loft with three mints at 130 Watts Street close off 5% from 2005

guessing at The Peak
The fact that the Manhattan loft #3N at 130 Watts Street sold on July 21 at 5% under where those sellers bought in October 2005 is (to me) interesting enough. That sequence lead me to ruminate about where The Peak might have been for that loft: it probably would have sold somewhere around +15% of the 3Q05 price if it had sold in 1Q08. Probably.

But these 2005-buyers-turned-tardy-2010-sellers didn’t quite get that right: they came out high (+27%) and late (4Q08). I am not sure that any (reasonable, to them) price would have worked in November 2008 (ten weeks after Lehman fell), but I bet it would have done OK as late as June 2008 if priced around 15% higher than the 2005 sale; indeed, somewhere around where they priced in April 2009 (brrrr). (No way to lose that bet, or win.)

Here are the details on the In-and-Out (more precisely, on the In-Not-Out-Then-Out) of this “2,000 sq ft” “finely detailed, triple mint” loft in the wilds of Far Northwest Tribeca:

Oct 17, 2005 bought $2.05mm
Nov 4, 2008 new $2.595mm
Jan 29, 2009   $2.45mm
Apr 22   $2.25mm
Nov 25 off market  
Feb 17, 2010 new $2.125mm
Mar 24   $1.995mm
May 7 contract  
July 21 sold $1.95mm

what were they thinking?
I realize that this is “fun” for only a very small population (anyone with me on this??), but it is my blog and (if you read) you have to put up with me. In asking the sub-head question, I don’t mean to suggest these sellers are idiots for not having ‘gotten it right’ in 2008, by coming out earlier and lower. They don’t need a smarty-pants with a blog and hindsight picking on them. I ask “what were they thinking?” as a prelude to considering that very question, looking at it from where (and when) they acted.

I don’t know why they did not come to market by June 2008, but assuming they weren’t ready by then many people would have agreed with the idea to not bring a $2+mm property to market in July or August (everyone’s at the Hamptons, or some such theory). I never bought into that theory myself, but it is common. So if they waited for Labor Day, it probably did not matter that they also waited until November 4, 2008. Once Lehman hit the fan, the fan was a mess.

I don’t have link at the moment, but The Liquidity Crisis (banks tightening lending standards) preceded Lehman by (three?) quarters, so there were macro-level rumblings about whether The Trend of The Ridiculous Record Year 2007 might continue. In his 1Q08 report, The Miller talked about a second consecutive quarterly drop-off in Manhattan coop and condo sales, and a 20.7% increase in overall inventory from the last quarter of 2007. So there were hints in the data in April that change was in the air.

The Miller’s 2Q08 quarterly report brought more hints, but the signals were mixed. Inventory was up another 10.9% from the first quarter, but transaction volume rebounded above 3,000 (a figure never even approached before 2007), and days on market declined 7.5% from the prior quarter.

Many early 2008 sellers thought the recent (ridiculous) strength would continue, or (worst case) that any drop off would be (a) gradual and (b) moderate.

Almost certainly, if the owners of #3N at 130 Watts Street were thinking about selling ‘soon’ in Spring 2008, they probably figured they had some time. They were, of course, wrong. But they were probably more wrong about timing than about price.

the eternity of 6 months
Instead of November, had they come out in May 2008 even at $2.595mm, they might have gotten a $2.2mm low ball bid. Had they dropped in a month to $2.45mm and in another month to $2.25mm (the price drops they were more slow to hit, much later), they might well have gotten a contract  at or above $2.1mm before or even a little after Lehman. But they didn’t, and they didn’t.

To recap: the facts are that these folks bought in November 2005 at $2.05mm and sold in July 2010 at $1.95mm. It is fun for some (me!) to speculate about what they tried to do at $2.595mm ten weeks after Lehman filed for bankruptcy, and what they might have done had they acted sooner. Not fun for them.


fun fact, 2000 edition
Before that 2005 sale at $2.05mm, #3N changed hands in June 2000 at $641,500 … quite a 5-year appreciation!]

© Sandy Mattingly 2010

Tagged with: , , , , , , , , ,

Leave a Reply