250 Mercer Street loft rode peak without selling, just sold off one-third
no cash in just riding a wave
The Manhattan loft #B406 at 250 Mercer Street closed on December 1 at $1.65mm, a far cry from the asking prices in 2007 and 2008. If only…
It is just not enough to be on the market approaching a peak … You still have to be priced at the market in order to sell. I hit a Manhattan loft at 30 West 15 Street yesterday that overlooked that detail (January 9, loft that missed The Peak at 30 West 15 Street comes back to sell, modestly but successfully), but that one was actually hardly on the market heading to (and over) The Peak. In contrast, the “2,000 sq ft” combo loft that is #B406 timed The Market perfectly, being on the market from April 2007 into June 2008, but timing isn’t everything. They were then asking from $2.495mm to $2.199mm, but The Market was not biting. If only …
fight and flight, and …?
I framed my November 15 post as though a disappointed seller has only two choices, fight or flight. But if a seller is at it long enough (sad to say), a sequence of choices is available, like this:
|April 18, 2007||new||$2.495mm|
|Jan 17, 2008||back||$2.25mm|
|April 7, 2010||back||$1.895mm|
a little less fight might have done it
Of course, there are other alternatives to fighting or fleeing when The Market rejects your price … among them, meeting The Market where the price needs to be. Instead of doing that, the #B406 sellers sat at too-high prices for about 9 months leading up to The Peak, a period that included deals being made at record levels of volume and pricing, and then sat (again, at too-high prices) for a few months after The Peak. On the one hand, they dropped the price four times; on the other hand, none of the price drops got to the right price.
Notice what happened in 2010: they came back, then dropped once, and sat at that price for five long months before signing a contract at a 7.5% discount from that last ask (34% off their first ask)
meanwhile, upstairs in #B506…
It is impossible to prove what the right price for #B406 would have been in an earlier market, or to prove that The Market punished it for being on The Market so long, so high. But neighbors upstairs also tried to sell in 2008 unsuccessfully but did not fight as long, and then did much better after taking time off.
#B506 has the larger part (“1,200 sq ft”) of the footprint of the combination #B406 (which was combined with #B407 at some point). As they probably still say in school, compare and contrast this #B506 listing history with that of #B406, above:
|June 20, 2008||new||$1.695mm|
|Sept 26, 2009||back||$1.475mm|
|Feb 22, 2010||sold||$1.475mm|
As we will see, there are probably some differences in the level of finishes in the two lofts, but note the different approach taken in marketing #B506 … and the different result. Rather than fight a weakening market in the Summer of 2008, the #B506 sellers took it off for a year; when they came back, they came back at a modest 7% discount from the last ask and were rewarded with a full-price contract within 6 weeks.
That was a contract at $1,229/ft in November 2009, compared to #B406, which came back to market in April 2010 (after nearly two years away, and 6 weeks after #B506 closed at $1,229/ft) asking $1.895mm, or $947/ft … and did not get it. When #B406 finally sold, it was 9+ months after #B506, and was at $1.65mm, or $825/ft. That is a staggering $404/ft lower than the upstairs sellers got.
The #B506 sellers were very proud of their “spectacular” and “tastefully renovated” loft, dropping proper proper names into the kitchen description (which includes “custom made cabinetry”), and claiming “gorgeous light and views”. The #B406 selling description is much more muted (“carefully renovated and is ready to move in” is the highlight), but I just don’t read $400/ft worth of difference in the condition of the two lofts.
reconciling is hard to do
How then, to account for vastly different market treatment accorded these two not-so-very-different lofts? I have to believe that part of it was the long (bloody) fight that #B406 waged in 2007 and 2008, and that the loft was perceived as damaged goods even under $950/ft in 2010.
I suspect that these two lofts are not so similar in the market place, and so can’t so readily be compared to each other. Manifestly, #B506 competed well in the two-bedroom loft category around $1.5mm in 2009, even with relatively high maintenance charges of $2,585/mo. At “2,000 sq ft” and with 3 bedrooms, #B406 was competing against different lofts, and the $4,190/mo maintenance may have contributed to the drag.
I have not done the research to elevate this theory beyond theory, but I am hard-pressed to account for $400/ft worth of difference between #B406 with a October 2010 contract and #B506 with a November 2009 contract.
© Sandy Mattingly 2011