ million buyers is finite. (Go figure.)

But I think there is another aspect of this (emphasis on I think): the new development Manhattan loft market is (I think) more susceptible to emotion-based swings than the resale loft market. (Call it herd mentality, if you prefer.) In part, this is a commodity thing.

Lofts tend to be sufficiently different from each other, even within the same building, that they can more fairly be given the over-used broker babble label “unique” than typical Manhattan “apartments”. Even lofts with the exact same footprint in mature residential loft buildings tend, over time to look very different from each other, as owners with different tastes and resources change. Not so for the four “A” line units at 443 Greenwich Street, all with the exact same “unparalleled combination of space, luxury finish, location, and privacy”, as the Sponsor Babble put it, on the exact same footprint.

Posted in loft neighborhoods tribeca Tagged with: , , , , ,

lily gilded, 161 Hudson Street loft sells after deep price cut

what a difference a million dollars can make

One way to measure the difference between the seven weeks that the “2,314 sq ft” Manhattan loft #2B at 161 Hudson Street spent on the market in the Spring of 2016 and the five weeks that it spent on the market in the Spring of 2017 is by time (seven being, you know, greater than five); another way is by asking prices ($5.75mm then being much greater than $4.95mm more recently); but the most significant difference is result, with the more recent marketing having succeeded in generating the contract that closed on May 24 at $4.8mm.

Only the insiders know what was going through the owners’ minds last year, but that brief marketing suggests that there just wasn’t any market response (perhaps, few showing appointments). It wouldn’t surprise me to learn that the owners blamed their 2016 agents for the lack of response, as they not only changed prices dramatically when they came back to market around the same time of the year this year, but they changed agents.

The happy result (for the former owners, recent sellers) is that they got a deal only 3% off their asking price. Almost a million bucks off the first ask of 2016, but who’s counting? And they got that deal after only 5 weeks on the market, and closed only 10 weeks after starting. It is hard to get a more successful asking price than that.

they bought a beautifully renovated Tribeca loft in 2013 and sold a very different beautifully renovated Tribeca loft in 2017

People with sufficient financial resources can adapt even a beautiful Tribeca loft any way that they like, of course. These recent sellers bought a “beautifully designed and renovated … Architect’s residence” in April 2013 for $3.7mm. That iteration featured “exquisite custom mahogany built-ins throughout, stunning walnut floors [… , a] chef’s kitchen … completely customized and featur[ing] Poggenpohl cabinetry, with SubZero and Miele appliances”, as well as custom closets, central air, and Crestron home automation. They made significant changes to the overall look and feel of the loft, and to that chef’s kitchen, probably none of which generated many additional dollars in value on resale.

When they sold last month, the loft was fairly (and enthusiastically) described as “perfectly renovated and light-filled […,] the epitome of chic downtown style[, e]xpertly blending the grand industrial scale of Tribecas best architecture with a warm material palette”, featuring “extensive built-ins, high ceilings, central HVAC”, an “entry hall … with a built-in bench crafted from vintage wood and painted diagonal wall panelling”, (the same) “monumentally scaled original columns [and] wide-plank Brazilian walnut flooring, [and new] beautifully crafted exposed copper pipe lighting, electric solar shades”, and a master suite “featuring walls clad in reclaimed wood planks, which are also repeated on the ceiling of the en-suite bath”.

The partly-old partly-new kitchen

features top of the line appliances including a Viking range and hood, and a Sub-Zero fridge. Integrated into the Poggenpohl cabinetry are a Miele dishwasher, microwave, and espresso/cappuccino machine, as well as a Gaggenau wine fridge and a roll-up door appliance garage. Open wood slab shelves provide additional storage and complement the handmade aesthetic of the white-glazed Dutch tiled walls and the encaustic tile floors.

It is impossible to say from the two sets of broker babble whether the coffee machine or appliance garage is new, but it appears from the photos that the Viking range and hood came with the loft in 2013 (uncredited in that babbling?), yet we know that the Poggenpohl quotient is much reduced and the overall look completely changed, without changing most appliances (at least) or the footprint.

full Poggenpohl with same lower cabinets, same counter, and (dare I say) restrained lighting (thanks Warburg, on all Before pix)

new tile work *everywhere*, new ceiling, and open shelves (thanks Compass, on all After pix)

Aside from the functionality change from upper cabinets to open shelves, these are cosmetic changes. A great many cosmetic changes, swapping out expensive well-crafted elements for different expensive well-crafted elements. (Whether the Poggenpohl color changed, I can’t say for sure; but it certainly looks from the cabinet contrast with the old white floor as though the recent sellers replaced the remaining cabinet fronts to bright white.) It’s a free country, and people with money are free to demolish lovely cabinets and tile work, and to replace those elements with a style that suits them. I just don’t see any added value here, from the 2013 kitchen to the 2017 kitchen.

I won’t beat this horse further, but will add two more pairs of Before and After photos, each involving very different aesthetic judgments and some money:

such dark materials! and a completely different lighting scheme

opposite angle, but same area … just completely different cosmetics, with “beautifully crafted exposed copper pipe lighting”

let’s call this lighting ‘dramatic’, from back in the day, in an otherwise conventional master suite

a different sort of idiosyncratic choice: “walls clad in reclaimed wood planks”

Just to highlight two elements in the After pair, above … I consider the copper lighting in the public area of the loft and the wood walls in the master suite to be Love It Or Hate It elements, in terms of appeal to the broad potential buyer pool. The sort of choices that the Conventional Wisdom strongly argues against if (a) resale value is a consideration the owners care about when they renovate, or (regardless) (b) the owners think they might want to sell within three or four years. And neither of these elements came cheap.

performance against The Market runs slightly in favor

If the StreetEasy Manhattan Price Index is the best single-number proxy for the overall Manhattan market (as I continue to think that it is), the overall Manhattan market is up 22% from April 2013 (when these sellers bought) to April 2017 (they sold in May, but April is the most recent month reflected in this iteration of the still-awkwardly-located chart; select “Manhattan (All)” and hover carefully!), having risen from $817,151 to $993,592.

