Mar. 4, 2009 - worse than bandages? painful for sellers to rip the calendar

2009 as the new 2005, without the optimism
It is very challenging for most sellers to understand just how much The Market has shifted. Most sellers will acknowledge that they won't sell now near peak prices, but they are  reluctant to 'give back' much more than that. That's why I find some of the what year is it? marketing sequences for Manhattan lofts so interesting. You can almost see the reluctance to start tugging on price, sort of like the kid (or grown-up, I guess) with a big bandage who starts pulling very slowly, likely increasing the discomfort, instead of just ripping the darn thing off at once -- some pain, but getting it done.

There's a bit of an old school Manhattan loft that just went into contract in a bit of an old school (30 year old) coop in Flatiron. The marketing campaign was about space, location and the lovely building, rather than about bling-bling, so the loft may be in move-in condition but is not otherwise brag-worthy. Even though I don't know the contract price, it is a worthwhile thing to talk about because it is so current and so informative.

"start high to leave negotiating room"
When sellers say they are willing to "start high" they usually add "we can always come down" or "that leaves room to negotiate". In the current market, months spent at the wrong price can waste equity as well as time, and sellers generally don't 'need' as much negotiating room as they think they will. The seller of this Flatiron classic loft needed much less room, and burned months of equity, as you see here:

• $1.85mm when new in Spring 2008
• dropped around $100k when not quite so new in Spring 2008
• dropped around $100k when not new at all in the Summer of 2008
• dropped around $200k when it had aged quite a bit by late 2008
• there was one more significant price drop this year, followed by a contract, anticipating a closing in May or June 2009

There's a neighbor in the building that moved in after buying in 2005. That loft was then in a similar condition to the current offering, though perhaps in slightly more updated condition and with better light. There's a different layout, but the quoted square footage is exactly the same in the two lofts. That one cleared at $1.375mm. The one newly in contract is likely to be within a few percent of that February 2005 price when it trades 51 or 52 months later, probably at a lower price than the February 2005 sale.

That will turn out to be 25% to 30% of very expensive negotiating room, considering what The Market has done since this loft came to market in Spring 2008.

frustratingly opaque, or sufficiently interesting?
I know that these posts that do not identify the specific listing are frustrating and vague. (Even I have trouble following my story line in re-reading a post such as last week's 2005 wasn't bad, was it? that used a similar calendar analysis for a Chelsea loft that was new to market.) But with The Market so ... dynamic, the information about brand new contracts (or listings, for that matter) is more timely than waiting for closed sales data. Timely and interesting enough to justify posting about even without knowing the clearing price.

In this case, as with the new listing profiled last week, it is very likely that the 2009 prices will be at or below 2005 sales. That seems sufficiently important to me to trade off some obscurity for timeliness. Weigh in with a comment if you disagree or have a better idea, of course. And look forward to learning the clearing price when the loft closes and the price hits the public data bank.
 

© Sandy Mattingly 2009