what changed in 2012 to get 8 Warren Street loft sold in September but not January?

what a difference 9 months made
I am not saying there is a rational explanation for this, just that these are facts about the “2,010 sq ft” Manhattan loft #5E at 8 Warren Street (Trinity Stewart Condominium): it did not sell when offered at $2.8mm from January 3, 2012 to April 9, but when offered at $2.745mm on September 4 it found a full price contract 3 weeks later and closed on November 21. That’s a full-price Fall contract within 21 days of coming back to market at 98% of the price that was unsuccessful for 95 days to start the year.

Was the First Quarter market so different from the Third Quarter market in 2012? Not in the overall Manhattan residential real estate market, but (apparently) in the hyper-local market just west of City Hall on this more busy-than-charming block in southeast Tribeca.

The scenario that can account for this sequence involves one (more likely, two) set of loft buyers who … er … appreciate this micro-nabe but who were not in the market at the beginning of the year and who were in the post-Labor Day market. This hypothetical can work if there was only one such buyer set, but only if the buyers really loved the loft and the seller really was stubborn about price; if there are two sets of buyers the seller need not be so stubborn for this to work.

Walk with me through some tautology, please: loft #5E was not worth about $2.8mm in early 2012 because no qualified buyer stepped up to buy at that price then; loft #5E was worth exactly $2.745mm in September 2012 because a qualified buyer agreed to pay that amount. (I assume that someone offering $2.745mm in February would have made a deal; you should, too.) In a rational and efficient market, both of these things cannot be true. (I assume for this discussion that The Market was essentially the same throughout 2012; you should, too.)

In this instance, I assume the breakdown is that the hyperlocal market for 2-bedroom lofts near City Hall above $2.5mm was not deep enough to be efficient. In fact, that it had no buyer participants in the First Quarter.

While I might be able to construct an argument about a broader market change if I sliced and diced the market data enough (perhaps identifying the other nearby loft[s] that engaged the buyers who were then shopping), that seems like too much strain for too little explanatory power.

confirming the local market value, more or less
Attentive readers of Manhattan Loft Guy will remember that the last time I was in this building I made a mental note to compare the next open market sale to the loft #2E July sale, which I hit in my August 23, 8 Warren Street loft buyer completes 2nd floor set at record prices. That was a public sale in the sense that it was marketed to any buyer, but was made by the unique buyer who owned the other loft on the floor, so I wondered if that record-setting value was a true market sale:

But for the address of the buyer, this would obviously be a market transaction, an entirely valid comp for all purposes.

I can’t be sure at this point, but I suspect that some of my unease about whether #2E really reflected The Market was because #5E had not sold earlier in the year. Indeed, the loft #2E record contract was signed just 7 weeks after #5E was pulled from the market at essentially the same price per foot. (We can, therefore, go another round: if #5E was not worth $1,393/ft in early April because no qualified buyer stepped up to buy at that price then, how could #2E have been worth $1,395/ft when that contract was signed at the end of May?)

In this case, at least, there is a logical answer, again based on a thin buyer pool in which the potntial buyers for #2E included the guy next door, a buyer who was definitely not in the market for a loft that did not abut his.

By the time that #5E came back to market in September, that #2E buyer had bought, which both took that unique buyer out of the market and created a recent highly relevant comp for #5E for buyers new to the market around City Hall, especially for new buyers who were not aware that #2E’s market price was paid by a buyer uninterested in other lofts in the building or elswhere in Tribeca.

That $1,395/ft for #2E is, of course, still a building record (#5E ‘only’ comes to $1,366/ft), exceeding the later #5E even though #5E should be more valuable in a rational and efficient market because that "main living & dining room area have brilliant southern exposure." But it is within a range of market noise of #5E and, thus, now looks more like a valid comp. (Whether it was at its own time, or not.)


© Sandy Mattingly 2013


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