That implies that had the 2013-buyers-turned-2017-sellers done nothing to the space other than keep it well maintained, the loft would have been worth more or less $4,514,000 when they sold it, instead of the $4.8mm observed value. That’s not a bad outcome!

It is, of course, impossible for an outsider to know what those folks paid for the wood-clad walls, all that new kitchen tiling (and demolition), and custom copper lighting, etc, etc, etc, but it is unlikely they spent as much as $300,000. But if their budget approached $300,000, the entire affair approaches break-even status compared to overall market expectations.

I would typically add here a comment along the lines of ‘it doesn’t matter so long as they got enjoyment out of the loft, and they evidently could afford it‘, but for one niggling fact: they were asking $5.75mm for the ‘upgraded’ loft in April and May of 2016. That suggests to me that they (or their first agent team) believed that their renovation added significant value to the loft. (The increase in the StreetEasy Price Index to April last year was only 20%, implying an ‘unimproved value to that point of more or less $4.44mm.)

It is inconceivable to me that they spent anywhere close to a million bucks doing the ‘improvements’, but that first asking price is evidence that somebody thought the loft had undergone a 7-figure improvement. Granted, they didn’t hold that belief for very long, but still ….

we’ve been to this corner of Hudson and Laight before

Because the Intertubes never forget, you can ready the post I wrote way back on May 28, 2013 when these recent sellers became buyers. The big story then (you’d have to see 161 Hudson Street loft to hope to know why it sold 53% above 2009, 9% above ask) was how brave that 2009-buyer-turned-2013-seller was in buying as The Thaw was beginning following the Nuclear Winter that chilled activity and dropped prices after Lehman filed for bankruptcy in September 2008. (Anyone remember those days??) A second story was that the loft had changed relatively little in an architectural sense, if not a cosmetic sense. The more things change ….

Posted in loft neighborhoods tribeca Tagged with: , , , , ,

Mike Myers doesn’t care about super luxury Tribeca loft market, because (money)

yes, Virginia, the rich are different from you and me

Lots of people, when faced with the choice to live in a newly purchased spectacular loft in Tribeca or losing well more than a million bucks by selling right away, would avoid the monetary loss and accept their fate by living in luxury, while awaiting a more propitious time to sell. But people who have to sell might not have that option, and people who don’t care about money … don’t care. I’d put Mike Myers in the latter rather than the former category, as exemplified by his noteworthy resale of the the “4,241 sq ft” oh-so-lovely oh-so-luxurious Manhattan loft #5A at 443 Greenwich Street.

Thus, I don’t think The Real Deal got it quite right last week:

Comedian Mike Myers can’t be laughing now. The “Austin Powers” star just sold his never-lived-in Tribeca condominium for a loss.

Not laughing, probably; not crying, certainly. He volunteered for this, beginning over two years ago:

Sept 29, 2014 new to market $14.25mm
Oct 9 contract
Der 6, 2016 bought $14,675,019
Jan 11, 2017 new to market $15mm
Feb 7 contract
March 16 sold $14mm

Obviously, this was a new development purchase. Obviously, in the 26 months between signing the contract and having to close, Myers changed his mind. Or maybe his accountant told him he needed to take a loss somewhere.

Obviously, he’d have lost money even if he had sold at his resale asking price of $15 million, as he was set to pay his agents (5%, according to our system) and city and state transfer taxes (1.825%). At the $14 million resale price, those transaction costs reduced his cash (increased his realized loss) by nearly a million ($955,500), to $1,630,519:

paid $14,675,019
received $14mm
commission ($700,000)
transfer taxes ($255,500)
net $13,044,500
loss (big picture) $1,630,519

That’s a lot to not laugh about, but remember: he volunteered.

he probably saw it coming (too late, of course)

A click or two from the Active Listings tab on the StreetEasy building page shows that the same loft on both the second and third floors took until at least November 2016 to get to contract (they haven’t closed yet), while the Past Sales tab shows many more sponsor discounts than full asking price sales, including the sad fact (for our Canadian comedian) that loft #4A didn’t find a contract that stuck until May 2016 and then sold in September 2016 for $13,753,000.

The writing, as they say, was on the wall, long before Myers finally bought #5A from the sponsor for $14,675,019 three months ago.

new development sales can be weird

File this one under The New Development Market Is Different Than The Resale Market. This project (443 Greenwich Street) looked a lot better in the Fall of 2014 than it did two years later, or now. Perhaps the story is the simple one, oft repeated in the media in the last year: softness in the luxury market. After all, at least ten lofts were sold at 8-figure prices in this single project (a quick scan of the Past Sales tab on StreetEasy tells you that). Apparently, the supply of $10+ million buyers is finite. (Go figure.)

But I think there is another aspect of this (emphasis on I think): the new development Manhattan loft market is (I think) more susceptible to emotion-based swings than the resale loft market. (Call it herd mentality, if you prefer.) In part, this is a commodity thing.

