buy low, sell high: simple advice well executed at 121 West 17 Street loft

how bad was that nuclear winter, grampa?
The last time the “1,135 sq ft” Manhattan loft #5D at 121 West 17 Street was offered for sale the ask was $1.34mm; this time, $1.295mm. Last time, the clearing price was $870,000; this time, $1.275mm. Last time, the marketing campaign was launched in that awkward period a few months after The Peak in the overall Manhattan residential real estate market and a couple of months before Lehman filed for bankruptcy protection and The Market went into deep freeze; this time, the loft came out in a hot market.

The 2009-buyer-turned-2013-seller made money in real estate the old-fashioned way: he bought low, then sold high. In order to do that, he had to do what few buyers were able to do, which was to buy into a falling market without confidence that the fall would end soon, or that market conditions would improve in time for him to benefit. (I’ve said this before: no matter how often Manhattan real estate spectators say people are foolish to buy when prices are rising, few actual buyers have the … er … intestinal fortitude to buy when prices are dropping.)

same screens, same floor, same loft
The recent marketing campaign as reflected on StreetEasy is odd, in that it has only 3 photos. The broker babble is more matter-of-fact than enthusiastic, supported by no photos of the kitchen or bath:

light flooded, approximately 1,250 sq foot home, features 11′ ceilings, original columns and over-sized South facing windows providing brilliant sunlight throughout this gracious space. With a washer/dryer, generous storage areas and hard wood floors, this renovated loft features a modern kitchen with concrete counter top and top of the line appliances, as well as a large renovated bathroom.

The 2008 babble was more specific:

a wall of huge windows, south light, interesting city views and open sky. True loft living approx. 1,135+/- sq. ft. with high ceilings, original columns, original hardwood floors in excellent condition. 5D has been totally redone retaining the loft elements with the influence of Myia Shoji who designed and built the Shoji screens and many closet treatments. The kitchen is modern and succinct with Meile, Viking and Sub-Zero and a very deep kitchen sink. The bath is unique and original with a Toto toilet and Bowery sink. There is a Miele washer/dryer, Videx video intercom, Luceplan kitchen, bath and entry light fixtures. There is an entry, office, dining area, large loft living space and large bedroom. The apartment has excellent storage over storage features.

Although only 3 listing photos from 2008 survive on StreetEasy, our listing system has 12 photos. It is hard to tell from StreetEasy, but the loft had the same configuration in 2008 as it did when sold recently, even though the 2008 listing floor plan is different from the current floor plan (the 2nd photo from 2008 on StreetEasy matches the current floor plan, with the “study” behind the couch wall and the kitchen through the sliding Shoji screens).

I can’t be certain that the “modern and succinct[!]” 2008 kitchen survived into 2012 without seeing a 2012 photo to match up with the 2008 photo and its more specific description, just as I can’t be certain that the “unique and original” bathroom from 2008 has been unchanged, but I am pretty confident that is the case. In other words, that the loft as sold for $870,000 on January 30, 2009 is in precisely the same condition as the loft as sold for $1.275mm on February 12, 2013.

That is a gain of $405,000, or 46%, in 4 years. As I am sure we can agree that the overall Manhattan residential real estate market has not experienced a gain of that magnitude over that period, this loft is an outlier. And probably an outlier on the 2009 sale rather than the current sale.

back to The Ice Age
I can’t tell exactly what happened to the seller in 2008, as our listing database has only this tantalizing history, with no match to the (eventual) sale January 30, 2009:

  • July 17, 2008 new to market $1.34mm
  • July 28 open house set for Aug 4
  • Sept 2 open house set for Sept 7
  • Sept 2 open house set for Sept 10
  • Sept 9 open house set for Sept 14
  • Oct 17 temporarily off the market

As I am sure you recall, Lehman’s bankruptcy filing was on September 15. It is not fair to say that thereafter all hell broke loose so much as it would be better to say that thereafter pretty much nothing broke loose, and it was hell. I suspect it is not coincidental that the last scheduled open house was the Sunday before Lehman’s bankruptcy petition.

What’s odd is that the trail goes cold in our system, but that the seller managed to sell (painfully, very painfully) on January 30, 2009. You’d think that a desperate seller would keep flogging the market with open houses (at least, through an active listing) until the deed got done. (And if you think that perhaps the seller was not desperate then, I give you one number: $870,000.)

I can’t even imagine an explanation for a seller’s mindset to stop public marketing yet take a deal at a 35% discount 3 months after giving up publicly. Desperate times call for desperate measures, of course. But I am not going to play that mind game.

a wall of poster children
I will add this old data point from #5F in January 2009 as an additional poster child for how cold it was for sellers during that nuclear winter. And I will keep this opportunistic 2009 buyer in mind when people wonder why anyone would buy in a falling market.

I have described other poster children from the nuclear winter. The one with the saddest face is probably still from my January 6, 2011, 345 West 13 Street loft is candidate for sale of the year, but the year was 2009 (a sold price sequence of $3.875mm, $3mm, and $4.4mm, with the middle one [obviously] being the well-chilled one). Another with a smile-turned-upside-down is from my August 9, 2011, agony + ecstasy at one 65 West 13 Street loft (with a sequence of $2.22mm, $2.2mm, and $3,182,500).

Finally, in my May 15, 2011, from fire sale in nuclear winter to +27% at 155 Hudson Street, I talked about how The Market has two sides, a seller for every buyer. In every example of a sales price depressed by nuclear winter conditions there was an opportunistic buyer with intestinal fortitude to match up with a seller in dire straits. (That one involved a frozen purchase at $1,753,500 and resale at $2.23mm.) So, too, does every profitable resale have two sides: the entry price and the exit price.

gotta sell high to make it really work
That guy also did pretty well on the sale side, at least compared to the prior sale in the building. The “1,000 sq ft” loft #7A has a less flexible footprint (harder to squeeze in a “study”, though a layout with greater utility can be imagined) and what looks like a more conventional high quality finish than #5D. Not to mention, two exposures, “magnificent” light, and windows that clear the rooftops nearby so should provide charm and water towers, as well as all that light. That one sold for $1.18mm last May, $1,180/ft for those without a calculator or not paying attention.

If I were the #5D seller, I would feel pretty happy getting $1,123/ft, or $1.275mm, for a (slightly) larger loft with less light, no view, and an idiosyncratic style.

Nicely played, sir; nicely played. On both legs of the round trip.

Count-up: 2,000 … 2,001 … (just kidding)

© Sandy Mattingly 2013

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