Feb. 8, 2010 - REBNY does its job, takes anti-social stance against tax consistency

the problem with REBNY
Because all agents in all firms that are members of the Real Estate Board of New York are required to be REBNY members, I got a bit of email propaganda from the president of REBNY on behalf of "our industry" last week. He's just doing his job, but this one irked me enough to prompt a Manhattan Loft Guy rant. And it is not fair to pick this issue at as the problem with REBNY, but it is a start.

The issue is pretty simple. Sales of coops are transfers of stock, not sales of Real Estate, and are secured by a pledge of shares, not by a "mortgage". Thus, the "mortgage recording tax" that is levied upon the transfer of "real estate" (including townhouses and condominium apartments) is not levied on coop sales. (This is one reason that condo closing costs are much higher than for coop transfers.) The State is proposing to level this playing field by extending the recording tax to the pledge of coop shares. "The industry" is aghast.

where is Half-Term Governor Palin?
The REBNY rhetoric is straight out of this weekend's Tea Party convention:

New York Observer ran a nicely balanced article on February 2, The Bell Tolls For Coops, featuring a very-different-in-tone comment from a very different industry group, the Council of New York Cooperatives and Condominiums:

"We're opposed to it-let's put it at that," said Marc Luxemburg, president of the co-op council. "The problem is, you have a huge budget deficit, and they're looking around for any source of money they can find. Collectively, we'd have to reduce the size of government, which doesn't look like it's going to happen too quickly, or they've got to dig deeper into the taxpayers' pockets."

history is incremental

I had always figured that the difference in tax treatment between sales of condos and coops was an oversight, an example of The Idiots In Albany not getting the details right. After all, if one were to create a new system, it seems (to me) to be inconsistent to not tax coop share pledges the same way as condo mortgages -- especially since coop shareholders have an exception to normal tax treatment of corporate entities by being able to pass through real estate taxes paid by the coop to individual shareholders. But maybe this wan't an oversight, so much as it was a recognition that -- back in the day, at least -- coop shareholders were different from condo owners.

The Observer describes coops as semi-socialistic, and maybe they were originally, as relatively rare collections of "cooperating" neighbors. But that train left the station not later than the mass conversion of rental buildings to coops in the 1970s. The Observer also notes that this tax anomaly has been considered for at least 20 years, but Albany did not 'fix' the 'problem'. (Leading me to believe that The Idiots are idiots, but in this case because they could not fix something rather than because they were ignorant of what they were doing.) From The Observer:

"our industry"?
REBNY often turns my stomach, as it is a trade organization that serves a constituency much broader than coop or condo owners. In this instance, to be fair, REBNY is speaking on behalf only of coop shareholders but it is tainted (for me) for being the voice of those people who, you know, would otherwise find it hard to get the attention of our public officials, like the Rudin, Durst, Trump and Macklowe families. It is comforting to know that there is a mouthpiece with a broadly representative name that can Speak Truth To Power, even if usually done on behalf of Power. Not.

I don't know who "our industry" is, in the sense of "Our industry already pays more than its fair share in taxes." I suppose it is far more politic to refer to "our industry" rather than to The People Who Own All The Land and Buildings; there might be less sympathy fr such a group.

But if REBNY is a sophisticated group (as you would hope that a group representing, among others, billionaires would be), you would have the right to expect that it would have some, you know, analysis, or a serious budget proposal to make. Instead, their argument is captured perfectly by the headline on their Action Center page: "Reduce Government Spending; No New Taxes!"

A serious consideration of local and state budget problems would acknowledge that not all budget problems can be solved by reducing "spending" without reducing "services". So ... as a serious "industry" group, which "services" would REBNY cut instead of creating the playing-field-leveling recording tax on coop transfers?

Why should REBNY be taken seriously in demanding "no new taxes" as part of a serious budget solution? Why shouldn't REBNY have to make the case that a 1% or 2% tax imposed when coop shares are financed is a worse bad thing than other bad things being considered to address current budget realities, such as the possibility that x,xxx public school teaching jobs will be eliminated. Indeed, why wouldn't REBNY be out front in opposing the elimination of public school teaching jobs, on the theory that such cuts will impact property values??

snark alert: Spell Check works, Grammar Check fails
I can't resist one more dig at the public voice of "my" industry. A professional lobbying group that represents The People Who Own All The Land and Buildings should have better editors than this on a call-to-action page (emphasis added):

in case you were wondering about deductibility

By the way, these mortgage recoding taxes are not deductible for federal income tax purposes, per Jay Romano's NY Times Real Estate Q&A of January 14, 2009 (so if this tax is extended to coop share pledges their treatment should be the same):

end of rant
Resume normal discussions about the Manhattan loft market.

© Sandy Mattingly 2010

Feb. 7, 2010 - measuring arm's length / not a real "sale" at 125 East 12 Street

this is hard work, fraught
Having gone on record on Friday (sign of a thaw? 147 West 22 Street closes up 9% over 2006, 263 Ninth does not) with a commitment to bringing th Manhattan Loft Guy Master List of Loft Closings up to date, it is timely to consider one of the difficulties in interpreting a fact, such as that I discovered this week that a deed was filed dated June 25, 2009 reflecting that title in the Manhattan loft #1E at 125 East 12 Street (the Zachary) was transferred and that $800,000 changed hands in the process.

I was about to add this "sale" to the Master List based on my initial review. I was a little concerned that Streeteasy noted there is no listing associated with this transaction. Then I looked at prior history and thought I do not think this loft lost 60% of its value in four-and-one-half years (the prior deed was dated June 27, 2005; price was $1.945mm). So I looked at the names on the two deeds, and found that two people with distinctive names (to me) acquired the loft in 2005 and that in June 2009 one of them transferred an interest to the other.

In other words, it almost certainly is an intra-family transaction as opposed to an arm's length transaction between a willing buyer and a wiling seller, neither of whom is under undue duress. Maybe it was part of a divorce. Maybe it was one of a series of property dispositions or estate planning, or it was a gift. Regardless, in still other words, I will bet you a dollar that it is not a valid comp for any purpose. (A dollar is a big bet for me, and is more than I will wager on the Super Bowl, or have plunked down in any of my last four trips to Las Vegas. But I digress. Again.)

Sherlock Holmes need not apply, this time
This one was easy to identify, but I can't swear that I have always taken extra steps when dealing with a deed and the note there is no listing associated with this transaction. Had the price history been a little closer, within the possible range if actual values (pretty broad, in buildings I am not familiar with), I might not have checked the names on the deeds. Sometimes the names on the deeds are not as easy to figure; sometimes there are Trusts, LLCs, or other entities with different names that mask related-party transactions.

I assume The Miller and the other professionals who create market reports have a refined process for vetting such things. Manhattan Loft Guy flies by the seat-of-the-pants method here. You probably do, too, if you look at ACRIS or StreetEasy. Watch those pants.

To use this example, the transfer of #1E at 125 East 12 Street might have not featured names that were easy to track, and/or might have been at a (still-artificial) price of $1.5mm, in which case somebody out there might have used the sale as a comp. That somebody would have made a mistake.