Lofts tend to be sufficiently different from each other, even within the same building, that they can more fairly be given the over-used broker babble label “unique” than typical Manhattan “apartments”. Even lofts with the exact same footprint in mature residential loft buildings tend, over time to look very different from each other, as owners with different tastes and resources change. Not so for the four “A” line units at 443 Greenwich Street, all with the exact same “unparalleled combination of space, luxury finish, location, and privacy”, as the Sponsor Babble put it, on the exact same footprint.

The only difference among them is whatever different angle of sun or rooftop the different floor heights might afford.

Sometimes the proverbial early bird gets the proverbial worm, and original (early to contract) buyers do better than original (later to contract) buyers. Not here, not for our Canadian. His October 2014 contract price was $922,019 more than the May 2016 contract price for the exact same unit, one floor below. At this dollar level, so many dollars (nearly a million) is only a difference of 6.3%. Still: $922,019 is a lot of dollars.

efficiency is in the eye of the beholder in Manhattan residential new development sales

Sponsors have tremendous advantages over buyers of new development properties. They are looking at the big picture (total sellout), but more critically, they know what demand is like, including what prices all buyers are willing to pay. I am very curious to see what the second and third floor “A” lofts go for. In contrast to our Canadian (again, $14,675,019 on a long ago contract) and loft #4A ($13,753,000 on a May 2016 contract), these two lofts didn’t find contracts that stuck until 2017 (long after #4A had closed). If those two (late) buyers paid anywhere near $13,753,000, they probably overpaid. Time (and ACRIS) will tell.

Posted in loft neighborhoods tribeca Tagged with: , , , ,

5 years later, Tribeca loft adds $1 million to building values

crude measurements of value are still measurements, right?

The “2,068 sq ft” Manhattan loft #5S at 459 Washington Street in extreme northwest Tribeca just sold for $3.625mm in a somewhat newsworthy transaction. (“Somewhat newsworthy” in the sense that the Luxury Listings wing of The Real Deal media clan reported it last week because the new owner runs a “healthy cafeteria chain” (!!).)  The big picture detail of interest to Manhattan Loft Guy, however, is that this is the first sale in this small (12-unit) residential loft building in nearly five years, following a three year period in which four units sold (Past Sales tab on StreetEasy, here), the last of which was not quite a million bucks short of the recent sale.

Before breaking that down further, let me take a swipe at the Luxury Listings part of the Manhattan Media Division of the Real Estate Industrial Complex. The only thing reported as a listing history is that the loft had been “asking $3.8 million in 2014”, which suggested to me that this was a private sale. Nope! Had Luxury Listings gone to StreetEasy, the reporter would have seen that the loft had, in fact, been offered for sale from May 2013 to April 2014 for from $3.95mm to $3.875mm, but that it had also been offered for sale beginning in May 2016, the offering that resulted in the contract that the cafeteria guy signed in January.

Here’s the full listing history from StreetEasy:

May 1, 2013 new to market $3.95mm
Sept 26 hiatus
Nov 5 $3.875mm
April 17, 2014 off market
May 5, 2016 new to market $3.95mm
Sept 19 $3,799,500
Jan 20, 2017 contract
Mar 8 sold $3.625mm

A couple of things …. These sellers really wanted to sell at $3.95mm. These sellers learned that $3.95mm was too much for The Market to swallow in 2013 and in 2016, but they also learned to make a bigger price cut to find a buyer.

It’s odd that Luxury Listings didn’t find this full price history, because they grabbed listing photos from the 2016 marketing campaign. Weird!

Look at the first six listing photos in the Luxury Listings piece: they all have the Douglas Elliman watermark. The next set of listing photos is a slightly different size, with no watermark. Go to StreetEasy for the explanation: the latter set is from the (successful!) Sothebys marketing effort. In other words, Luxury Listings went to the trouble to find more listing photos from 2016, without noticing that there had been a marketing campaign in 2016. Sad!

past sales history history is instructive, if not determinative, in a small Tribeca loft building

There’s no shame in asking more than The Market wants to spend, of course, as (repeat after me) comping is hard. Especially for small building old school Tribeca lofts (which tend to be unique), and especially where there hasn’t been recent sales activity in the small building.

The last sale in the building was #6N, slightly smaller than the “S” units at “1,945 sq ft”. With one major exception, however, it sounds much like #5S, with an unspecified but “gourmet” kitchen, and classic loft elements. The light sounds better on the top floor facing north (“three sunny exposures”) but the element that breaks this unit as a comp is the private roof deck, over 400 sq ft. So the $2.65mm clearing price in October 2012 needs more adjustment than is easy to make to be very useful as a comp for #5S. (I’m gonna ignore it, as there are easier ways to skin this cat.)

The two prior sales in the building were the fourth floor pair, with #4N selling for $2.2mm in January 2011 and #4S for $2.6mm in July 2010. Not a lot of bragging in either listing description (same agents on both, with same generic descriptions), so it is hard to appreciate the stark difference in value without having seen both units.

If you take #4S as the most appropriate comp for #5S, we’d adjust for time and condition (#5S is much nicer, based on broker babble and listing photos). No need to adjust for light or view, even though #4S claimed “spectacular water views” and #5S only “an abundance of natural light”: obviously, they have the same exposures, and since 2010 the 10-story rental building at 456 Washington Street has gone up just across the street (see the living room “view” that leads the #5S listing photos … brick!). So the former (presumed) premium for a water view has been lost, while #5S enjoys a much higher level of finishes than the #4S listing implied for that unit. Let’s ballpark those differences as a wash, if only for lack of principled ways to be precise (and because it makes the math simpler!).

