yes, Virginia, the rich are different from you and me
Lots of people, when faced with the choice to live in a newly purchased spectacular loft in Tribeca or losing well more than a million bucks by selling right away, would avoid the monetary loss and accept their fate by living in luxury, while awaiting a more propitious time to sell. But people who have to sell might not have that option, and people who don’t care about money … don’t care. I’d put Mike Myers in the latter rather than the former category, as exemplified by his noteworthy resale of the the “4,241 sq ft” oh-so-lovely oh-so-luxurious Manhattan loft #5A at 443 Greenwich Street.
Thus, I don’t think The Real Deal got it quite right last week:
Comedian Mike Myers can’t be laughing now. The “Austin Powers” star just sold his never-lived-in Tribeca condominium for a loss.
Not laughing, probably; not crying, certainly. He volunteered for this, beginning over two years ago:
|Sept 29, 2014||new to market||$14.25mm|
|Der 6, 2016||bought||$14,675,019|
|Jan 11, 2017||new to market||$15mm|
Obviously, this was a new development purchase. Obviously, in the 26 months between signing the contract and having to close, Myers changed his mind. Or maybe his accountant told him he needed to take a loss somewhere.
Obviously, he’d have lost money even if he had sold at his resale asking price of $15 million, as he was set to pay his agents (5%, according to our system) and city and state transfer taxes (1.825%). At the $14 million resale price, those transaction costs reduced his cash (increased his realized loss) by nearly a million ($955,500), to $1,630,519:
|loss (big picture)||$1,630,519|
That’s a lot to not laugh about, but remember: he volunteered.
he probably saw it coming (too late, of course)
A click or two from the Active Listings tab on the StreetEasy building page shows that the same loft on both the second and third floors took until at least November 2016 to get to contract (they haven’t closed yet), while the Past Sales tab shows many more sponsor discounts than full asking price sales, including the sad fact (for our Canadian comedian) that loft #4A didn’t find a contract that stuck until May 2016 and then sold in September 2016 for $13,753,000.
The writing, as they say, was on the wall, long before Myers finally bought #5A from the sponsor for $14,675,019 three months ago.
new development sales can be weird
File this one under The New Development Market Is Different Than The Resale Market. This project (443 Greenwich Street) looked a lot better in the Fall of 2014 than it did two years later, or now. Perhaps the story is the simple one, oft repeated in the media in the last year: softness in the luxury market. After all, at least ten lofts were sold at 8-figure prices in this single project (a quick scan of the Past Sales tab on StreetEasy tells you that). Apparently, the supply of $10+ million buyers is finite. (Go figure.)
But I think there is another aspect of this (emphasis on I think): the new development Manhattan loft market is (I think) more susceptible to emotion-based swings than the resale loft market. (Call it herd mentality, if you prefer.) In part, this is a commodity thing.
Lofts tend to be sufficiently different from each other, even within the same building, that they can more fairly be given the over-used broker babble label “unique” than typical Manhattan “apartments”. Even lofts with the exact same footprint in mature residential loft buildings tend, over time to look very different from each other, as owners with different tastes and resources change. Not so for the four “A” line units at 443 Greenwich Street, all with the exact same “unparalleled combination of space, luxury finish, location, and privacy”, as the Sponsor Babble put it, on the exact same footprint.
The only difference among them is whatever different angle of sun or rooftop the different floor heights might afford.
Sometimes the proverbial early bird gets the proverbial worm, and original (early to contract) buyers do better than original (later to contract) buyers. Not here, not for our Canadian. His October 2014 contract price was $922,019 more than the May 2016 contract price for the exact same unit, one floor below. At this dollar level, so many dollars (nearly a million) is only a difference of 6.3%. Still: $922,019 is a lot of dollars.
efficiency is in the eye of the beholder in Manhattan residential new development sales
Sponsors have tremendous advantages over buyers of new development properties. They are looking at the big picture (total sellout), but more critically, they know what demand is like, including what prices all buyers are willing to pay. I am very curious to see what the second and third floor “A” lofts go for. In contrast to our Canadian (again, $14,675,019 on a long ago contract) and loft #4A ($13,753,000 on a May 2016 contract), these two lofts didn’t find contracts that stuck until 2017 (long after #4A had closed). If those two (late) buyers paid anywhere near $13,753,000, they probably overpaid. Time (and ACRIS) will tell.