price drop can re-set expectations IF low enough

probably not low enough
There’s a Manhattan loft newly returned to market in a brand-name Tribeca building that has been for sale for quite a while. It is now on its third firm and fourth price. It is hard to see that the new firm and new price will have more luck than the last firm and price, as there is not  a huge difference in then-vs-now pricing, but The Market will tell….

how big a change is big enough?
This seller is at least frustrated, and maybe pissed. Here’s a bit of price history, then an explanation for the (certain) frustration and (likely) pissedness:

early 2008 asking $4.2mm
Spring 2008 drop to $3.95mm
Summer 2008 asking $3.85mm
(the new price is roughly 6% off the last price)

There is an extremely local and extremely timely comp for the value of this loft, a sale in July 2008 at $4.075mm that took about 10 weeks from offering to close. In other words, that successful sale overlapped with the newly returned to market loft, but was (a) offered at a higher price and (b) closed at a higher price. Hence the (certain) frustration….

thin market leads to inefficiency
Retrospect (bitch that is) establishes that The Market was changing (dropping) in Summer 2008, though some were quicker than others to notice. Manifestly, last Summer there was a buyer for a loft like the one newly returned to market and the one that sold in July. And I mean "a" buyer in the sense of a single buyer, for had there been two buyers, the second one would have bought this newly returned to market loft soon after the other one sold in July, as that sale established a market value above the then-current asking price. But it did nto not happen that way.

The new price for the loft newly returned to market is about 15% lower than the original asking price, and more than 10% below that July 2008 clearing price. Unfortunately for this frustrated seller, they stayed on The Market long enough after the July sale below that July sale price to confirm that $4.075mm no longer represented The Market Value for this loft. Eight months later, the sellers are left with the difficult task of setting a new price to attract buyers in the current market. If the old price did not work (it didn’t), it is hard for me to see that a price 6% less 8 months later will work.

This whole scenario is similar to the dueling neighbors at 144 West 18 Street that I hit on June 11, neighborly competition / laggard at 144 West 18 Street closes off 15% since December. One of those neighbors got ‘the’ buyer for the building (as in, the single buyer), selling at $1.675mm in December to a buyer who signed a contract in October; the other got stuck with a buyer who closed at $1.425mm on June 2, after signing a contract in April. In other words, more evidence that a thin market is very dangerous for sellers and that even contemporaneous sales in the same building can be distracting comps.

In the case of the newly-returned-to-market-in-Tribeca loft, I think The Market expects more of a change over 8 months than 6% — the July 2008 sale be damned. Perhaps the new price will attract a (in a former lexicon) low-ball offer that the old price did not. Seems unlikely to me.

Please note that this is not fair. In a rational (efficient) world, this unit would have sold when the other one did. But it didn’t. Sucks for them.