How do those professionals filter for related party transactions, I wonder....

© Sandy Mattingly 2010

Feb. 6, 2010 - new development 72 Mercer holds its own from peak

looking up from THE peak
The Manhattan loft #4E at 72 Mercer Street traded on January 29 (deed filed yesterday!) for $3.2mm, which is noteworthy for more than the up-to-the-minute currency: when it sold as brand spanking new in April 2008 the price was $3.165mm. I am not saying this is (another?) sign of a thaw -- as I did yesterday, prematurely perhaps, with my on-the-one-hand-on-the-other-hand post, sign of a thaw? 147 West 22 Street closes up 9% over 2006, 263 Ninth does not -- but it is something.

This is an interesting sale because the prior closing was about as close to THE peak of the Manhattan residential real estate market as I have noted for any repeat-sale loft: I subscribe to The Miller's usage of sales closing in 1Q08 as the top of the market; this one closed on April 1, 2008. As a new development sale, the lag between contract and closing was a little longer than for a typical resale, but in this case 'the lag' was not very long: the contract was signed October 31, 2007.

But as a new development sale, it may be that the April 1, 2008 price was not as good an indication of that market as a resale in a building with a mature and established market may have been, but in those heady days I tend to doubt that the developer (intentionally) left any money on the table. As is, I am inclined to take this sale as one resale that held its value from The Peak to January 2010. A rare feat, indeed. Kudos to that seller and his/her star-studded PruDE team.

your cup of tea?
The building was built new in 2006 and is in the love-it-or-hate-it category. (I don't love it.) Scrupulously "post-modern", it nods at the local facades in a 'clean' and 'sleek' way. Critics would say "smugly", but you know how critics are.... The architects have done a fair amount of work in the immediate area, including down the street at 44 Mercer Street (a design I prefer to 72 Mercer Street). Their portfolio page has some interesting tidbits, including a hint at what Soho was like back in the day.

Whether because of negligence, squatters (artists??), insurance or some other factor, the sites on which both 44 Mercer and 72 Mercer sit suffered devastating fires "in the 1960s"; in one case totally destroying the building, in the other leaving a first floor facade and set of columns. Lots of fires in Soho back then....

© Sandy Mattingly 2010

Feb. 5, 2010 - sign of a thaw? 147 West 22 Street closes up 9% over 2006, 263 Ninth does not

it wasn't the renovation
The most astute (anal? persistent??) among the readers of Manhattan Loft Guy may have noticed that I have once again been updating my master list of loft closings, having added a hundred or more in the last week (I have a long ways to go, to fill in since mid-August, but I am essentially current back through December). [Click here for the Master List, a Google Docs spreadsheet; see my August 23, 2009 post, master list of Manhattan loft closings since November, for some limitations.]

In doing that detail work I have been pleased to note many, many paired sales (lofts that have a prior sale, in addition to a current sale). My (everlasting?) To-Do list includes a note to focus on the lofts that have sold twice in the last few years, starting with  a list or table. But I won't wait for this one, as it may be (another?) sign of a 'thaw'....

The Manhattan loft #3S at 147 West 22 Street sold last week for $1.75mm. While it is babbled as both a "stunning example of contemporary sophistication" and as "triple mint & meticulously renovated", that condition should not account for the fact that this January sale was 9.4% above the same loft's sale in February 2006. For that prior sale, the babble went like this: a "perfect union of pristine design and sophisticated elegance ... [that was f]eatured in Wallpaper* Magazine". (I am willing to assume that someone did not buy a Perfect Union in 2006 to gut and re-build it as a Stunning Example, but my point here depends on that assumption being correct.)

data point giveth, data point taketh away
Of course, immediately after having noted the 147 West 22 Street sale as maybe being (another?) sign of a 'thaw', I came across a parallel paired sale at The Heywood, 263 Ninth Avenue. There, the story is different. The "1,489 sq ft" Manhattan loft #4D at 263 Ninth Avenue also closed on January 25 and also sold earlier in 2006. The recent sale at $1.315mm was, in contrast to #3S at 147 West 22 Street, 5.3%% lower than the January 10, 2006 sale at $1,389,375. (Same condition, but the recent sale included a storage unit that sold separately in 2006 for $24,056, so the better comparison is $1.315mm to $1.413mm, a decline of 7%.)

Maybe these two data indicate that any thaw is variable, or perhaps that we are in a bit of a sideways market. Ask me again in 6 months what they meant....

© Sandy Mattingly 2010

Feb. 4, 2010 - spectacular restored loft gets 22% haircut, 85 Mercer sells for $937/ft

Word For The Week = "restoration"
Last week's Manhattan Loft Guy fun word was "unspoiled", as in my January 27 "unspoiled" loft at 70 Thomas St sells for $511/ft, about a loft in not-prime Tribeca that needed a lot of work (not to mention, was up 4 flights of stairs).  This week's word (say it with me ... res-to-ra-tion) was worth $937/ft in prime Soho, in spectacular condition, with an elevator. However, since the sellers of this Manhattan loft (85 Mercer Street #4) sold at a discount of 21.7% from their last asking price -- and at a staggering 40% off their original asking price -- there's probably not much joy in Mudville for nearly doubling the $511/ft of a 5th floor walk-up on Thomas Street. (They did close.)

But I do like the word "restoration", as in this bit of broker-babble:

Not to go all lexicographer on you, but "restoration" is a wonderful way to express the sense that the loft essence remains after a first class renovation. (Indeed, both this loft and 70 Thomas #5 were accurately describes as "authentic", but that just goes to show that "authentic" can be used -- appropriately to describe varied lofts. But I digress. Again.)

using a hatchet to cut hair
The loft is "4,800 sq ft", lovingly restored (as noted), and updated with 21st Century touches like a professional kitchen hidden behind full-height sliding doors and a media room with pivoting wall. I had to cross-check the inter-firm data-base against StreetEasy's price history, because neither source has the complete history. Take a look here, after swallowing any beverage in your mouth:

(Note that, as indicated on the StreetEasy building page "#4" [as it was marketed, a full-floor loft including a guest apartment] sold as two lots, #4F and #4R, at $3,825,000 and $675,000, respectively.) The $4.5mm clearing price had to have been the result of some hard bargaining off that last $5.75mm ask since March 2009. The $4.5mm clearing price had to have been an even more bitter compromise for these sellers, who started at $7.5mm way back at (essentially) the peak of The Market. The $4.5mm clearing price must have looked awfully paltry to sellers who knew that their second floor neighbors sold (separately) in October 2006 and August 2007 for a combined $5.67mm.

But they closed.

speculating about sellers' feelings is guesswork
Unless our listing data-base is missing an intervening transaction, these January 2010 sellers at $4.5mm bought the two 4th floor units on the same day in July 1999 for a total of $1.425mm. Granting them even a million dollar "restoration" (it was probably much less expensive in 1999 - 2000), they still cleared two million more than their purchase price + renovation (sorry ... restoration). Not as much as they'd hoped for.

