little loft, big price for 720 Greenwich Street loft

a Pinched Long-and-Narrow??
I am not going to say that the footprint to the “740 sq ft” mini loft #4C at 720 Greenwich Street is the strangest for a Manhattan loft, because I am still young and there are so many lofts that I have never seen. But this floor plan sure is unusual, even for a building with many small footprints.

I don’t know that I have ever before described a Manhattan loft that is this small as a Long-and-Narrow (how long can long be at this size?) but this one is just narrow enough that it makes the other dimension seem long. At its ‘widest’ point, the loft is 14 feet (or maybe 12; don’t they look the same?), with the other dimension being something like 65 feet. That ratio is comfortable for a larger (typical) Long-and-Narrow, e.g., 22 x 100 feet. Like many lofts, this one has windows only on one end, but the classic problem of the ‘far end’ being dark is exacerbated in #4C by that pinch in the east wall.

Broker babble such as “[s]o bright, so open and airy” is true, insofar as it goes, and I assume that anyone who has looked at the floor plan will expect no natural light in the dining area and kitchen. The light finish on the floors helps, as do the painted-white bricks; and, of course, the back of the loft seems very well lighted.

This babble worked, however, so who am I to quibble? The mini-loft came to market on April 26 at $879,000, went into contract on June 6, and closed on September 16 at $845,000. Less than 6 weeks to contract at 96% of the ask is a very successful marketing campaign.

what happened (did not happen) in 2010?
One way to compare market conditions in one period against market conditions in another period is to look at lofts that sold both in the first and in the second period (as I did in my September 27, is the Manhattan loft market back to (up to) 2007? 61 repeat sales say “probably”, “a bit”). But that only works when there is a big enough data set of such paired resales, something that is unlikely if we were to compare 2010 to 2011. Another way to compare market conditions in one period against market conditions in another period is to look at lofts that were offered for sale both in the first and in the second period, a very different data set.

Mini-loft #4C is only one data point in such a set, but it is interesting that it did not have a successful marketing campaign in 2010, despite doing the same things in 2010 that worked in 2011:

• Mar 22, 2010 new to market $879,000
• Aug 10 off market

Personally, I believe that the 2010 market was substantially similar to the current market (unlike, say, the significant differences between the 2009 and 2010 markets), so this history of failure at $879,000 in 2010 and success at $879,000 in 2011 is peculiar. Aside from the irritating babble format (why do agents punish us with ALL CAPS??), the 2010 presentation hit the same high notes as the 2011 presentation.

Conventional Wisdom is that an asking price that did not work over 5 months did not work because it was too far from the market value. Absent a change in market conditions, a do-over at the same price should again be too far from the market value. But what did not work in 5 months in 2010 took only 6 weeks to work in 2011. Either The Market changed significantly since 2010 (which I doubt) or … it is just one of those things. Sometimes Conventional Wisdom does not apply because some data points will stray from the the general trend.

Put another way: The Market, like Life, is not fair.

comparing the 2005 market
This mini-loft wold be a valid data-point for a traditional paired resale analysis comparing two market periods, as it previously sold on October 19, 2005 for $740,000. StreetEasy only has the deed record, but not the marketing campaign from that sale. Our data-base has enough detail to show that the “new” kitchen and bath claimed in 2010 were not present in 2005. So not all of the 14% gain from 2005 to 2011 can be attributed to different market conditions.

Indeed, I wonder how much that new kitchen and bath cost. They are not large, and may have been done for as little as $40,000. If so, and if The Market valued the work dollar-for-dollar, that would leave as much as $75,000 of the gain since 2005 to market appreciation. I have not done a 2005-to-2011 paired resale analysis, obviously (note to self …) but am inclined to believe that a 10% gain would be comfortably at the low end of gains since 2005.

If The Market value of the new kitchen and bath is greater than $40,000 (both look much improved over the 2005 conditions pictured in our data-base), then less of the $105,000 gain would be left to general market appreciation.

I will stop with the mere speculation about 2005 and this mini-loft, but will pull one nugget out of the 2005 broker babble that you can’t see. I very much appreciate the subtlety of this description:

The unique structure of the space allows for a generous, as well as discrete, bedroom.

the joys (and math) of owning v. renting
Habitual voyeur that I am, the notice address for the seller in the recent deed permits me to trace her to a rented condo, to one of the great prewar condos in the West Village, in fact. She paid up to $4,500/mo for an awfully nice apartment (recent rental listing for that apartment is here, with more pix and prose than in the link for her 2009 rental). She gave up the “gorgeous sunset view on the Hudson River and north city view, [the] Working Fireplace[, the r]enovated and fully equipped modern Italian windowed kitchen[, and 2 large walking [!] closets” to buy mini-loft #4C.

There is no mortgage filed yet on #4C. Her new maintenance there is $1,112/mo. That leaves $3,388/mo available to her to pay a mortgage to be in the same cash position as when she rented (assuming she paid the full freight; just work with me here…). That would carry only about $450,000 in mortgage principal at 5%, so (if she has a mortgage) she would either put down much more than 20% to keep the same cash (pre-tax) position, or she would pay more cash per month in maintenance plus interest to own instead of renting.

In a nice bit of data synchronicity, it is pretty clear that the apartment she rented is worth more than $1.25mm (way more than she paid at 720 Greenwich), as this same lower-floor apartment sold for that amount in 2009 (and for $1,282,995 in 2007). In other words, she was renting far ‘more apartment’ than she later bought at similar numbers.

Had she stayed, she might have had to pay the new rent of $4,950, which would be equivalent to another $100,000 or so in mortgage principal at 5%. In (overly simple?) terms, for what she wold have been paying to rent a terrific apartment (“[b]est one bedroom line in prestigeous [sic] Bing & Bing building”), she would have put down $290,000 and carried a $550,000 mortgage at 5%, along with her monthly maintenance at 720 Greenwich.

As a purely financial decision, this is a step back for the #4C buyer, given that #12C at 299 West 12 Street is worth much more. But obviously worthwhile for her, net-net. Instead of the prospect of rent increases (it went up 10% in the two years she was in #12C), she has fixed mortgage costs (presumably) and the prospect of maintenance increases down the line.

Again, net-net, it was obviously worthwhile for her. It is rare to get so much public data about one loft buyer’s options and decisions. Fun stuff (for me, at least).

© Sandy Mattingly 2011