chasing a dream or waking up from a bad dream, as they chase The Market down

stepping in a down market, easier said than done, always painful
There’s a new-ish listing in an architecturally significant Manhattan loft conversion from this century that hit numerous Manhattan Loft Guy buttons: it is (another) one of those eight million stories; it was definitely too pushy; it is now priced significantly below the prior market (possibly in line with current reality).

Looks as though they did  a lovely job with the conversion, using quality finishes and creatively adapting the so-far-from-cookie-cutter spaces a few years back. Certainly, the loft is lovely. Certainly, it was priced right back in the day: it took ten days to find a contract in the original offering. Certainly, these folks have (at least) one of the eight million stories here in the big city: they started trying to flip seven months after closing, probably as unintentional flippers (in the sense that they’d have marketed immediately after closing if they had always planned to flip; ‘waiting’ 7 months implies a change in circumstances).

the numbers tell a story

• The developer priced this loft at almost $1,300/ft almost 3 years ago (it closed a year later)
• The new owners started flipping (started trying to flip) 7 months later, asking under $1,500/ft
• Unsuccessful after six months (and one drop of about $100/ft), they took it off the market (without, apparently, having totally abandoning the idea of a flip)
• Back on the market after another 9 months, now asking about $1,100/ft — about $400k less than their purchase less than two years earlier

what’s the story?
I may only be scenario-spinning here, but I read this trail as evidence of people unhappily but finally confronting the reality that they have to sell, come hell, high water or a significant capital loss. They spent some painful months since Summer figuring out if they really had to sell, then decided the numbers didn’t work so they had to sell. Re-pricing $600k less than before looks pretty credible to me; we will see if The Market is equally respectful of their new approach.

© Sandy Mattingly 2009