flipping on your head (ouch) in Chelsea / from 2002 to 2007, returning to 2009 … then 2006 or earlier??

off 10-15%, at least
It feels as though it has been a while since I posted in the too pushy …? thread but here’s one that reminds me that the thread always had that "?" in it. There’s a Manhattan loft newly (returned) to market in Greater Chelsea that is priced way below where it was offered last year, and more than 10% below where it last traded for, in 2007. I would think they would get some interest at this pricing level, but (The Shadow being off the radio for decades by now) only The Market knows ….

gain to froth to pain: The Market timeline

(I am going to set this out in words first, as I am a word [and wordy] guy, but I realize this is hard enough to follow that I will put in a table at the end, using proportions though not actual prices in order to shield this loft form being identified. As always, I beg your indulgence to bear with me.)

The building was first marketed in 2002, a full year before it was completed and sales occurred. This unit’s history in the developer marketing days is interesting: it had an accepted offer very early that fell through, then was re-priced 35% higher for a short time (the developer thought they had left a lot of money on the table in the first pricing), then was re-priced lower by 10% (second thoughts on how much was left on the table), then actually cleared in 2003 at about 5% off the last asking price after being on the market at that lower price for 5 months or so. That was a dynamic market, no?

The original buyer decided to move on and cash out about 3 years later. In what was by then a somewhat frothy market, the original-buyer-turned-2007 seller asked nearly 50% more than the original price. (Those were heady days, no?) It took all of 4 weeks to make a deal at 97% of that asking price, resulting in a gross gain of $400k on a loft that is not much more than 1,200 sq ft.

not that heady, after all
Here’s where miscalculations about The Market come in, as that 2007 buyer tried to flip almost immediately, asking 40% more than s/he had just paid. Like the developer five years earlier, the new flipper thought too much money was left on the table — although this time by the original-owner-turned-2007-seller. While there is no question that The Market generally increased through 2007, that 40% premium was way more than The Market would swallow. Taking $100k off the price after 4 months did not impress anyone either, so that marketing effort ended when the listing expired after 6 months.

not that heady, either
Undaunted, though somewhat chastened, the flipper tried to flip again after The Market had definitely (in retrospect) changed, dropping the ask by another $200k, still looking for about 15% in gross profit. The flipper was way behind a declining market, and that effort expired in six months, as well.

to the present, priced at a loss from 2007
A change in agent and price shows the (by now) very chastened flipper asking 10% less than s/he paid in 2007. Ouch, indeed. Any potential buyer will argue with this flipped out flipper that 10% is not enough of a discount, but I think the flipper has finally found an asking price that should attract some interest, unlike the prior two 6-month exercises in pricing futility.

the same story, fewer words (proportionate values)

late 2002 $1,000,000* developer’s original ask
Spring 2003 $1,375,000 price increase after accepted offer
(fear of pricing too low)
within a month $1,220,000 developer overshot the market?
Fall / Winter 2003 $1,160,000 contract / clearing for 1st buyer
early 2007 $1,750,000 1st buyer wants to sell after 3+ years
within a month $1,690,000 2d buyer contract; buys 30 days later
Spring 2007 $2,300,000 2d buyer seeks to flip within 30 days
4 months later $2,187,000 flipper resets price
2 months later   listing expires; price did not work
Summer 2008 $1,925,000 flipper tries again in declining market
6 months later   listing expires; price did not work
March 2009 $1,500,000?? flipper tries again (11% off 2007 purchase)
(30% above 2003 original sale)

*the original price was not $1mm, but I am using that starting point to keep the active listing anonymous; all subsequent "prices" are closely proportionate to what happened since that beginning (in round numbers)

As I said (in all those words above), this is quite an interesting timeline, encompassing Mahanttan loft markets that showed gain to froth to pain: (1) an up market (developer searching for right price in 2002-03), (2) a frothy market (quick sale in 2007 up 45% in three+ years and an immediate attempt to flip way too high), and (3) a chastened flipper two years later trying to lose only 11%. Wonderful microcosm, I think. [arrgggh … can’t turn that italics monster off; sorry]


© Sandy Mattingly 2009  



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