57 Walker Street loft sells for 21% more than neighbor a year ago

overly restrained babble is pretty much unheard of
Have I mentioned lately that (yes) … comping is hard? When the “1,850 sq ft” Manhattan loft #4B at 57 Walker Street sold on October 12 at $2.04mm, that closing capped a successful and brief marketing campaign: for sale on April 22 at $2.095mm; in contract by June 2. The listing description was all about the space, with very little about the finishes (“open and airy with 12’ ceilings and oversized windows which allow for beautiful North and South light[; l]iving, dining and open kitchen areas have a lovely flow for just relaxing or entertaining guests”). Indeed, the only mention of finishes or condition are these few and spare comments: “has built ins” and “a large steam shower”. Seriously. That’s all the ‘bragging’. 

So it is a mystery to me why it sold for 21% more than #3B, which closed on June 11, 2010 at $1.685mm. The contrast in listing descriptions could hardly be more stark:

The open chef’s kitchen is ideal for entertaining with its imported Italian marble center island, six-burner professional Viking stove (fully vented to the outside), and endless custom wood cabinetry. A wide hallway leads to the enormous Master Bedroom suite with huge, double glazed south-facing windows and massive built-in closets. The luxurious Master Bathroom boasts a two-person jetted-air bathtub, custom walnut vanity, Philippe Starck fixtures, and your own washer-dryer. The second bedroom with its french doors and built-in oak shelving is ideal for guests and/or a home office. The beautifully renovated guest bathroom offers Crema Marfil marble detailing and a stand-up glass shower with built-in bench and Kohler fixtures.

There are two possibilities here, only two. Either #3B is, in fact, in a significantly better condition than #4B, or the #4B listing description woefully undersold that loft. Since we are dealing with competent agents, it is extremely likely that the #4B was restrained and accurate (or restrained, because accurate).

How then to account for the vastly different market valuations only 16 months apart?

(waiting …)

(Bueller? Anyone??)

2010 v. 2011
My impression is that the Manhattan loft market values are a bit better this year over last, and the best (and largest) hard data is (only mildly) supportive of that view. Per the Miller Samuel 3Q11 market report, the year-over-year values are essentially flat: in the entire Manhattan residential coop and condo market, average sales price is down 1.5%, median is down 0.3%, and average price per foot is up 3.2%. But The Miller has the loft niche doing better: average sales price is up 4.8%, median is down 2.1%, and average price per foot is up 14.8%.

A conservative approach would be to say market conditions year-over-year are ‘essentially flat’. Certainly, there is no observable market activity to account for the 21% spread between #3B in June 2010 and #4B in October 2011, especially when taking into account that #3B was in better condition when sold. The Miller’s 14.8% y-o-y gain in price per foot accounts for no more than $220,000 of the difference, and that (almost certainly) requires downward adjustment for #3B’s better condition.

is it the light, Mars?
Sorry, Spike, but it is not likely that the 4th floor light (described as both “beautiful” and, in front, “a flood”) was worth $355,000 ($192/ft) more than the “beautiful” 3rd floor light. The buildings directly across Walker Street to the north are five stories, with a much larger building to the east on that north side of the block, so the incremental view must be nil, going from the 3rd floor up 13 feet. Same thing in back, to the south, where 54 White Street (and its neighbors) are also five stories high.

The New York Observer (h/t Curbed) outs the #4B buyer as a “pop artist”, in a story that mentions the “flood of afternoon light”, but there is no suggestion that he will be popping his art in that space (so that he ‘needed’ to pay a premium for great light, which doesn’t even appear to be present).

and the answer is …
It turns out that I have a simple but unsatisfying answer to my question above (“How then to account for the vastly different market valuations only 16 months apart?”):

just because

Put another way, The Market valued the brag-worthy #3B in June 2010 at $1.685mm and the not-very-brag-worthy #4B in October 2011 at $2.04mm because the Manhattan residential real estate market is neither reliably efficient nor rational. Period. End.

There is no “reason” for a 21% premium for the lesser loft from last year’s market conditions to this year’s. Other than that two different sets of sellers and buyers negotiated to two very different results. At least one of these results is an outlier, but which one?

it gets worse
Fans of the efficient market theory will be further dismayed by the pre-history of #3B. Keep in mind the very recent $2.04mm clearing price for #4B in looking at this unsuccessful #3B campaign:

Repeat after me: 2007 was the most active and deepest full year market the Manhattan residential real estate market has ever experienced. And: The Peak of the Manhattan residential real estate market was for sales closed in about the First Quarter of 2008.

How can you reconcile the fact that #3B could not sell in the last half of 2007 off of that $2.25mm asking price, despite the evident intention to negotiate (made evident by the price drops), given that #4B just sold for $2.04mm? Rather than repeat my red (non)answer above, this time I will say simply that I cannot reconcile this past #3B (unsuccessful) price history in 2007-08 with what just happened to #4B, nor can I reconcile the (eventually successful) #3B price history in 2010 (starting at $1.895mm, ending at $1.685mm) with what just happened to #4B.

I’d love to hear from anyone who can do better. Bueller? Anyone??

© Sandy Mattingly 2011