neighborly competition leads to neighborly mistakes? the laboratory at 24 East 22 Street
MLG went there before the NY Times
You may remember that the NY Times ran a piece about multiple apartments for sale in the same building back in August (August 10, Neighborly Competition). You may also recall that I used to talk about current listings, one of which involved competing Manhattan loft listings on the 4th and 5th floors at 24 East 22 Street. I just restored that February 9 post (‘rare’ open house duel at 24 E 22 / fighting about windows) because neither of those Manhattan lofts is an active listing by another firm. I was pretty stunned by the listing histories of the two lofts, leading to a rumination about how competing listings in a building impact each other, leading to this post.
It will take me a while to get to an answer (MLG is still wordy, wordy, wordy…), but here’s the fun question: is it easier to make a mistake if someone else is already making one?
what will the neighbors think? what will The Market think??
The Times quoted a terrific Corcoran agent about one aspect of neighborly competition:
Of course, you can always find a point-counterpoint structure, and Teri Karush Rogers has no shortage of sources:
Yeah, putting an apartment on the market at the same time as a neighbor’s can strain relationships within a building. But I wonder about the degree to which competing listings can lead sellers to over-value their apartments. Let’s get back to 24 East 22 Street and the 4th and 5th floor Manhattan loft competition.
Here’s what i said in my compare-and-contrast post on February 9:
$2.695mm and $2,530/mo (condo) for “2,000 sq ft”
I hit it in an open house review on January 4, describing it as:
new to market December 11
24 East 22 Street #5
$2.795mm and $2,150/mo for "2,150 sq ft" set up as 2 BR with "craftsmanship throughout" and views of the Empire State, Flatiron and Met Life buildings; this kitchen also has proper proper names
on market since July ($2.9mm)
how much for the windows?
The finishes in both units appear to be brag-worthy, so one’s preference between them is likely to be simply that – a matter of preference. Odd that one has 13 foot ceilings (4th floor) and the other 14 foot ceilings (5th floor), but I suspect that is a rounding error somewhere. (Both ceilings are vaulted.)
There is one significant difference, one that is worth something and – to the light sensitive buyer — might well be worth $100k. The 5th floor has 5 west-facing windows (allowing that Flatiron view?) that are missing from the 4th floor.
Note that the two units were offered at $100,000 apart in February, after one had been on the market for 3 months already and the other for 8 months already (at $105k higher). Given the descriptions, it is hard to imagine that anyone who came across one of the two lofts would not also go to see the other; as I said, the preference would probably come down to simple preference about finishes (unless those additional west windows on the 5thfloor would be the key factor for some buyers).
Before I get into what actually happened to these competing listings, lets drag another quote from the NY Times.
‘absurd’ price competition, or Market pricing?
I LOVE this NY Times quote (you’ll see why soon):
Perhaps especially in the context of The (current) Market, "absurdity" is in the eyes of the beholder, no?
Soon after my compare-and-contrast post, the 5th floor seller dropped the price to $2.695mm, but then took it off the market completely shortly later. Leaving the field entirely to the 4th floor.
The 4th floor sold, but it took … a while, and what must have been serious pain.
very painful history
Before the 5thfloor dropped to $2.695mm, the 4th floor abandoned that position by dropping $245k, to $2.45mm on February 17, then another $200k, to $2.25mm on March 28 (is that the drop that killed all motivation on the 5ht floor??), then another $400k, to $1.85mm on April 25.
That’s what I call evidence of motivation! In the space of 9 weeks, the price dropped $600k (about 25%), and $800k overall from the original asking price of $2.695mm in December 2007. That get the job done, with a contract signed as of June 12, and a deed transferred on July 16 at $1.8mm.
That is 8 months and a closing 33% off the original asking price
who could have predicted?
Retrospect brings clarity. Both sellers in this building (and their agents) mis-perceived The Market. One seller pushed on, to find The (actual) Market; the other dropped out still way above where The Market turned out to be.
I wonder how much that (eventually) successful seller (and agent) on the 4th floor was distracted by the competing price set by the 5th floor. Without that price (starting at $2.9mm in July 2007), might the 4t floor have started lower than $2.695mm in December — when The Market was better for a seller than 7 months later? Without that high-but-false ‘comp’, might the 4th floor seller have dropped more quickly, more dramatically, but not quite to the one-third-off that it took to get the thing sold?
No way to know, of course. But fascinating. Let’s go back to that last quote about "absurdity" from the NY Times.
That looks remarkably like the competition between the 4th and 5th floor lofts at 24 East 22 Street, doesn’t it? The Market is The Market is The Market, right? By definition, that is real, not absurd, right? Painful, but real.
footnote to pain
In defense of the mistaken judgement evident in retrospect, the 5th floor unsuccessful-seller-in-2008 was a buyer-in-2004. Presumably they took it off the market in 2008 because they did not have to sell (to move to San Diego or for any other reason). They may have had a particularity acute reason for not matching the 4th floor listing history down below $2mm — they paid $1.9mm in 2004.
© Sandy Mattingly 2008