Jul. 8, 2009 - will pricing 25% below 2007 hit The Market in a sweet spot?

will a modest asking price be rewarded?
There's a lovely Manhattan loft newly offered for sale at about 15% above where it was bought brand new 4+ years ago. Why do I think this is a modest asking price? Neighbors downstairs sold their (identical) loft in 2007 about 25% above the new asking price. Those downstairs neighbors generated a gross gain of 50% over their 2005 purchase price. At 2007-less-25% pricing, the new listing seems modest, indeed.

Whether it works or not is a different story, of course. But they are helped by the fact that an upstairs neighbor has been stubborn, and offering another (essentially identical) loft at more than 20% above the new asking price, without generating a contract in the 8 months that has been offered. They may also be helped by the fact that other upstairs neighbors dipped their toes in the market waters for a few months, and pulled off when a price about 15% above the new asking price did not work.

the roller coaster of brand name loft conversions in nabes that are tres fasconable
This loft was newly converted at pretty much exactly the right time, from a developer's point of view. Closings started in early 2005. The very first buyer flipped after 7 months -- at a 60% premium over the original price. Another early buyer was quicker (flipped within 10 weeks) and not quite as successful ('only' a 50% premium). Weren't those exciting times??

There was an active after-market in this building, with widely variable results. Sales in 2006 and 2007 by original purchasers garnered premiums as low as 20% and as high as 70% above the sponsor prices. But evidence of a change in The Market occurred here as early as January 2008, when a loft that had been flipped by the original buyer within that first year (2005) at a 40% premium traded again in January 2008 at about 6% above the purchase price 26 months earlier.

All said and done, it will be "interesting" indeed, to see where the new one ends up -- and whether the current modesty matches the current market. At a minimum, they are ignoring much of the background noise of the intervening roller coaster years. Props to them for that.

 

Aug. 29, 2009 - RE: will pricing 25% below 2007 hit The Market in a sweet spot?

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Nov. 4, 2009 - RE: will pricing 25% below 2007 hit The Market in a sweet spot?

It will be "interesting" indeed, to see where the new one ends up -- and whether the current modesty matches the current market.

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