buyers with cold nerves sell 4 West 21 Street loft at 51% gain

… and the home of the brave

Let’s take another spin at a wheel I mentioned on Wednesday (September 18, masterpiece designed since 2009, 60 West 15 Street loft doubles in value) about the favorable resale position of  2013 sellers who bucked the trend in the overall Manhattan residential real estate market in 2009 by buying. Today’s example of The Few, The Proud, The Brave just sold the “1,500 sq ft” Manhattan loft #4B at 4 West 21 Street for $1.995mm, a gain of 51% over the $1.325mm these recent sellers paid when they bought on June 2, 2009. Good for them, now (in their profit) and then (for keeping some activity in a still-chilly market). The anomaly of the 2009 price is evident from this sequence of sales, starting with the sponsor sale:

  • July 17, 2006 $1,644,473
  • Oct 24, 2006 $1.885mm
  • June 2, 2009 $1.325mm
  • July 29, 2013 $1.995mm

But for that third sale, this would be an unremarkable sequence: as was not unusual in those thrilling days of froth, the original buyer was able to quickly flip a hot new development, and the recent value was only a modest increase over the market value 5 calendar quarters before The Peak. (If anything, that story line would be about the modesty of that 6% spread going back 7 years.) But the third data point makes the sequence much more dramatic, doesn’t it? (I’ve noted some odd histories in this building before; see at bottom.)

Before we look at the opportunity that every potential buyer had 4+ years ago, that only these recent sellers took, let me note that StreetEasy’s listing history is missing a critical early sequence (those first 4 months, taken from the inter-firm data-base), and that I ignore the last price drop on StreetEasy as invalid because it coincided with the contract signing:

May 8, 2008 new to market $2.1mm
June 18 $1.995mm
Sept 18 hiatus
Sept 25 change firms $1,992,150
Sept 30 $1.975mm
Oct 3 $1.75mm
Oct 30 $1.6mm
Dec 16 $1.575mm
April 21, 2009 contract
June 2 sold $1.325mm

(That first effort was through a very small firm; I wonder if Streeteasy did not have a feed from it at that time, even though it was a REBNY firm.)

This is a rich history. The second owner attempted to improve on her purchase price but was too optimistic about values in (what turned out to be) The Just Past Peak period. As she did, you’d think that the mid-2008 market would support a value above the $1.885mm she paid in 2006, but her failed effort at $2.1mm and $1.995mm was probably the canary that died unobserved. She changed firms as the world was falling in around her ears Lehman’s bankruptcy completely changed The Market, which she obviously did not immediately understand, but then sprinted to catch up to.

I may never find a better example of Chasing The Market Down than the four price drops over 11 weeks at the end of 2008 (I would be tempted to say Death By Small Price Cuts, but the last three weren’t small drops). Three weeks after Lehman, she really got it in gear, but was too far behind to catch up for a while.

Hindsight is, as I often say in this blog, a female dog. And second-guessing can be cruel. But that is the lot of a blogger commenting on the market, past and present, with real world, real-time examples. No personal slights intended, but that second owner acted as though she had all the time in the world when she starged trying to profit on her 2006 purchase, and then failed to react quickly or deeply enough, until she got into a set of market conditions that had precious few successful sellers, and no happy ones. In retrospect, she was a very motivated seller, but she didn’t act like it until many thousands of dollars had been burned off her loft.

At the end of the day, she bit the bullet and accepted an offer 16% and $250,000 below her asking price, 37% and $775,000 below her first asking price, and 30% and $560,000 below her purchase price. Let’s do that again, shorter: she finally sold $560,000 below her purchase price. You’d not want to see a more motivated seller than that, ever.

The drama is over-weighted on the sell-side of such a transaction, but the heroes of the story are the buyers. See that September 18 post for data about sales volume in 2009 in the overall Manhattan residential real estate market.(Not a spoiler alert: thin.) These folks are the Teddy Roosevelts of loft buyers. (“When all around you are losing their heads ….”) In a clinical sense, they took advantage of the market and the seller, but gave she seller what she wanted on April 21:(a contract), when no one else would. (Of course, I’d love to know where they started that negotiation, to end up $250,000 off the last ask.)to the victor …Now those 2009 buyers get to enjoy the spoils. More power to them that it was as easy for them on this end as it was difficult for their seler on the other end: to market on May 3, in contract by May 18, and sold on July 29 at the full ask of $1.995mm.

The oft-stated rule is easy to state, difficult to apply: Buy Low, Sell High. You need only excel at one to make it work. They didn’t sell so high (at least, not in comparison to the 2006 market), but they bought so low that higher was simple. In retrospect, it looks easy; at the time, it must have looked fraught.

Nicely played, folks; nicely played.

about those odd local histories

I mentioned up top that the #4B sales sequence would not look so odd if not for the 2009 dip. In my June 20, unsold 3 times at $1.795mm, 4 West 21 Street loft finally sells at $1.915mm, I noted that resales in the building had finally begun to get higher prices than the sponsor sales in 2006, after a long history of resellers getting creamed, as recounted in detail in my April 12, 2012, loft at 4 West 21 Street an outlier, closes 9% off 2006. Apart from #2D, which just resold some $85,000 less than the recorded sponsor sale, all 2013 resales appear to exceed the first recorded value, with #4B showing the largest gain, by a hair.

Odd, that.

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