If you take the StreetEasy Manhattan Price Index as a useful proxy for the overall market (I do, but its become a long story), the overall market is up 33% between July 2010 (you gotta hover, $737,336) and December 2016 ($984,463). The observed #4S sale price of $2.6mm in July 2010 thus implies that #5S would be worth about $3.47mm in the just-observed market report from the most recent StreetEasy report.

Pretty darn close to the $3.625mm observed price (4.5% feels PDC, especially given the assumptions made about evening out the former premium for the water view in the #4S sale and the condition premium in the #5S sale).

my favorite listing photo is a classic Manhattan loft element, ready for its close-up

Before leaving northwest Tribeca, I’d like to comment on two listing photos. First, the good news:

love the way the beam is secured over the column

This is something I would marvel at if I were in this space, likely making a nuisance of myself by standing in front of this column, looking up, with a silly grin on my face. Your mileage may vary.

On the other extreme, the photo of “the spacious chefs kitchen” irks me. Nothing undercuts the “spacious” part like a wine fridge outside the kitchen:

most people won’t care, but …

The reason the wine frig looks a bit out of place is that it is a bit out of place, having been plugged into an outlet just outside the kitchen. What a difference it would make in integrating the kitchen if the wine fridge had the same cabinetry on top as the Sub-Zero. Alas.

Manhattan Loft Guy loves loft owners who love lofts

Luxury Listings reports that the cafeteria guy who just paid $3.625mm for his new loft in northwest Tribeca owns a penthouse loft at 130 Barrow Street. That would be this “1,103 sq ft” duplex penthouse loft with a terrace and private roof deck that was marketed as a bit of a project (“awaits your golden touch”) when he bought it in April 2014 for $1.785mm. The cafeteria business must be good!

Now the guy has twice as much space, though he lost his private outdoor space. And he’s about as far (as close, really) to the Hudson, moving all of about ten blocks due south from the West Village to northwest Tribeca.

Manhattan Loft Guy loves loft owners who newly love lofts

One more and I’ll stop, promise, but that deed record leads me in another direction. The cafeteria guy was renting this lovely prewar 1-bedroom with a great view in the West Village in 2014. From there, to that Barrow Street loft (a move of nearly ten blocks due south), and then to the much larger Washington Street loft. Business must be very good!

Perhaps he will stay for a while.

Posted in loft neighborhoods tribeca Tagged with: , , , , , , , , , , , , , ,

simple, right? don’t measure Market Trends by asking prices

but the NY Post doesn’t know that

I did a quick hit on my Manhattan Loft Guy Facebook page after reading this November 28 puff piece from the NY Post, Apartments experiencing the ‘fastest market adjustment ever’, because I’m a skeptical guy (in addition to being a Manhattan loft kind of guy) and because it constantly irritates me how much attention is paid in the real estate press to opinions and anecdotes rather than market facts (actual apartments or lofts actually sold). But this particular piece has irked me enough to re-read it and try to figure out the story behind the single closed sale used (among three other examples of too-high asking prices dropping for still-unsold properties) to ‘prove’ the provocative claim in the headline (fastest market adjustment ever). So now I’m even more irked, irked enough to write more than anyone should on Facebook ….

the premise about the Manhattan real estate market might be true, but the NY Post has no way to know

The provocative quote follows the set-up paragraph:

The overpriced Manhattan real-estate scene has left some homes lingering on the market for more than four years, prompting huge price cuts that make them ripe for the picking, according to experts and stats compiled for The Post.

Before getting to what provoked me most, note how two things are combined: an “overpriced Manhattan real-estate scene” (“scene” must be JournoSpeak for the Manhattan market), causing “huge” price cuts (my, how I hate that word!) for listings now “ripe for the picking” (not sure what that means with over-priced listings, but still). Note that the Post claims two sources for this intelligence: (1) experts and (2) stats compiled for the Post.

While three agents are quoted by name, the only “stats” offered are (with the one exception addressed below) about price drops and days on market. Oddly, while reference is made to other statistics, none of them are provided. There’s this pregnant sentence:

There also have been extreme price drops in the much more affordable range, according to statistics compiled for The Post by real-estate Web site StreetEasy.

This is followed by a single example of a small coop that has been on and off the market for three years, with an asking price that dropped in the last year by 40%. (That’s more an example than a stat, no?)

But here’s what provoked me, and offered the headline for the NY Post, and the social media linkage that inevitably follows this sort of drama:

“Historically, we are now in the midst of the fastest market adjustment ever,” said [the] president of the city real-estate giant Compass.

Fastest. Market. Adjustment. Ever. (Remember that guy.)

If you were an editor of a newspaper, what sort of proof would you like to see to support this provocation? I’d think StreetEasy (or others) could do a chart, showing the velocity of market changes measured by (pick one) median prices for Manhattan coops and condos, or by median prices for just the tippity-top of the Manhattan market, or maybe by changes in days on market overall, or by sales volume compared to inventory (i.e., absorption). We don’t know what the actual “statistics” that were “compiled for The Post by real-estate Web site StreetEasy” are, but we’re told about

  1. Robert DeNiro’s old duplex penthouse at 165 Perry Street, which is asking $19.8mm 18 months after asking $38mm
  2. that small coop at 575 Park Avenue, on and off since 2013, asking $500,000 last year and $300,000 this month
  3. “a buyer [who] got a seemingly incredible deal when a[n unidentified] Village town house sold for $6.8 million [recently, presumably], even though it was listed for $13 million just last year” [remember that townhouse, those numbers], and
  4. an apartment at 150 Charles Street, on the market for 233 days, originally asking $8.99mm and now $7.95mm

That’s it for data, let alone stats. Four over-priced listings, overpriced as long ago as three years, 18 months, seven months, and since last year some time.