But they closed.

© Sandy Mattingly 2010

Feb. 2, 2010 - 73 Worth Street neighbors (almost) fought over one buyer, $84k (loser closes closes down 10% since 2005)

the $84k may be more painful than the 10%
The Manhattan loft #5B at 73 Worth Street closed on January 21 at $2.585mm, quite a step down from the $2,877,250 at which it was traded in September 2005. But the same-unit-different-year comp is less interesting than what happened in the building last Spring.

There is a relatively recent comp, just downstairs at #4B, which I hit when it sold in June 2009. That headline that told that tale, as of then:  73 Worth Street closes by biting a very large bullet in one bite, June 26, 2009. That tale focused on how motivated that seller was, but that comp has a fascinating timeline when set against what happened upstairs at #5B. Sometimes there is exactly one buyer for a given property type, so the neighbor who does not get that buyer waits and waits, and sells lower. Ouch.

The very comp-ish #4B (both are "2,571 sq ft", both use glowing adverbs and adjectives) closed at $2.69mm on June 12, 2009, which was a big gulp off the $3.2mm asking price and which suggests a brutal negotiation. But -- as I said then -- the #4B seller proved to be very motivated by taking that 16% hit and getting out of the building. (For some reason I failed to note then that the original price for #4B had been $3.5mm, so the clearing price was a hefty 23% off the original price; it was also 7.4% off what this July 2009 seller had paid to get into the building in August 2005.) In that June 26 post last year I wondered about #4B's impact on the neighbors: "whether (how) any currently available listings are adjusting to this news".

early bird, meet worm
#5B was one of those neighbors, as they had been trying to sell since April 24 (starting at $2.75mm, way below the $3.5mm at which #4B had started in September 2008). While they were adept enough to drop to $2.675mm one week after #4B closed, it appears that #4B got the one buyer then interested in this line in this building (neighborly competition can be intense!). It took #5B until November 30 to drop again (to $2.595mm), from which there was a (relatively simple?) negotiation concluded with a January 4 contract (can that date be right?) and the January 21 closing just $10,000 off the last ask.

a thin market is a dangerous market
That one buyer was just not available to #5B, as they came to market at $2.75mm one week after #4B went into contract at $2.69mm. That small spread between #5B's ask and #4B's contract suggests that #5B should have attracted a #4B-like offer immediately, but The Market did not have such an offer available for another 8 months.

The $84,000 difference between these 73 Worth Street neighbors represents only 3.2% of the lower selling price. The last time I noted the same upstairs-downstairs-higher-sale-lower-sale phenomenon the gap was proportionately larger. Perhaps this is one more small indication that The Market is trending less negatively....

144 West 18 Street played the same theme
My June 11, 2009 post, neighborly competition / laggard at 144 West 18 Street closes off 15% since December, addressed two neighbors who were on the market at the same time, so they did fight over That One Buyer. Those neighbors started at exactly the same price but one wanted to sell first, while the other was (over)confident:
 

The neighbors in that building in that post were fighting in the immediate post-peak period (they came to market in July 2008), which was a very difficult market to decipher or to get ahead of. The prize to the winner of The Neighborly Competition sold for a $250,000 premium over the laggard, who took another 6 months to sell. Given the scale (that was

a 17% hit

to the lower selling neighbor!) there was more of a bloodbath at 144 West 18 Street (particularly as they were on the market at exactly the same time) than at 73 Worth. But be careful of your neighbors!

© Sandy Mattingly 2010

Feb. 1, 2010 - NY Times "recent" residential sales? not so much (at 252 Seventh Avenue)

standards at Old Grey Lady go all to hell
You'd think that the regular Sunday real estate feature in the New York Times, Residential Sales Around the Region, would be ... you know ... "recent", as the sub-head always is: "a comparison of recent residential sales by region and price range". In at least the case of the "recent" sale of the Manhattan loft at the Chelsea Mercantile, 252 Seventh Avenue, for $1.52mm ("1,510-sq.-ft. open-space condo in a converted prewar factory; 24-hr. doormen, renovated kitchen, 11-ft. ceilings, oak floors") you'd be wrong for thinking so. Wrong, that is, if by "recent" you don't mean something that closed more than four months ago.

You can't blame the Times for the reported Time On Market (here, said to be 17 weeks) because they get that from the agent who reported to them the transaction. But in this case that figure is as accurate as reporting on January 31 that a sale that closed on September 16 was "recent". (See the feature from Sunday's paper here.)

what a STRANGE history!
There's a lot about the listing history for this listing that is strange. The loft in question is #5W at 252 Seventh Avenue. StreetEasy tells part of the story:

02/07/2009 Listed by Corcoran at $1,850,000.
03/02/2009 Price decreased by 3% to $1,795,000.
03/19/2009 Price decreased by 5% to $1,699,000.
04/03/2009 Price decreased by 3% to $1,650,000.
04/25/2009 Price decreased by 4% to $1,590,000.
05/07/2009 Price decreased by 3% to $1,550,000.
05/21/2009 Price increased by 10% to $1,700,000.
05/31/2009 Price decreased by 3% to $1,650,000.
06/05/2009 Price decreased by 4% to $1,590,000.
07/01/2009 Listing entered contract.
09/16/2009 Listing sold.
09/16/2009 Sale recorded for $1,520,000.

If you are keeping score at home, that is five price drops by early May after coming to market at $1.85mm in February, then a price increase and two more price drops before finding the contract July 1 that closed on September 16. Talk about a roller coaster!

The inter-firm data-base contains a fascinating hint about what happened in mid-May, between the fifth price drop (to $1.55mm) and the May 21 price increase (to $1.7mm). The note says "SELLER'S REMORSE KILLED DEAL IN CONTRACT". Evidently, there was an apparently successful negotiation off that $1.55mm asking price that the seller balked at after signing a contract. The remorseful seller had been a manifestly motivated seller, dropping the price five times about every two weeks from February into May. But that remorseful-in-May seller was emboldened enough to raise the asking price $150,000 to come back to the market by May 21.

Remorse again gave way to motivation, however, as the May 21 price of $1.7mm was dropped to $1.65mm May 31 and to $1.59mm on June 5. Some form of stasis set in, as the price did not change again before (again?) going into contract July 1. (Presumably the new buyer began negotiating before the seller had time to do another every-two-weeks price drop.)

full circle?
One wonders about the emotional roller coaster the seller had been on, to blow up one deal in May off the $1.55mm asking price but to accept by July 1 the deal that closed September 16 at $1.52mm. One also wonders what the jilted May buyer thought when the July contract cleared publicly at $1.52mm. Did that not-buyer deem the experience a tragedy or a farce?

which 17 weeks?
There are roughly 17 weeks between the back-on-the-market price of $1.7mm on May 21 and the September 16 closing. But it makes more sense (to me) to count only until contract (if eventually consummated), which would be only 7 weeks if you count from May 21, or 21 weeks if you count from the first offering date of February 7.

