did the Manhattan loft market improve by 15% from November to June? 43 Clarkson Street has 2 data points

one lingered, after drops; the other flew off the shelf
Even infrequent Manhattan loft Guy readers know that I love paired loft sales! The October 4 sale of #2B at 43 Clarkson Street was posted the other night on The New York Observer’s site, in the In Deed! feature (2nd item), which lead me to the December sale of #3B. If these two Manhattan lofts really are essentially identical (more about that, below) the significant difference in clearing prices is difficult to understand. Unless you believe that the loft market in Manhattan improved by 14.6% between the times the two contracts were signed (December 2009 and June 2010). I don’t, and I have a theory (below), so let’s look at this puzzling pair.

real deal + old school in the 21st century
Here is the broker babble that was used to sell #3B, which has 3 bedrooms and two bathrooms and is said to be “2,585 sq ft”:

This loft is what you think of when you think West Village. This real deal, old school CORNER 3BR Condo Loft has been renovated for the 21st century, yet maintains ALL of its prewar grandeur and soul. Sprawling, sunblasted and cavernous, this is the quintessential Dreamloft. A grand scale entertaining space with 10 windows and 2 exposures that can host a dinner party for 50, or a family of 5 – or both!! All this in the most chic, private location that is in the middle of it all – yet miles beyond your expectations. If you are looking for authentic, yet need the modern bling – see this today! This is the only 3BR Loft in the West Village that has every thing you are looking for…and more.

price discovery can be painful
The listing history for #3B hints at a great deal of seller anxiety but probably does not really reflect overall market conditions, despite living through the changed market conditions from early 2008 into early 2009 so much as it reflects overly aggressive pricing:

(That first * indicates a period of back-and-forth $4,000 price changes that I will ignore for this analysis; they were so trivial that they could not have been intended to change the market perception of the price, but only to claim attention for a Price Change! The second ** indicates I have ignored that it was also off the market for five weeks over the turn of the year; clearly a ‘temporary’ change. The third *** indicates the contract date in our data base, instead of that on StreetEasy (Dec 10), which is just too close to the closing date to be credible, even without confirmation in the inter-firm data-base.)

This history tells me that they were way above The Market during the only time they had a really good chance to sell this loft: from May 8, 2008 until Lehman’s bankruptcy filing on September 15, 2008. They do get an “A” for effort in dropping 19% immediately after Lehman and then another 6% within 7 weeks. But they simply missed the best market they had, and then sailed into the chilly winds of the nuclear winter for Manhattan real estate that followed Lehman’s demise.

retrospection: that female dog!
With the benefit of hindsight, their return to the market on September 22, 2009 at yet another big price drop (13%) can be shown by the coming comparison with #2B to have been an over-reaction. (They never changed agents, bless their loyal souls.) Whether or not they “panicked”, they were clearly motivated to sell, and they succeeded in that they got a contract within six weeks at a tiny discount (1.5%).

It seems clear to me that these battered #3B sellers missed that the September 2009 market was a much deeper market than the market 6 or 12 months earlier. They made the painful choice to drop a half million dollars from their asking price, and were rewarded for their zeal with a quick contract.

This would all be a theoretical (general Manhattan loft market) discussion about whether they left money on the table had their neighbors downstairs not decided to sell five months later. I wonder if the #3B sellers have keep up with news about the old building…. [see below for Update]

The Observer observes
Which brings us (finally!) back to the very recent sale of #2B that was reported in the New York Observer this week. You will remember that I said above that #3B and #2B are “essentially identical”. There are some interesting differences in layout, and #2B has one more bathroom than #3B, but you don’t have to rely on my judgment that these two lofts are “essentially identical”, because here is the broker babble for #2B:

This loft is what you think of when you think West Village. This real deal, old school CORNER 3BR Condo Loft has been renovated for the 21st century, yet maintains ALL of its prewar grandeur and soul. Sprawling, sunblasted and cavernous, with 14ft ceilings- this is the quintessential Dreamloft. A grand scale, open south and west facing entertaining space, with 10 windows and 2 exposures that can host a dinner party for 50, or a family of 5 – or both!! All this in the most chic, private location that is in the middle of it all – yet miles beyond your expectations. If you are looking for authentic, yet need the modern bling such as 2 zone central air as well as filtered water and internet everywhere – see this today! This is the only 3BR Loft in the West Village that has everything you are looking for…and more.

I hope this sounds familiar, and before you scroll up to re-read the babble for #3B I will tell you that this is word-for-word identical, with two additions in the #2B iteration (the 14 foot ceilings, and specific “bling”: 2-zone central air + filtered water + internet everywhere). Yes, the agent is the same for #3B and #2B. Yes, he plagiarized from himself.

price: discovered!
Between the December sale of #3B at $3.2mm and the May launch of #2B’s marketing the agent and/or the #2B sellers figured out that the Spring 2010 market was very different from the market conditions of 6, 12 or 18 months before. (I have beaten that horse before, of course, most recently in my September 28, 20-26 N. Moore Street loft sells quickly if you don’t count 2008 and 2009, about a loft that did not sell for $2.2mm in early 2009 but sold in July 2010 for $2.5mm) Note the similarity in original asking price for #2B in May at $3.75mm and the second-to-last asking price of #3B as of February 2009 at $3.749mm.

Note, too, how well that $3.75mm worked for #2B after $3.749mm had failed for #3B:

The contract in 7 weeks at a 3.3% discount proves that $3.75mm was the right asking price to use to discover the market value of #2B, which turned out to be $3.625mm.

So far as the selling agent wanted the world to know, #2B and #3B were identical except for one extra bathroom, higher ceilings, and more specific “bling”, yet #2B sold for a $425,000 premium over #3B 10 months later. Not to beat up on anyone here, but I don’t believe that much of that premium reflects a market preference for a third bathroom or for higher ceilings; nor do I believe that it represents a change in market conditions from November to June.

I believe that the #3B sellers over-corrected when they came back to market in September 2009 at $3.249mm. I believe that the #2B sale strongly suggests that had #3B come back to market at the old $3.749mm or slightly lower, #3B would have sold in about December 2009 around $3.6mm or a little less.

As I said up top, I love paired loft sales! In the case of this puzzling pair, I think they illustrate something fascinating about The Market and about seller behavior. I am sure the #3B sellers were relieved to finally get out of 43 Clarkson Street last December, perhaps even (grudgingly) happy about the price. If they know about their neighbors in #2B, [see below for Update] I bet there is a certain … regret.

The Market teaches cruel lessons. Again.

[UPDATE 10.23: I don’t know how I missed this, but the deeds show that the #2B and #3B sellers were the same family. This fact doesn’t change the thrust of this post, but I have stricken through some of the ‘old neighbor’ remarks. The point remains: the later sale of #2B shows that these folks over-corrrected in pricing #3B last year. Net-net, I am sure they are happy with the two gross sales prices, though they clearly left some money on the table ($250k or more) when they sold #3B. When it came time to unload #2B, they knew to adjust the price up.]

© Sandy Mattingly 2010