Remember The Provocation? Fastest. Market. Adjustment. Ever.

Is that what you conclude from these four factoids? Some notes…

  • only one of the four has actually found its market clearing value
  • we have no idea, from this limited data, whether any of them was actually worth more at some earlier point than it is today

Maybe I am not as smart as the average bear, but I can’t tell anything for these four factoids other than that the sellers and their agents have had difficulty figuring out what The Market for each listing is (has been over its listing history). In other words, without any further support: Dog bites Man. Long-time readers of Manhattan Loft Guy know that I have often noted sales that were a long time coming, and/or that cleared only after significant price drops. Among examples far too numerous to mention:

(As Casey Stengel might have said, you are likely to find at least one such post in every single month in which there are more than a few Manhattan Loft Guy posts since 2006.)

once provoked, Manhattan Loft Guy may push back

Obviously, one thing that irked me right off is what led me to that quick hit on Facebook: using drops in asking prices to demonstrate what The Market is doing, without also considering changes in clearing values, is (a) the wrong way to measure market adjustment, (b) lazy, (c) (as I said on FB) “just another puff piece, as the Manhattan Media Division of the Real Estate Industrial Complex fluffs the Manhattan Sales Division”, or (d) all of the above.

Once irked enough, I will try to find more backstory, as regular readers of Manhattan Loft Guy know. The one closed sale offered to support The Provocation is curiously unidentified in The Post, but I am pretty sure I found it. And it is very odd, for a couple of reasons related to that puff piece. Again, this what we’re told by the Post:

This month, a buyer got a seemingly incredible deal when a Village town house sold for $6.8 million, even though it was listed for $13 million just last year.

But “the house was totally overpriced starting out,” noted Steinberg, who was the listing broker when it sold.

Wouldn’t you think that the smart guy who sold the townhouse for $6.8mm was not the agent who listed it last year, “totally overpriced”? Joke’s on you, it appears.

You can trust me on this, or you can go to that smart guy’s agent profile page and scroll through both closed sales and pending listings. You will find only one listing that matches “townhouse” and “Village” and was brought to market last year and sold this year, and that conceivably fits a sale at $6.8mm off an original ask of $13mm. It’s listed as In Contract both there and on StreetEasy, but it has to have since closed (no deed yet recorded, not yet updated on the agent profile page). Here’s the full listing history from StreetEasy:

Nov 3, 2015 new to market $12.3mm
Dec 2 $11,995,000
Jan 21, 2016 $10,995,000
May 11 $9,995,000
July 1 contract
July 29 back on market $8.95mm
Sept 11 contract
Nov __? sold? $6.8mm?

This isn’t a perfect match for the ‘facts’ recited in the Post, but is convincingly close for me. The principal factual discrepancy is the starting price was $12.3mm instead of $13mm, but I’ve seen enough puff pieces like this to know they either are not fact-checked against public records or use generously rounded figures. Plus, there is no other listing in this agent’s lengthy profile that matches “townhouse” and “Village” anywhere near the right dates or prices.

As the guy said, “the house was totally overpriced starting out,” even though the Post implies it was not “totally overpriced” by him.

Back to my (now-irksome?) point: this sale might be an extreme example of the truism that over-priced properties take a long time to sell, always, and in every market, or it may simply be another example. Either way, I don’t see it as supporting the proposition that the current market is the result of the Fastest Market Adjustment Ever. Not without seeing macro data about trend lines now being much steeper than in comparable periods and/or micro data suggesting that this listing was actually worth a great deal more than $6.8mm at some recent date (micro data such as highly relevant comparable sales histories).

what macro data about Manhattan residential real estate market trends can look like

Unless StreetEasy is pissed at the Post for not using the data compiled for the article (missing, apart from the three still-pending sales), it might have volunteered to run some market trend graphs for the Post. StreetEasy actually makes it easy to visualize broad market trends. You could, for example, go the the StreetEasy Third Quarter 2016 Market Report, scroll down to the graph, and click so that the only monthly trend line you see for the StreetEasy Price Index is for “Manhattan (All)”. But you can tell that the Post didn’t do that, because the trend doesn’t support The Provocation. In fact, looking at StreetEasy’s Index (which uses same-unit paired sales, plus secret sauce), you see that this Index has been flat throughout 2016 (varying by no more than 0.1% from January through September).

Fastest?? Market. Adjustment. Ever. ???

(If you look back into 2015, it gets worse, for the Post: slow and steady monthly increases, totaling 4.2% year-over-year, January 2016 to January 2015.)

What if there were a way to look only at high-end properties?

I have to believe that the Post has quoted The Miller about Manhattan real estate market trends about as often as everybody else, which is a gajillion times. So they know how to reach him. Or, they could have saved the time needed to call and consulted his Third Quarter 2016 Market Report to see (on page 4) that the Luxury niche median sales price (the top 10% of all sales) in Manhattan was up 3.1% quarter-over-quarter and 23.9% year-over-year. You could argue about new development sales skewing this data, as their typically extended periods between contracts and closings may not reflect real-time market conditions very well, but if you are going to assert the opposite (say it with me: Fastest. Market. Adjustment. Ever.), it might be sensible to have some hard data, instead of anecdata.