But in a world in which the august New York Times refers to a 4-and-one-half-month old closing as "recent", quibbling over the time on market of 17 or 21 weeks is mere quibbling indeed.

bleeding value, even from a peak two years ahead
Not surprisingly for a loft that traded in November 2005, July 2006 and then in September 2009, the first two prices (heading towards the peak of The Market) exceeded the last price (descending from the peak of The Market). The details for this "1,510 sq ft" one-bedroom-convertible-to-two-bedroom loft looking south over 24th Street:

Note that the November 2005 buyer must have suffered a loss on selling 8 months later, after netting closing costs such as brokerage commissions; neither did that July 2006 buyer have a capital gains tax problem selling 38 months later for $190,000 less than the 2006 purchase price.

© Sandy Mattingly 2010

Jan. 31, 2010 - what's up with this down? Sugar closes on Laight Street under $1,000/ft

wishing for 2008?
The last time I hit sales at 79 Laight Street, December 4, 2008, Sugar is sweet but 79 Laight Street closing is better, there were several recent sales. One was just under $1,000/ft, the other was nearly $1,100/ft. There was a deed filed Friday on a Manhattan loft sale closed on January 21 in this building, the US Sugar Building. #4D at 79 Laight Street cleared at $2.6mm after having been marketed since March at $3.099mm, with a quick drop to $2.995mm, another to $2.895 (June 1), and a final drop to $2.7mm, from which perch a buyer signed a contract by November 30. At "2,743 sq ft", that comes to $948/ft for a classy 2002 conversion with a high level of amenities over on the river edge of north Tribeca.

river is not such a premium this time
In that December 2008 post I speculated about the rationale for different market responses to different loft layouts and views in this classy building, with much help from Reader Jess. On the one hand I wondered whether duplexes had the same value as simplex lofts (the "spacious" factor). On the other hand I recognized that river views command a premium. In the case of #4D, there's a plus ("direct river views") and (possibly) a minus (it being a duplex; at "2,743 sq ft" a large duplex, but still...).

The difference between the September 2008 sales of the smaller #5D ("2,332 sq ft") as a duplex with no claim to river views ($2.525mm, or $1,083/ft) and the January 2010 sale of the larger #4D ($2.6mm, or $948/ft) as a duplex with a direct river view is rather striking.

© Sandy Mattingly 2010

Jan. 30, 2010 - why hire a low-life as property manager? 'cuz you didn't know

ignorance is expensive
There were reports in the press this past week about Richard Bassik, a Manhattan property manager accused of stealing from downtown clients that caught my eye because I know the guy ... at least, I worked with him when I represented the sellers in a loft building that he managed. The NY Daily News article from January 24 (hat tip to Curbed, I think) has the salacious details about the guy's recent bad acts and the even more salacious details about his (literally) criminal past (long past). The whole article is worth a read.

But for Manhattan Loft Guy purposes, the key fact is that this guy moved money or changed bank account authority so that he could get his hands on it. The article refers to four buildings (not identified, but hinted at) that claim they lost nearly $2mm. (Property management firms range from the very large, through medium, to small, down to mom-and-pop operations; the bad guy ran pretty much a pop shop called Downtown Properties.) The critical issues are (a) how did these buildings let themselves get in this position, and (b) how could they have prevented this. No doubt, many, many buildings are poring over their own books and asking these same questions about their "professional" management.

Before getting to these Big Questions, let me tell you a story.

one loft building unscathed, lucky?
I spoke this week to a friend, a coop board member whom I knew had retained the bad guy about 4 years ago, replacing another small management firm with whom they had grown disenchanted. His coop is a small loft building, fewer than 20 shareholders and (thankfully) with a fellow board member frankly described as "cheap". They got a call not too long ago from the coop board of another downtown building managed by the bad guy, asking if they had noticed anything "funny" about their accounts or records. This coop was about to sue the bad guy over some irregularities.

My friend thought there were no irregularities, but he and the other board member then spent about 36 stressful hours reviewing "everything", they contacted their bank and had his name removed from any signing authority, and let him know that they would replace him as property manager. Interestingly, the bad guy stayed on, managing the building, until they could transition to a new management company. From their perspective, the bad guy had done a good job managing their coop, and continued to do so until replaced.

They did have one bit of trouble with their accounts afterwards, but suffered no losses they could find. After the various lawsuits mentioned in the Daily News article, they found that one of their accounts had been frozen by court order, apparently because there was a possibility that the funds in that account may have come from one of the buildings that had suffered losses. Fortunately for this small loft coop, they were able to prove to the court that the funds in the account clearly flowed from the proceeds of a mortgage refinance, with a consistent balance (no increases) since before the bad guy had begun to represent the other unfortunate buildings. Had there not been this somewhat fortuitous paper trail and timing, they may have had to tussle with these other buildings over what they knew to be their own money.

Board members spent time in court, preparing for court, and working on their paper trail, which was certainly distracting and worrisome, but at the end of the day they discovered no dollar losses.

no need to outrun the bear
Remember that cheap board member? I asked my friend why he thought they had come through unscathed. He said that this colleague was a pain in the butt, that he closely reviewed all the coop's financial statements and accounts, and asked many questions that revealed a (shall we say) anal personality. If there was a bank late fee in an account, he would want an explanation and to know whether the property manager had tried to get the fee reversed at the bank. When there was a $200 charge one winter month for "snow shoveling", he protested, saying that he thought that there had been no appreciable snow that month. When the coop reserve fund was tapped to pay for board-approved projects, they asked for details to show how the reserve funds had gone from $xxx to $yyy.

From what they can surmise, the bad guy may well have figured that this coop was paying more attention than others and maybe was not a prime candidate for hanky-panky. (Neither my friend nor I know anything about how these other buildings ran their operations, so this is not intended to blame them for these losses.) This surmise brings to mind the classic story about the two guys who come upon an angry bear in the woods.

"Uh-oh ... do you think we can outrun that bear?"
"Gee, I don't know. All I know is that I don't have to outrun the bear ... I only have to outrun you."

Maybe this coop board paid just a little bit more attention than other buildings, four of which have lost nearly $2mm. Maybe this coop board could have been scammed by the bad guy, but the bad guy had easier opportunities with other buildings.

remedies are limited
Of course the bad guy was bonded as a property manager, but my friend guesses that the coverage limits will be well short of the losses suffered (other buildings may yet discover that they got fleeced, but it is a $2mm problem so far). The Daily News implies that the bad guy has signed some confessions of judgment and the District Attorney is involved, but there was no suggestion that anyone is likely to track enough assets to make up much of these losses. And however much the bond is for has probably already been tendered (or will be shortly), without much fight.

looking back, looking forward
Obviously, the more closely a board reviews their accounts, the more protection they have against theft or incompetence. I believe it is standard practice (it is certainly good practice) to require a board co-signature on any checks or withdrawals in non-trivial amounts. Boards can require that their property managers have a criminal background check, though some boards may still decide to make an appropriately compassionate choice under the right circumstances to give someone a second chance (though if they do, they'd be wise to double their guard).

