473 Broadway loft seller is stubborn after (somehow) missing peak

a rich history of sales, and of listings
The Manhattan loft #5E at 473 Broadway that just sold on April 28 has now been re-sold twice since having been purchased from the developer in 2002, in what appears to be a smooth sequence of increasing values:

  • March 1, 2002 $1.6mm
  • April 25, 2005 $2.1mm
  • April 28, 2011 $2.85mm

There are two things that you don’t see in that simple list of deed dates and clearing prices: 

  1. the last seller was extraordinarily patient, having held at the $2.95mm asking price from May 28, 2010 until finally signing a contract at that small discount (3.4%) probably at least 8 months later; and
  2. that last seller tried to sell into The Peak at a much higher and almost made it.

I can’t decide which of these bits of listing data is more interesting.

remain calm
It must be hard to maintain a belief that your loft is appropriately priced, month after month after month with The Market saying, in effect, meh. You know, the Conventional Wisdom says a price drop is needed to get a sale done at that point. Yet the sellers remained calm (at least, publicly) by holding at $2.95mm for at least 8 months since last May.

The most interesting thing about this sequence is that that Conventional Wisdom was wrong in this case, as proven by the fact that this loft did sell for a modest discount despite holding firm at the original asking price for so long. I will just point out, but not grapple further, with the metaphysical conundrum of (a) if the loft was worth $2.85mm in February 2011 (a fact ‘proven’ by the contract), (b) why wasn’t the loft worth that same value one, three, or five months earlier (facts ‘proven’ by the lack of a contract, despite having been professionally exposed to The Market since May 28, 2010)?

what was The Peak value?
In the absence of a sale, there is no way to know what a loft is worth at any particular time, though everyone is entitled to his or her own guess. If you think that The Market is down since The Peak about 15%, you could work backwards from the $2.85mm April 2011 clearing price to imply a Peak value for #5E of about $3.35mm.

What’s the point of this exercise? To highlight that the recent sellers at $2.85mm tested The Market at (and before) The Peak, proving (you would think) that the following prices did not represent market value at the times these prices were offered:

Sept 14, 2007 new to market $3.75mm
Nov 27   $3.45mm
Feb 8, 2008 contract  
Feb 26 back on the market  
Mar 14 hiatus  
April 14 back on the market  
May 20 off the market  

I’d love to know what happened to that February 8, 2008 contract that quickly failed, and the contract price. It is axiomatic (an even stronger authority than Conventional Wisdom) that a contract price from a buyer who cannot close does not represent market value, that only contracts that close establish market value.

But look again at my math extrapolating backwards from the recent sale price. You’d think that the market value at The Peak should be somewhere around $3.35mm unless (a) the Peak-to-now decline was something less than 15%, or (b) the $2.85mm recent clearing price was an outlier, or (c) the fact that #5E did not sell near $3.35mm at The Peak was an outlier, or … ???

not wisdom, repeated
A data point is not The Market. Averages don’t dictate the result of a particular loft sale. Oh … and comping is hard!

© Sandy Mattingly 2011

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