Let’s leave for another day lamenting (or trying to explain) the fact that The Miller’s trend line for the overall Manhattan residential sales market looks a little different from the StreetEasy Price Index trend line, as for present purposes his trend line (on page 1) shows a modest quarter-over-quarter decline in median prices in Manhattan (-3.1%) but a countervailing year-over-year increase (7.6%) in median prices. Stick that in your provocation.

another odd thing about that unidentified townhouse in the Post

We are now officially at the Manhattan Loft Guy stage of quibbling, a stage that long-time readers are familiar with. It’s simply odd that no address was given for the sole featured sale, while for the other three market factoids, addresses were given. More odd still, the address is, in fact, 150 Charles Street (see the StreetEasy link above), which happens to be the same building as another of the examples:

An apartment at the Village’s 150 Charles St., where rocker Jon Bon Jovi and actor Ben Stiller live, has been on the market for 233 days. Its original $8.99 million asking price is now down to $7.95 million.

That one is this unit, one of five units offered for sale but not in contract, asking from $35mm to $6.95mm. So two of the four data points are from the same building, and three out of the four (along with the former DeNiro penthouse at 165 Perry Street) are in the far West Village.

Only the reporter knows why she didn’t list the address for the mystery townhouse (or even if she knew), but it might be expected to limit the power of “market” data if three of four data points are within a few blocks of each other.

a quick stab at what some micro-data might look like

I’m not going to do this for each of the four factoids (that provocative horse is dead, right?), but there are some relevant data points for two that are close at hand. The unidentified Village townhouse is, as you know, Unit #M8 (where “M” is most likely for “maisonette”, aka “townhouse”). The LLC that just sold #M8 for $6.8mm bought it only in October 2015 … for $8,814,552. Looking at the listing history way up top, the LLC was trying to immediately flip for a 50% gain, and we now know that worked up much worse than badly.

For market trend purposes, these new development sales are difficult to factor. Mainly, because of the (long) lag between contract and closing, which in this case was 29 months or more. Secondarily, as I have often suggested in looking at resales by new development buyers, sometimes the new development buyers overpay, at least as measured by the later resale. This maisonette would be one example, as the overall Manhattan trend from October 2015 purchase to resale is up slightly (at least) and from 2013 contract to sale up significantly, while this reseller’s experience is the opposite. Sh*t happens, right?

This might be something of a building issue. The townhouse next door, Unit #M9, was bought from the developer in September 2015 for $9,611,214, but when that buyer tried to flip it immediately at $12.8mm and then increasingly lower prices, the listing sat, until being taken off the market ten months later, still asking $10,595,000.

Infuriating both these original buyers, their neighbor in #M7 sold two months ago in what looks like a private transaction, and an odd one at that: after paying $10,480,165 in August 2015, that guy sold in September 2016 just over $12mm. One really wonders what that September 2016 buyer of #M7 thought to not buy either #M8 or #M9 and saved more than a few million bucks.

But that micro data, as variable and perhaps difficult to interpret as it may be, suggests that the reason #M8 (my poster child for The Provocation) didn’t sell is not because “the market” suffered a broad and fast (fastest evah!) adjustment, but that one specific and highly motivated seller sold into a market that was not very deep with buyers at the 8-figure level, at a time when hyper-local inventory was relatively flush. In contrast to the time the developer was offering these three maisonettes in 2013, when there were three buyers willing to pay $8.8mm, $9.6mm, and $10.5mm, in 2016 there was exactly one buyer, and he preferred #M7 to the other two, for reasons no outsider will ever know. The seller who didn’t have to sell (#M9) retreated, while the one who did, sold #M8 at a significant loss.

That’s my top-level hypothesis, offered with a good bit more hard data support than the Post article that provoked me (to this great length!).

The testing of that hypothesis would be an interesting article to read.

finally (really) … there may be other facts, but the Post doesn’t know them (either)

The agent who sold #M8 at 150 Charles Street and who offered the provocative quote is obviously a terrific agent. More importantly for this piece, he has a team that does way more transactions than I do, including many at this price point, where I have done none in this rarefied atmosphere. He follows this market niche; I don’t. He may actually have market facts that support his view that there has been some general (and fast!) adjustment, but if so, (a) such facts are not apparent from the macro level stuff I see, and (b) were not shared with the Post to support his colorful claim.

It is interesting to see his acknowledgement of #M8 (in hindsight) as being “totally overpriced” at the start of the resale marketing campaign, but he wasn’t the only agent who made that mistake in this building, at about the same time.

Posted in market trends Tagged with: , , , ,

31% gain in 20 months for small Soho artist’s loft with charm but no walls

if The Market doesn’t make mistakes, how to explain this Soho oddity?

It is a truism that the sales price of a publicly marketed Manhattan loft is The Market, assuming there is the classic willing buyer and willing seller, neither operating under compunction. Hence, the funky, lovely, weird Soho loft #3R at 140 Sullivan Street that sold a month ago for $2.1mm was, in fact, worth exactly $2.1mm. By that immutable law, the same loft, in (almost) exactly the same condition, was worth exactly $1.6mm when it sold in January last year. In that instance, the loft didn’t take very long to get to contract (7 weeks, and then again 2 weeks after the first one failed, if you can believe StreetEasy; our listing system doesn’t have either contract date), at a price slightly above ask. More recently, the loft might have failed to find a buyer in two months at the end of last year (asking $1.91mm then; again, the inter-firm data-base has gaps, alas) but sailed through The Market when offered on May 4 at $2.15mm, finding the contract by May 20 that closed October 6 at $2.1mm.