This bad guy is going to make it more difficult for the mom-and-pop shops to compete with larger property management firms that can economically carry larger bonds. Bad luck for them.

This bad guy should encourage all board members to be "cheap and proud", a pain in the butt even. Property managers will have to grow thicker skin for a while, as they are probably in for a season or two of micro-management. Too bad for them. Not too many coops can easily sustain un-reimbursed losses of tens of thousands of dollars per shareholder.
 

© Sandy Mattingly 2010

Jan. 29, 2010 - 148 West 23 Street sale treads long water (swallows some)

from 2004 to 2007 to 2010 without getting anywhere
This history is remarkable, perhaps mostly because there are three data points, but also because the three data points overlap so much. The diminutive Manhattan loft #7E at 148 West 23 Street (Chelsea Mews) has traded three times in recently recorded history: October 2004, December 2007, and January 13, 2010.

The three clearing prices were $655k, $695k and $637k. Yes, those are in order: 2004, 2007, 2010.

Perhaps more remarkable still, the latest current price of $817/ft is higher than the two most recent other sales at Chelsea Mews.

#3E cleared on January 19 at $777/ft ("900 sq ft"), compared to $/ft $673/ft ($606k) in June 2005 (the higher price was due to the "thoughtful renovation throughout" after 2005)

#7A cleared last May 28 at $659/ft ("1,100 sq ft"), compared to $736/ft ($810k) in March 2005

maintenance is not diminutive
I have never done the due diligence for this building, so I don't know the maintenance history. But the maintenance for #7E of $1,916/mo is rather impressive for a loft of only "780 sq ft", in a what the hell do I get for that? kind of way....

© Sandy Mattingly 2010

Jan. 28, 2010 - for rejected coop buyer: screwed? yes; recourse? not so much

Manhattan real estate is not a benevolent universe
I referred a week ago (Jan 20, adventures in nephrology / about that kidney donation....) to a long phone conversation with a long-time Manhattan Loft Guy reader as something "for another post". Here's that post. The reader (lets call the reader DL/SF) tells a mournful story about romance, dreams, schemes, dejection, rejection and the loss of faith in a benevolent universe. Of course the story involves bad behavior by a coop board, abetting a conflict of interest by one coop director.

It has been a while since I have beaten up on coop boards (the link history is below) but apparently it has not been because coop boards have universally cleaned up their acts. At least, not this (unnamed by me) coop board. The story told by DL/SF is so classic that it had already been featured in the New York Times in 2005, and that story was so close to my heart (and involved a sale I had been peripherally involved in) that it really bothers me. DL/SF knew about the NY Times piece, and included a link in the email that led to our conversation. First, that back story....

The NY Times piece from April 24, 2005 detailed a dirty little secret in Manhattan real estate: that coop boards and directors sometimes abuse their power for personal reasons. That article was refreshing because it may be the only public complaint by a coop shareholder about board misconduct that named names (and addresses). Not only did the shareholder go on record, but her agent was identified and the agent's firm's head offered some scathing quotes. That article had a terrific lead:
 

As related there (and denied by the coop director named), the shareholder trying to sell an apartment for $695,000 had a cash offer from a couple with "seven-figure income and ample liquid assets" but the couple was eventually rejected by the board without having been interviewed. At the end of the day, the seller felt forced to sell to a buyer affiliated with a board member who had expressed firm (and peculiar) interest in buying the apartment. (Actually, at the end of the day, we're all dead; which is what happened to that buyer, but that had nothing to do with this transaction I am sure. But I digress....)

As it happened, the agent representing the seller in the deal in the NY Times then sat two desks from me at my old firm, and it is my former boss who was quoted so stingingly to close that article. (Her money quotes literally close the article, but the whole thing is a good read.) When that agent was on vacation while this apartment was for sale, I showed it a few times. Needless to say, I was very familiar at the time with what went on there. So I was especially intrigued when reader DL/SF linked to that article and described the situation as follows:

Reader DL/SF wanted to vent, but also to do something (going public was one option). But reader DL/SF (correctly) realized that there was nothing to be done that would (a) change the board decision or (b) punish the board and the particular director. Reader DL/SF was just an applicant, to whom the coop board owed nothing. The person with the real beef in DL/SF's situation was the selling shareholder but, as in the case in the Times, the eventual buyer agreed to match the price agreed upon so the seller was "damaged" only by the delay (if that deal is consummated). Meanwhile, any selling-shareholder-who-has-not-sold-yet may reasonably be concerned with how their next application to sell will be treated if they make a stink. Tough choices, all around, for all those screwed here.

These shareholders conceivably had a legal claim against the board for any dollar consequences flowing from the delay, but the cost-benefit analysis in starting a lawsuit was pretty weak. Te rejected buyers had no legal claim at all. But this is wrong, although effectively invisible to the only people who might care and (if they cared) could do something: the other shareholders.

why a conflict of interest policy would not have helped
Taking what DL/SF relates as true, the full board must have understood that they rejected highly qualified potential shareholders in order to give a board member the opportunity to buy that apartment. What is particularly irritating about this instance is that the board knew what it was doing. This board rejected a supremely well-qualified buyer couple in favor of a board member who (after completing this purchase) would put another apartment on the market. The board may or may not get an application from buyers for that (to be sold) apartment that will be as well qualified as DL/SF, but they are willing to run that risk. And to screw a shareholder whom they think they will unscrew when they approve the sale to the board member. But the existing shareholder is stuck with an apartment they no longer want longer than they would have been if DL/SF had been approved, and is subject to market risk (will the board member renegotiate a lower price if market conditions change?) and event risk (what if the board member decides not buy-and-sell? or dies?).

This would probably have played out exactly as it did even if the board had a conflict of interest policy (one that required disclosure and recusal by an 'interested' board member). As told by DL/SF, the board knew of the interest of their fellow board member (as in the Times case, where the board member said that she recused herself, making it obvious she had an interest). Few coop boards have conflict of interest policies that do more than require disclosure, and then, usually only within the board -- not to shareholders generally. Some boards have no conflict policies at all.

would shareholders care?
Shareholders in a coop have a legitimate interest in knowing if their board includes people who place personal interest ahead of fiduciary obligations, but there is rarely a mechanism for them to find out, and probably even more rarely an interest on their part in finding out. (Many shareholders are relieved that there are even enough people who want to be on a board in the first place.) They should be (a) interested, (b) informed, and (c) willing to throw the bums out when this happens.

DL/SF is not holding his/her breath. Neither is Manhattan Loft Guy. Many thanks to DL/SF for this from-the-trenches story. Good luck with that whole benevolent universe thing.

