no Virginia, there is no rational market (not here, at least)
Fans of the efficient market theory for the Manhattan residential real estate market should be surprised if a loft is offered within $5,000 of its value but takes 7 months to find a contract. Surprise! Not only was the “687 sq ft” mini-loft #301 at 67 West 11 Street (the Cast Iron Building) offered within $5,000 of its value from March 7, 2011 until its contract by October 24, for 4 of those months it was offered below its value.
|Nov 18, 2010||new to market||$799,000|
|Mar 7, 2011||$749,000|
|July 1||off the market|
|July 15||change firms||$759,000|
Even at the beginning of the 11 month pre-contract period, the asking price for loft #301 was within 6% of its (eventually established) market value. That small a gap is bridged every day in the Manhattan residential real estate market, yet this one lingered.
Even fans of the efficient market theory for the Manhattan residential real estate market acknowledge that the theory works more weakly in a thin market, one with relatively little buying activity. Certainly the overall Manhattan market was deep in 2011, with a comparatively high number of sales, but perhaps the market for a mini-loft with a very idiosyncratic floor plan and a single window was a slow segment of a slice of a niche.
my first-ever “A” floor plan
The successful marketing campaign (the one beginning July 15) did not include a floor plan, and I have to wonder if that helped. I wonder if people might have ignored the prior listing because this floor plan was hard to imagine as living space, even though people (one person, at least) appreciated the space when in it enough to buy it. I would have no clue what to call this footprint if it had a single level, but the mezzanine line makes it an almost perfect “A”. You don’t see those every day.
Nor do you see many lofts that taper to less than 6 feet. I can think of a 2008-ish new development in 7th Avenue in the West Village, and maybe some other new developments (Morton Square?), but these tapered lofts have significantly more space than loft #301, which is less than 30 feet long.
a gut feeling about the renovation
Of course the successful marketing campaign bragged about a gut renovation (using the word “gut” twice in the first 10 words of the substantive broker babble). You’d almost want the loft to have been sold in the exact same condition as it was in September 2005, as the 2005-buyer-turned-2011-seller got only an 8% premium on resale, compared to the $695,100 he paid then.
There’s not much room in a renovation budget of $58,900 to “gut” renovate to a “gourmet kitchen with top of the line appliances” and “an ultra modern bath,” and “beautiful hardwood floors”, before you are looking at a decline in market value 2005 to (unimproved) 2011. But I think they are talking about someone else’s gut.
You cannot see the 2005 listing on StreetEasy or anywhere else public, but I can see the floor plan and the photos from that sale. I don’t see an intervening gut. From the floor plans, the only difference is a reconfigured kitchen, withe the refrigerator moving across the entry way into what had been a hall closet, and the closet/pantry being added on that wall under the mezzanine. Bathroom set-up is exactly the same. From the pictures, the kitchen has new stainless steel appliances but the same cabinets as in 2005. Upstairs, the doors to the closets are new.
They might have been able to do all this for about $15,000. So maybe the did pocket as much as about $45,000 in the resale (without considering other expenses of the transactions).
fun fact from 1996
Our data base reveals that the last sale before 2005 was in December 1996, when the loft sold for $125,000. I can’t see pix of a floor plan from that long ago day, but it makes more sense that the real gut renovation was between 1996 ($125,000) and 2005 ($695,100) than between 2005 and 2011, doesn’t it?
© Sandy Mattingly 2012