That increase (computed in the title) dwarfs the change in the overall Manhattan residential market over the same time frame. Obviously.

But here’s the support: the StreetEasy Price Index for all of Manhattan was up only 5% in those 20 months, now $990,805 (at the end of the Third Quarter of 2016), up from $944,086 in January 2015 (start here, and scroll down to the interactive chart, because StreetEasy is not making this stuff simple). (If you look only at Downtown Manhattan, the market gain was even less.)

the loft is definitely quirky

If the floor plan dimensions are accurate the main part of the loft is less than 600 sq ft, and the rest of the loft is smaller still (400 sq ft?).

two squares, one smaller than the other

two squares, one smaller than the other

Yes, “all dimensions are approximate”, but yes, the arithmetic sum is less than 1,000 sq ft. The loft could be used differently, with a true bedroom added to the layout. But the listing photo show that two owners in a row used the front area as an unenclosed sleep area rather than breaking up the larger square.

the most recent owner

the most recent owner

the prior owner (still no books, different art, same arrangement)

the prior owner (still few books, different art + rug, same arrangement)

You do see one change by the most recent seller in these side-by-sides: a lighter finish on the floors. If you look at the other listing photos, you’ll also note that the loft was painted. No surprise, as the first sellers had an affection for words that most people don’t share. But there’s no indication in the photos, the floor plans, or the respective broker babble that there were any other changes to the loft from one seller to the next. Hence, my slight modifier in the opening paragraph that the loft sold both times “in (almost) exactly the same condition”. Again, check the listing photos and I think you’ll agree that even the window treatments are the same.

it takes only one buyer to break The Market

Fans of the efficient market theory hate data points like this pair of same-loft sales. Fans of the Manhattan loft market niche just shake their heads.

Here’s my theory, and I am sticking to it …. With more cookie-cutter ‘apartments’ (even spectacular apartments), a prior arm’s length sale has a greater impact than with lofts, especially with quirky lofts. While it is true that sellers often over-price their property in reliance on the aphorism “it only takes one” (buyer), sometimes that single buyer is out there, and highly motivated.

In the case of loft #3R, the recent buyer at $2.1mm must not have been looking at the end of 2014 when the loft was offered at $1.595mm (and sold at $1.6mm), and must not have been looking when (if??) the loft was offered at $1.91mm at the end of last year. Had he been out there at either of those prior time periods, he’d have saved himself a couple of hundred thousand dollars, or more.

The recent clearing price does not suggest a bidding war, more like an offer that the seller reacted to as though a preempt. I.e., there does not appear to have been a second bidder, meaning that the buyer went to $2.1mm by himself, suggested by the asking price and (possibly) seller resistance to a significant discount to ask.

Oh how I would like to have been a fly on that wall! We know the buyer was represented by a professional and experienced agent (see the deed record page) so it must be that the buyer knew of the January 2015 sale price. And it must be that the buyer knew that there were no overall market trends to support the increase of half a million bucks in that short time frame. No matter! He had the money, he wanted the loft, and he paid what it took. Manhattan Loft Gu might think that he “overpaid”, but if that is what he had to do to get the seller to agree, that’s The Market, dammit.

I have to wonder how surprised the seller was to get this deal ….

 

Posted in loft neighborhoods soho Tagged with: , , , , , ,

‘architect-designed’ Tribeca loft does modern well, The Market is not as impressed as Manhattan Loft Guy

you could have fooled me

Perhaps I am just a sucker for lovely photos, but I found the listing photos for the “1,600 sq ft” Manhattan loft #2E at 16 Hudson Street to be fairly drool-worthy. I love the combination of old and new, the clean lines and the old timber, the shoji-like screens and the weathered white brick. I was nodding right along with the broker babble:

architect-designed 3-bedroom loft …. one is impressed by the level of finishes and soaring 12-foot beamed ceilings. *** Floors are reclaimed wide-plank oak throughout, perfectly complementing the history of the property.

 

(drooling ...)

(drooling …) (pic from Sothebys)

The charms of the interior aside, what makes the loft special is what you see out that arched window above: the “1,400 sq ft” terrace that truly expands the living area for as many months in the year that you care to use it.

the terrace is nearly the size of the interior

the terrace is nearly the size of the interior (again, Sothebys)

The floor plan hints at one of the issues that the loft may have In Real Life: the rooms are not very big, so even with 12 ft ceilings and those (lovely! arched!) french doors, the living area pictured up top may not feel spacious. Is the kitchen proportionately too big?? For a great room that’s nearly 600 sq ft, it didn’t take a lot of furniture to fill the space up.

As I said, I love the look of this loft, and initially thought The Market must have loved it as well, given that it came to market May 2 at $3.775mm and found its contract by July 1 at the $3,662,500 at which it closed on September 26. That’s fairly quick work, at a fairly small discount to ask, notwithstanding the 4-month effort in 2015 to sell at $3.995mm.

we have a (very) close-by comp

The folks upstairs that sold the “1,965 sq ft” loft #4C did better, I think. They came to market on March 2 at $3.65mm and were in contract by April 2, closing on June 28 at $3.75mm, one hundred grand over ask. A lovely loft in its own right, but rather traditional as opposed to architect-designed, with a palette that (one blue wall aside) let’s the eye focus on the massive (rather primitive) columns and beams and the 13 windows. The loft looks perfectly lovely, especially the kitchen, but there’s probably a reason there was not much bragging in the broker babble.