For my greatest hits on coop boards, see:

June 19, 2009: power of a coop board to reject a deal as "too low"?? (featuring this great MLG sub-heading: coop boards protect value like Canute protected beaches) 
Nov 21, 2008: picking on coop boards but in need of editing (NY Post) (about a crappy NY Post article and coop boards tightening standards in a changed market)
March 16, 2008: coop boards behaving badly / 32 Gramercy Park South edition (about a coop board lawsuit over a shareholder's holiday decorations)
May 29, 2007: advantages to the much-maligned coop ownership, vs. condos (about one advantage of coops compered to condos -- the ability of aboard to deal with misbehaving owners)
Feb 9, 2007: coop boards behaving badly / can you imagine? (about ways in which some coop boards do bad things, sometimes)

© Sandy Mattingly 2010

Jan. 27, 2010 - "unspoiled" loft at 70 Thomas St sells for $511/ft

some agents don't (always) babble
You've read a lot of broker-babble in the descriptions of Manhattan lofts for sale, and in this sense I mean "babble" as in drivel: those words that take up space but -- especially when strung together -- are more fluff than flavor, more dressy than descriptive. (I'll leave examples to your imagination at this point, as I have used those words, and probably will again.)

a description to behold
So when I came across the listing description for the Manhattan loft #5 at 70 Thomas Street, which closed on January 20 (deed filed today!), I had to smile. No babble here ... elegant! Language that is very positive, very evocative and extremely precise. No informed reader will expect anything different from what they see in the loft, and no one will be disappointed.

Authentic, light filled, and open spaced; the type of loft that motivated artists to seek out spaces in Tribeca originally. Unspoiled and in a self-managed coop, with original wood floors...

Granted, "authentic" is an over-used description of Manhattan lofts, but I have no problem with it unless it is used with an in-authentic loft. "[T]he type of loft that motivated artists to seek out spaces in Tribeca originally" is extremely evocative and extremely precise: open, raw (to repeat: raw). Since there are so few words so far, I can hardly begrudge the (not quite) redundancy beginning the next sentence: "Unspoiled and ...".

I don't think I have ever seen that word used in that way before, and right now I can't think of a better word for the right loft. While all "unspoiled" lofts should be "authentic", not all "authentic" lofts are going to be "unspoiled". Many, many "authentic" lofts have been "spoiled" by middling renovations that don't qualify (any longer, at least) as "improvements".

unusually efficient
"Unspoiled" just might be the most efficient word I have ever seen used in this context.

You don't need a floor plan to realize that you have a little demolition to do before you build out a brand new loft, using (at most) the original wood floors and original brick walls. If you do look at the floor plan, you readily realize the few walls separating a "bedroom" are 60 feet from the lone bathroom. Nor do you need pictures to realize that the "kitchen" consists of appliances and cabinets hanging on one wall at the other windowed end.

"Unspoiled", indeed! That single word tells you that (if you are interested) you need only consider the light, the shape, the building (where can the new plumbing go?), and whether the windows, floors and walls need only a bit of sprucing up or a massive rehabilitation. You know you will build it out completely.

There are other ways to communicate that they entire space will be gutted (not much to gut, really) and built out, but none is as evocative as saying "the type of loft that motivated artists to seek out spaces in Tribeca originally" and none is as efficient as "unspoiled".  There is nothing wrong with the former listing description (prior firm):

This true artist's loft is on a peaceful top floor with easy access to the roof. Original brick and wood flooring throughout. It has been used as an artist's loft since the building was a factory...

Any informed reader would make the same assumptions about the space as from the other description. But -- to me -- this description doesn't sing. Kudos to my favorite pair of married Halstead loft agents.

It is a good day ... I learned (re-learned, I hope) something important about marketing.

details
This loft took a while to sell. As noted, there were two firms involved, the first listing it for $1.399mm last February and dropping once to $1.25mm in May. That Halstead couple picked up the listing in September, at $1.2mm and found a contract within 7 weeks. (Was it the "unspoiled" word that did the trick?) The clearing price was $1.15mm, for either "2,250 sq ft" (Halstead's number), "2,000 sq ft" (as measured by the former firm), or [fill in the blank] (if your architect were to measure).

That's either $575/ft, $511/ft, or some similar number. One important thing that bears on the value of a 5th floor loft that is missing from the "unspoiled" description: there's no elevator, which might disappoint some people (nobody's perfect).
 

© Sandy Mattingly 2010

Jan. 21, 2010 - 2 cuts (deep), 5 months (short) to contract at Dietz Lantern, 429 Greenwich Street

getting it done
The Manhattan loft Unit 6B at 429 Greenwich Street, northwest Tribeca's Dietz Lantern building, closed on December 22 (deed filed January 8) at $2.45mm, the culmination of a fairly serious marketing campaign. They started in May at $2.999mm but dropped to $2.65mm within 3 weeks, holding there for the Summer before dropping to $2.499mm in September and finding a contract within 3 weeks of that last drop. All in, that's 18% off the first asking price, a bare 2% off last listing price, and less than 5 months to contract. As I said, fairly serious. And successful.

in the family way
I am not sure I would describe this building as "cherished", but it has been popular. This is a very handsome 120 year old building that was converted to condos in 1996. #6B is 'only' "2,100 sq ft" and is set up as 2 bedrooms; other units this size in the building have three bedrooms, and there are units as large as 4,000 sq ft. In other words, it features "family-sized" lofts, with the convenience of a garage (two deeded spaces were included in the #6B sale) and a doorman. This corner of Tribeca is not what some consider prime Tribeca (it sits just a bit below Canal Street and is bracketed by the Holland Tunnel spillways to the east and West Street to the west), but is no longer 'sleepy'.

proving popularity
How popular has Dietz Lantern become? Here's how 2 neighboring lofts have traded in the last 14 years:

That's pretty popular.

© Sandy Mattingly 2010

Jan. 20, 2010 - adventures in nephrology / about that kidney donation....

people say they want to know
I continue to be amazed and gratified by the number of people who have reached out to me after I went AWOL from Manhattan Loft Guy for the entire Fall. (Just today I had a long telephone conversation with a faithful MLG reader, but that will be for another post.)

People have expressed interest in reading about an interview of me and of Susan (my kidney's present custodian) for a private school newsletter (our 'connection' through that private school will be explained there), so I will post the link below.

way back on September 4
I posted in the wee hours on the Friday before Labor Day, asking for prayers from those who pray, as I was about to go up to Columbia Presbyterian to donate a kidney. That post was the beginning of the story for MLG readers, the middle of the story for me, and the beginning of the (happy!) end of the story for Susan.

good news!
The good news is that Susan has been on a successful path that includes post-surgery recovery and jiggering of her anti-rejection medications, with a (long!) lifetime ahead of her. The only bad news I see is that "my" kidney will have to get used to Susan's much more healthy lifestyle (has a donated kidney ever been rejected due to alcohol withdrawal??).

For me, the immediate post-op experience was about as good as it gets, even allowing for the Vicodin visions. As you will see in the article, I was on the subway and showed an apartment on the Thursday after the Friday surgery. But I needed to -- and did -- take it easy; more than I anticipated, frankly. I dropped off the face of the Internet after a couple of weeks because I could not count on having the energy and ability to concentrate as much as I needed to in order to service clients and the blog.

At some point, when I had the time and energy I started going to the gym instead of blogging. Throughout, I had less mental energy and concentration than it took to sit with a laptop at 11 PM and find interesting closed loft sales.

