Jul. 29, 2009 - attack of the Killer Comp (when 2005 pricing does not help)
tough to price, if even 2005 is too high
There's a pretty big Manhattan loft in a Chelsea corner that has been patient at an asking price around $1,100/ft for 3 months, which is just slightly less than the loft sold for in 2005. Ouch. It is a lovely loft, full of mints and proper proper names, with sunlight and tin, plus columns and huge windows. Priced by these sellers under what they paid 4 years ago, you'd think that it is priced where it should generate an offer. (Well, I would think so. And these sellers and at least one experienced agent would think so.)
modesty, not rewarded (if 2005 = modesty)
Indeed, I would generally have said that pricing a loft at or below 2005 prices was a sign of modesty, an effort that should be rewarded. When I first noted the listing (with all the breathless mint discussion) and the 2005 prior sale, I assumed that the renovation had been done after 2005 but it turns out they are not that modest. But still....
My attitude about 2005 is evident from my post on July 22 about two lofts at 29 East 22 Street, one of which sold recently and the other in 2005, 29 East 22 Street closes but is the calendar off?, where I yelped
... #3N ... closed one month ago, 16% lower than what #6S got almost 4.5 years ago. YIKES. I can't think of another loft with an implied loss of value like this since 2005 (assuming that the two lofts are as comparable as they appear to be....
back to 2005
Turns out that my memory is not that good, as I have hit on on a significant number of recent Manhattan loft sales around 2005 prices (though only one of which took more than the 16% hit at 29 East 22 Street):
- 14% off, July 11, in 50 Warren Street closes, off 45% from original ask + 14% off 2005 price
- July 3, 2005 pricing at The Printing House, 421 Hudson Street
- 7% below a 2005 sale, June 26, 73 Worth Street closes by biting a very large bullet in one bite
- $35,000 off 2005, June 3, 4 months to close, 4 years to zero out at 260 West Broadway
- plus (only) $15,000 compared to 2005, May 27, 4 years = $15,000 at 477 Broome Street
- 20% hit in the "C" line at The Bullmoose, May 15, into the way-back machine to close at 42 East 20 Street, down seven figures
- an asking price within 7% of the 2005 sale of the same loft, March 27, more angst at $1,000/ft / feels like 2005 in Tribeca as contract (finally) signed
- when I riffed on the changing market on March 4, the post was titled worse than bandages? painful for sellers to rip the calendar, but the first headline was: "2009 as the new 2005, without the optimism"
- and (finally) my February 27 title pretty much says it all, as far as 2009 vs. 2005 goes: 2005 wasn't bad, was it?
Note to self: stop being surprised by 2005 comps.
hate the neighbors?
But I want to make a different point than modesty about the loft that launched me on the trip back to 2005. The most painful thing for these sellers is probably the dread of the impact on their value done by a very recent sale of a loft of the same size that needed a complete make-over. That loft was in contract when this one started to market, after having been on for very long, with large price drops. That buy-and-gut loft closed $500/ft less than the current ask for this oh-so-minty loft in the same building. Granted, there are relatively few buyers for a very large total renovation project in the current (thin) market, but that spread has to be awfully worrisome to the minty sellers. One could probably do a $300/ft renovation in the recent sale, and still have a loft that is comparable at less of an investment than the current minty sellers are asking a buyer to make.
That makes marketing this loft very difficult, despite their pre-2005 pricing. What can you do?
If you believe that the $622/ft buy-and-gut clearing price was the aberration, you make that argument to buyers (if anyone shows up to view) directly and hold your price. (After all, you are still priced below 2005.) If you can afford to sit for a while, you might take it off the market (3 months? more??) to see if The Market re-sets in a way that you can more easily distinguish a May 2009 (possible distress) comp. If you can't afford to sit, and you can't attract a bid, maybe you wait until Labor Day (blaming the traditional lack of high-end buyers in summer) but you have to drop your price. Pain ensues, yes, but also (perhaps) a sale. As I said in the March 4 title, it is "painful for sellers to rip the calendar", perhaps "worse than bandages?"
Lovely loft, though. Very minty. And large.
© Sandy Mattingly 2009
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