The math for #4C works out to $1,908/ft, likely enhanced by a layout that is very efficient, easily yielding 4 bedrooms, only one of which is rather cramped.

the kitchen is not part of the 600+ sq ft great room, so it's no suprise that it feels bigger than #2E

the kitchen is not part of the 600+ sq ft great room, so it’s no surprise that the space feels bigger than #2E (thx Halstead!)

Isn’t this much more roomy than the top photo above?

the two exposures help it feel 'spacious', as do the many windows (again, Halstead image)

the two exposures help it feel ‘spacious’, as do the many windows (again, Halstead image)

The #4C floor plan is not without problems, as efficient as it is. The plumbing lines the east wall, separated from all the bedrooms by the entry hall (er, gallery). So there’s no en suite bath. Market had no problem, of course, offering $100,000 more than the seller asked.

Loft #4C has some advantages over loft #2E: the sense of space, the actual additional space (and 4th bedroom) even though only “365 sq ft” larger, and the open views (including the World Trade Center). Ah, the beauties of even a 4th floor open view in Tribeca! Without doing a lot of bragging about the interior finishes, we know that #4C was valued by The Market at $1,908/ft.

how much was that terrace in #2E?

But #2E has the terrace, an uncommon feature in a Tribeca loft. And, possibly, a higher level of finishes (that “architect-designed” thing). If you were to net out the space and light advantages of #4C against the interior finishes of #2E, maybe you discount the interior value of #2E implied by the #4C sale just a little, say to $1,850/ft. That leads to a (to me) startling conclusion about how The Market valued the huge #2E terrace.

-> at $1,850/ft, the interior of #2E should be worth just about $3 million

-> #2E cleared at $3,662,500, leaving (only!) about $662,500 for the “1,400 sq ft” terrace (= $473/ft) (= 25% of the value of the interior)

Granted, that relative valuation fits within The Miller’s rubric for valuing outdoor space (see my uber-post of May 6, 2010, riffing with The Miller on the value of Manhattan terraces, decks + balconies), but just barely. And I would generally give the #2E terrace a premium for being so usable, so directly accessible from the living space, and for being so nicely finished (with irrigation and cooking gas). But that’s not how The Market looked at it.

The Market either discounted the #2E interior space more than I would have expected based on the oh-so-recent oh-so-nearby #4C sale, or The Market discounted the terrace more than I’d expect. (Maybe a little of both; we’re extrapolating.)

Color me surprised.

or maybe the architect-y thing in this Tribeca loft  is dated

Does everyone’s mind work this way? When I see broker babble bragging about finishes and claiming “architect designed”, I assume (I know, I know) the loft was done fairly recently, and by these sellers.

You wouldn’t know differently from StreetEasy, which reflects only that the recent sellers bought in 2005 for $2,511,000, without any link to that listing. But our data system contains the listing description from 2005, which is highly suggestive that the architect at issue was retained by the folks who owned the loft from 2001 to 2005:

Architecturally designed and stunningly renovated, this 2-bedroom + office/nursery, 2-bath home has it all. The top-of-the-line Chefs kitchen features custom walnut cabinetry, basalt counter, Wolf range, Viking oven, 42 Subzero refrigerator, Dacor microwave & convection oven, Bosch dishwasher, and storage galore. The design and execution of the interior space is nothing short of spectacular, with 12 ceilings and exposed beams, 23 custom 10 steel doors, antique walnut wide-plank floors, walnut closet interiors, huge windows in every room, beautiful finishes throughout, enormous utility room with washer/dryer, central heat and air conditioning, and more! Then there is the Terrace! – 1,400sf of fenced and finished space, with direct access from the living/dining room, beautifully decked with Japanese Ipe wood and fully land [the thing just ends there, likely having hit some ancient character limit in our system from 2005]

I can’t be certain without photos (not retained in our system, alas), but it certainly sounds like it. And The Market back in that day treated the loft as fresh, as it went into contract within two weeks $116,000 above ask. That Market also credited that seller as having significantly improved the loft in four years, as that 2005 seller paid (only) $1.15mm in June 2001.

Assuming (reasonably) that the 2001-buyer-turned-2005-seller renovated as soon as buying, the finishes would be close to 15 years old at the time of the recent marketing and sale. Lovely photos aside (drool!), maybe it just doesn’t show as well In Real Life as the photos suggest. So maybe the 2016 Market discounted the interior of the space more than my notional $1,850/ft, above.

what happened to my feet? and what do they do to my riffing?

Did you notice one significant thing different in the 2005 listing description than my earlier description of the loft? I’ve used “1,600 sq ft” for the interior here and in my Master List of downtown Manhattan loft sales under $6mm because that is what our listing system says, and our system tends to be based on an offering plan. The 2005 listing says “1,500 sq ft”. I’m not going to get into (today) how frustrating it is that this sort of discrepancy occurs all the time about something as basic as the actual size of a loft (my uber-post on that is probably my November 2, 2010, the square footage dilemma: REBNY “leads” by protecting brokers, not buyers), but let’s play with the smaller loft size for a minute….

If the interior that the old architect designed is really only “1,500 sq ft”, the interior valuation for loft #2E (implied by the sale of #4C, discounted mildly to $1,850/ft as above) drops to about $2.775mm, bumping the exterior portion of the observed market value to about $875,000, or $625/ft, which is about one-third of the interior value. Not a dramatic difference to my discussion above using The Miller’s rubric. Never mind … resume normal activity ….

 

Posted in loft neighborhoods tribeca Tagged with: , , , , , , , , , ,