I did not have in mind when I took the unannounced sabbatical how long I would be gone, and it went on longer than I expected. Partly because "next week" is the seduction that precedes "tomorrow", which is still a long way from "doing it".  Partly because I was hoping to come back with some sort of bang, some grand post wrapping up X weeks of market activity and X weeks of blog absence. Sigh.

So that's the story (and I am sticking to it), with all sorts of Real Life Info on page 8 (of 10) of the January 2010 edition of FieldNotes, from the Ethical Culture Fieldston School (sorry for all the scrolling required).

2 more things
In the future, I will try to post some announcement when I intend to be 'away' from Manhattan Loft Guy for more than a few days.

Contact me if you are interested in live kidney donation. But anyone can donate a kidney once they no longer need it.  (You won't need them while dead, and they make lousy souvenirs!) This is from my September 4 post:

The New York Donor Network website is http://donatelifeny.org/, where you can get information about donating organs after you don't need them. There's a form you can fill out, print and mail that enrolls you in the donor program, which you can access here. The main site has many, many links if you want further information about organ transplants.

Do. It. Now.

© Sandy Mattingly 2010

Jan. 19, 2010 - the last 13% haircut drives new development deal at 135 West 14 Street

down $950k overall
The Manhattan loft #5 at 135 West 14 Street is the latest sale at the new condo construction "Loft 14", having closed December 22 (deed filed January 14). The "2,161 sq ft" floor-through has a classic Long-and-Narrow loft array, with no windows evident on the long sides at this height so the two bedrooms are in the back (the plumbing is in the middle), plus balconies front and back (one of the Juliet scale). There's a virtual doorman for the building, and apartments feature the kind of proper proper names common to high-end developments (Miele, Sub-Zero, Franke, Grohe, Blendheim, Thasos, Toto).

This unit looks like the fifth to close in a 10-story development originally slated to be completed in "early Winter 2008" -- long enough ago that the developer let the URL for the original website expire some time ago.

running out of ink for the color printer
The clearing price of $1.9mm for Unit 5 compares to the last asking price of $2.195mm (a 13.4% close-out discount) and is a sobering $950k off the original asking price of $2.85mm from November 2007. There were three price changes, two brokerage firms, and one large increase in projected real estate taxes (from $986/mo to $1,493/mo) over the course of 2+ years.

One imagines that the developer's spreadsheet is a bloody mess by now.

© Sandy Mattingly 2010

Jan. 17, 2010 - riddle me this / the naked data point at 35 Wooster Street

what does it mean?
I had a WTF? moment when I noticed the December 28 "sale" of the Manhattan loft #4F at 35 Wooster Street, as the clearing price was a most un-lofty $985k for space said to be 2,100 sq ft. The $469/ft price is so low that I immediately doubted that it was a real (arm's length) transaction, especially as there is no listing associated with this "sale". The price seems too low even if the space was a total wreck or completely raw.

By coincidence, I happened to have had a real (face to face!) conversation with long-time Manhattan Loft Guy reader Lofty last week about the difficulties in interpreting raw sales data in Manhattan, including specifically the problems in figuring out if a transaction is a legitimate indication of The Market because it was at arm's length, or if it can't be used as an indication of real value because (for example) it is between two related parties. I had in mind in that conversation the hard-to-interpret resale of a loft at 260 West Broadway (December 2009 clearing price was lower than the March 2005 price) that I addressed in my Welcome Back post of January 4, American Thread loft sells on Groundhog's Day, again.) In that instance, there have been enough other sales in the building that this one stuck at as perhaps not at arm's length, and I speculated about a possible explanation.

With 35 Wooster Street (the Lyall House condominium), there have been no sales since 2005 and the three sales in 2005 were at prices between $850/ft and $950/ft. One of those lofts sold in 2005 had been offered for sale in 2008 into 2009 at prices ranging from nearly $1,300/ft to nearly $1,100/ft, but all that did was establish where The Market was not for this building. Again, I just don't believe that $469/ft is anything but a distraction.

The Google is my friend
The #4F 'seller" is a corporation that a very quick Google search established is a high-end lighting designer and seller. Fortunately the name is distinctive enough to make the Google search instantly rewarding, unlike if the company had a more generic name, like Superior Lighting or some such. And luckier still, the buyers also have sufficiently uncommon names that a Google search on one of them showed that he is affiliated with ... voila! ... the same high-end lighting designer and seller that sold him the loft.

Thus, I have absolutely no doubt that the recent sale of #4F at 35 Wooster Street was not only not at arm's length but is probably part of a larger corporate plan involving this guy's compensation. (Will he report to the IRS the difference between the purchase price and true market value as compensation?? hmmm....)

The reported sale price in this case was so seemingly ridiculous that this one had little credibility as a true market indicator from the get-go. And the names of the parties were so distinctive that their relationship could easily and quickly be discovered. But what if the not-arm's-length transaction had been (a) at a price much closer (but still below) true market value, or (b) been between parties whose relationship had been much more difficult to identify?? In that case, the price would merely have been odd. People seeking to interpret it may have been suspicious, but it would have been just a questionable data point.

As they say, sometimes a cigar is just a cigar. Except when it is not. This "sale" was not a "sale".

As if Manhattan real estate were not difficult enough as it is....

© Sandy Mattingly 2010

Jan. 14, 2010 - double your money in 10 years! 135 West 17 Street does the deed

from "published" to "renovated classic"
The Manhattan loft #4B at 135 West 17 Street closed on December 22, but this qualifies as late-breaking news because StreetEasy says the deed was filed yesterday. This was billed as "2,400 sq ft" of "renovated classic loft" and sold rather quickly: to market on September 26 at $2.45mm, in contract by November 21, with that December 22 closing that was remarkably rapid for a coop board approval process.

The seller was quick to prove she was "negotiable", as that prompt contract and sale price was $2.15mm, an essentially average 12% discount from list. (Careful readers will recall that Miller Samuel pegged the average Manhattan listing discount in the 4th Quarter of 2009 as 12.8%; see my January 6 post more Manhattan lofts sold, but very, very slowly.) While the $895/ft price is interesting for a beautiful loft in almost-prime Chelsea, I was intrigued by the last sale of this loft.

It seems that this loft had not changed hands for ten years, and that the recent seller bought a lovely loft. #4B was marketed in 1999 as "architect designed and published". The appliances included Traulsen and Sub-Zero. (The 2009 babbling featured Sub-Zero, Viking and Bosch, as in "I will see your frig and raise you a range and dishwasher".) This loft closed in October 1999 at $1.05mm, almost exactly half of what it sold for ten years later.

rules, compounded
What's that rule of compound interest? 6% interest, compounded annually, will result in 100% appreciation over ten years. Voila!

But I am sure that the trajectory of value for this loft was hardly that linear from 1999 to 2009, and featured at least one dip in the early 2008 range. But the 2009 price was the Market Price (with no evidence of undue compulsion to sell), and the 1999 buyer might well have anticipated being happy with a market-doubling ten years later.

