345 West 13 Street loft is candidate for sale of the year, but the year was 2009

[oops — left off the title for 45 minutes]
December 2010 sale was pretty sweet, however
It seems like only yesterday that I was wondering whether a Manhattan loft that sold above ask after having been on the market forever was the strangest loft sale of the year just ended, but it was actually 4 days ago (in my January 2, Heywood loft sale (263 Ninth Avenue) is candidate for strangest sale of the year).

Today I am thinking that the recent sale of the Manhattan loft #5F at 345 West 13 Street was not the strangest Manhattan loft sale of this past year, though it sold on December 1 for $4.4mm, 5% above the asking price with a contract in 3 weeks, and even though that sale price was a whopping 47% premium to the last sale only 17 months earlier. Nope. Odd as it may be to be doing this in the first week of 2011, I am going to award this loft the deal of the year award posthumously, for that 2009 sale. That sale — on June 30, 2009 at $3mm, which seems to have been an arm’s length transaction — was a huge hit from the prior sale, on December 15, 2005 for $3.875mm.

that is some roller coaster!
If you are keeping score at home, the most recent sale was 47% above the June 2009 sale but only 13.5% above the sale 4 years earlier.

The June 30, 2009 sale at $3mm was not so much strange as disastrous, as there were a lot of people unable to sell lofts during the nuclear winter for Manhattan’s residential real estate market, and a lot of people who sold for much less than they wanted. Until I find a better example, however, the December-2005-buyers-at-$3.875mm and June-2009-sellers-for-$3mm are the Manhattan Loft Guy poster child for how bad that nuclear winter really was.

painful spectacles
It will be harsh but necessary to look back at how that disaster came about, especially because (with perfect hindsight) that had a chance to avoid it. A slim chance, but a chance. Keep in mind three things when you look at the painful listing history:

• they paid $3.875mm in December 2005
• The Peak was more or less March 2008
• Lehman filed for bankruptcy on September 15, 2008

It sure looks like they wanted to sell in Spring 2008, doesn’t it? Yes, they started way too high, but they dropped $205k in 3 weeks, then another $145k in another 3 weeks. And they couldn’t really have known that when they went off the market for the rest of the summer that they had lost their last chance to sell in a pre-Lehman market.

They were willing to bite the bullet and face a loss, by dropping the price after nearly a year to $3.75mm, but that was (much) too little, (much) too late. Smelling blood in the water, their buyers squeezed a further 20% discount from that last asking price to take the loft off their hands.

Talk about a distress sale! These folks took out a mortgage for $3.1mm when they bought in December 2005, so the $3mm sale was almost certainly a short sale. Though I see no indication that they were under extreme financial duress (no lis pendens was filed, for example, and no lien for common charges that I see), they were clearly feeling that they had to sell at whatever the market would bring them, when they finally did get a bidder in May 2009.

One more time:

• December 15, 2005 $3.875mm
• June 30, 2009          $3mm
• December 1, 2010   $4.4mm

Let’s put on the spectacles of hindsight, again. When they came to market in May 2008, they were in a changing market (prices were softening, which they could have known) and had 4 months before Lehman’s bankruptcy changed a challenging market into a nearly impossible market.

Had they started where they bought, they might have been able to sell at or around that $3.875mm and had a contract before Lehman’s fall. That would have looked to a buyer like a good deal, to be buying near The Peak at a December 2005 price, but for the same reason they would have been naturally reluctant to do that. Hard to say tough luck because this was their choice, so I will go with too bad.

data points make The Market, but …
The overall market is made up of the thousands of individual sales in Manhattan, but no individual data point is The Market. Fair Market Value is that price freely agreed upon by a willing buyer and a seller under no compunction to sell, so this June 2009 sale at $3mm qualifies, based on what I can see. Yet that $3mm sale was below-market, in the sense that the overall market (even the overall loft market) did not behave this way: down 22.6% from December 2005 to June 2009, then up 46% by December 2010.

The overall market might well be up 13.5% from December 2005 to December 2010, however.

In retrospect, the 2005-buyers-into-2009-sellers panicked. Given that they had been on the market since May 2008 and that they could not know how long the nuclear winter would last, they made a difficult choice in a horrible situation. (Yes, there were indications in 2009 of a thaw, but relying on “indications” can be an expensive proposition if the indicators prove to be wrong.)

O.U.C.H.

about that bidding war
You have probably forgotten by now that the recent sale was at a premium to the asking price. Getting to contract in 3 weeks above the asking price would seem to make this loft sale a candidate for 2011 Manhattan Loft Guy deal of the year, but you can’t win twice so close together. It wouldn’t be fair to the other lofts.

At “2,886 sq ft”, #5F sold a month ago for $1,524/ft. With timber beams, original columns (iron or wood, I want to know! update: I am reliably informed), brick archways and huge windows, there is a strong “loft” feel in a full-service condo that was converted in the Early Meat-Packing Era, circa 1999. The 3 bedroom + 2.5 bath floor plan has the benefit of a corner, but also the benefit of a long wall of windows. To market on September 3 at $4.195mm, in contract by September 27 at $4.4mm.

My, how things change!

© Sandy Mattingly 2011