Jun. 18, 2008 - the problem with anecdotes / reports from 40 Bond Street and Time Warner
Though a relatively short piece, Josh Barbanel's June 8 Sunday NY Times review of market data (A Mixed Picture) was rich for me, generating a June 11 post (data point in a sideways market / closing at 32 West 18 Street) and a June 13 post (Barbanel gives up Manhattan sales data in NY Times, grudgingly). Obviously, I have been thinking about it a lot. Here's more.
not bashing Barbanel, honest
Like so many newspaper articles about Manhattan real estate, Barbanel's piece was a mix of big picture data and specific "facts", in this case about some high-end price reductions. Skeptic that I am, I tend to wonder if the facts fit the story line, so it is nice when the facts presented are specific enough that I can find the details elsewhere. Here are Barbanel's facts, with my emphasis added:
At a number of celebrated recent developments, from the Time Warner Center facing Central Park, to 40 Bond Street off the Bowery in NoHo, condo owners have trimmed their asking prices on resales.
At 40 Bond, the resale asking price on a three-bedroom triplex was cut by $1 million in late May, to $10.9 million, or about $2,900 a square foot. Dennis Mangone, a broker at the Corcoran Group who recently had three listings in the building (one was just rented), said that competition between the sponsor (there is still one unsold one-bedroom ) and individual owners had “cannibalized resales” and that he expected prices to appreciate considerably in the next year.
At Time Warner, there are now 16 apartments on the market, according to Streeteasy.com, including three for which the asking prices were cut in the last few weeks, two of them by more than $1 million.
I read the story line of this piece as Manhattan-showing-signs-of-slowing. Here was the set-up for Barbanel's use of the 40 Bond and Time Warner anecdotes:
Yet there were some signs of caution in the preliminary numbers, the first indicator of the contracts signed in the spring selling season, which usually continues through the Fourth of July. The number of sales closed during May was 20 percent below May 2007, when the number of sales set a record for any single month. They were, however, above the sales volume recorded in May 2006.
million dollar price drops sound like trouble, no?
I think a fair reading of the sequence is that Barbanel is talking about these million dollar price drops as suggesting more "caution". But the data don't support that view (yet) because those million dollar drops -- while dramatic -- are off huge asking prices, seeking huge gains.
Checking the inter-firm data base and public data for closed transactions, it is easy to find the 3 BR triplex at 40 Bond that Barbanel cites as a price cut. In fact, that unit closed October 18, 2007 in the sale by the developer at $7.9mm, was immediately offered for flipping (October 19) at $12.2mm, but bumped to $11.9mm in March, and to $10.9mm in May (that drop in May was the million dollar drop Barbanel cites).
asking for a two million dollar gain
I don't see evidence of a slowing market in this history. Of course, the asking prices don't tell us much more than the attitude of the seller and agent, but -- so far -- this seller and this seller's agent are pretty bullish, as even a sale at $10mm in the next 4 months will gross a $2mm gain in a year. (Who knows if it will sell, of course.)
As always, StreetEasy is a good source for the details for any Manhattan coop or condo; 40 Bond Street info is here.
asking for the moon
Meanwhile at the Time Warner Center, one of those million dollar price drops was from $32mm to $29.995mm (it has just been dropped again, to $29.65mm) for a duplex (high floor, park views? you bet), the two original units of which were purchased for a combined $9.5mm in January and February 2004. I don't read a lot of market negativity into an asking price that is three times the 4 year oldpurchase price.
One other of those million dollar drops at Time Warner was from $20.5mm to $18.95mm for an apartment that closed for $8.9mm in March 2005 and was resold for $13mm a year ago. (As far as I can tell,the third million dollar drop was one part of the duplex offered, combined, for $29.65mm.)
Again, StreetEasy is your friend, with interesting building info for the two Time Warner towers here and here.
Again, not bashing Barbanel here. Just wondering about the specific "facts" offered to support a story line that don't quite do the trick. Though I would expect that an experienced reporter like Barbanel would ask about the sales history of the specific listings he uses to support his story line. Maybe next time....
© Sandy Mattingly 2008
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