I don't have enough pictures to compare the look of the units in 1999 and more recently, and no floor plan available from 1999, but I would not be surprised if the "renovated classic" condition in 2009 was very similar to the "architect designed and published" condition in 1999. (Both versions were billed as 3 bedroom, 2 baths.) There may have been only a kitchen upgrade and similar work over the ten years (the 1999 vintage "beautiful wood beams" had a natural finish then; ten yearslater thy had been painted white).

So I am mildly curious to know how much the loft changed over ten years, and how much money was spent, in order to see how clean the double-your-money thing went here. But only mildly curious. They are two nice data points, regardless.

© Sandy Mattingly 2010

Jan. 12, 2010 - 114 East 13 St lofts go 3-for-3 above $1,000/ft

nice streak in this season, but what does it mean?
The Manhattan loft #6A at 114 East 13 Street closed on December 15, pretty successfully, at $1.3mm. This "1,200 sq ft" condo loft was offered at $1.395mm since August 24 and found a contract by November 19 at only a 7% discount off the asking price. This is the third closing in the last quarter of 2009 in the 40 unit American Felt Building, each of which fetched over $1,000/ft. (Small wrinkle: #6A does have a balcony, but the balcony is just under 100 sq ft so the full loft -- inside and out -- squeaks in at just over $1,000/ft, though no one pays "full price" for outdoor space.)

The other two sales were of #7C ($1.285mm for "1,029 sq ft" [with another 100 sq ft balcony] on October 29) and #6D ($995k for "937 sq ft" [with a smaller balcony] on October 1). #7C took only 6 weeks to go into contract at nearly the asking price of $1.295mm, beginning in July, while #6D took 5 months to get 97% of the original asking price. (#6D has a balcony of 88 sq ft, so the all-in per-foot price was 'only' $971/ft but there should be some discount for the balcony compared to the interior space.)

That is a pretty good showing for the American Felt Building. Residents get a doorman and a common roof deck (with shower!), with monthlies of almost $2/ft (including a small assessment, the second assessment in the past 3 years).

some appreciation, but only partial
This trio of late-2009 sales hardly indicates a flood of departures in this 40-unit building, though it may be an indication of a market thaw. The 3 prior residential sales here were between April and September 2006. #5C closed on August 29, 2006 at $1,060,008 [Chinese good luck??] with no balcony, 'just' the "1,029 sq ft" footprint shared with #7C. This sale implies a market improvement from August 2006 to October 2009 for the "C" line, as there is no way that the balcony in #7C is worth anything close to $284,992. On the other hand, #8A cleared on April 25, 2006 for $1.33mm, compared to the only-slightly-lower-but-3.5-years-later sale of #6A a few weeks ago. But that unit was said to have a larger balcony ("200 sq ft") and was flogged much more enthusiastically than #6A, so maybe the finishes and fixtures justify a higher value for #8A in any market period.

The third American Felt loft to sell in 2006 was #PH-B, which closed on September 11 at $1.8mm. I have no information about this loft other than that it is said to be "1,479 sq ft" and that it is billed as a penthouse; I also have no parallel sale to compare it to, so cannot say what this September 2006 sale implies about how values have (or have not) changed in this building since 2006.

bottom line: use tad
Net, net ... I'd say that the #6A-#8A and #7C-#5C pairs from 2009-2006 suggest that values here are no worse than even compared to 2006, and probably just a tad improved.
 

© Sandy Mattingly 2010

Jan. 7, 2010 - housekeeping (and I hate housekeeping)

spam = evil
Regular readers will note one heavy price that I have paid for neglecting this blog ... thousands upon thousands of commercial spam that worked its way through the host spam filters. I am starting to delete, but there are complicated (and bug-gy) reasons this will take time. In the meantime, there is a new rule ....

comments must be OK'd to be OK
I have changed my Admin settings to require pre-approval for comments to be posted, which will be more of a pain for me than for you when you want to comment, but still ... unfortunate.

With luck, the host will get the spam filters under control, so i can reverse that, But until then, there is a Moderator in town. Guide your behavior accordingly ....

© Sandy Mattingly 2010

Jan. 6, 2010 - more Manhattan lofts sold, but very, very slowly

like the overall Manhattan market, mostly
Following up on my post yesterday about the New York Times article about the Big Three market Manhattan real estate reports for the fourth quarter, here's a nugget about the loft market from the Miller Samuel report (pdf here), now that I have read it.

Compared to the overall Manhattan real estate market, lofts showed a much larger increase in (relative) volume of sales, but the time it took to sell lofts increased dramatically more than the overall market. The listing discount was the same for the loft niche as for the overall market, while inventory declined in roughly similar rates. Numbers, per The Miller:

One can't read too much into the loft numbers, as the "n" is so small, and only 7.4% of the market, but there were visibly more loft buyers (actual buyers) out there this past quarter than previously. These actual buyers were pretty darn picky, with the average listing discount of 12.8% (from the last asking price) and with lofts taking (on average) more than 6 months to sell.

why so long?
If there is any number than can be counted on as suggesting a greater weakness in the loft market than in the overall Manhattan real estate market it is that change in Days on Market for lofts, up nearly 40% since the prior quarter and nearly 20% since the prior year. I would have to check the miller Samuel archives, but I believe that the listing discount of 12.8% is well above the ten-year average. On the one hand, that means that sellers are still asking prices that buyers are not willing to accept; on the other hand, th increase in sales means that buyers are not entirely put off by "too high" prices but will bid and negotiate to contract. That dynamic of implied hard bargaining would explain the increase in Days on Market.

bullish Miller?
I wondered yesterday about this quote in the Times from The Miller, which is relatively (for him) bullish: “There are a lot of challenges ahead for housing, but I think the worst is behind us.” I see in the text of his market report that he, as I expected, recited a host of "challenges" for the Manhattan market, and summed up:

"While the increased levels of sales in the second half of 2009 was encouraging, a true housing recovery will be marked by a meaningful decline in unemployment and greater consumer access to credit."

This is right in line with many comments I recall from him to the effect that any 'recovery' requires that bank lending problems be fixed first systematically, with no reasonable prospect of this happening in the next quarter or two.

other reports in (tardy?)
The Miller Samuel report gets the first reviews in Manhattan Loft Guy because (as long-time readers know) I consider that report and data set to be the most useful because it is the most comprehensive, the longest tenured, and because I appreciate that it has long been part of a campaign for greater transparency in this secretive industry. Now that I am with a firm that puts it its own Big Three reports I will have to pay more attention to the strengths of the Corcoran reports, while remaining frustrated that the two largest residential real estate brokerages in Manhattan use such different data sets to describe what should be the same market. I will overlook (for now) the fact that my Home Team report came to the web last yesterday, at about 4 PM, 4 hours after the Terra reports and at least 8 hours after the Miller Samuel reports. C'mon Team, you can do better!

More chewing on those 'other' reports in days ahead.

 

© Sandy Mattingly 2010

- 'nuff said