the problem of price discovery (hint: you have to pay attention) : Manhattan Loft Guy

Manhattan Loft Guy

Apr. 11, 2009 - the problem of price discovery (hint: you have to pay attention)

if a tree falls in the forest ...
I've been mulling a long-ish post on price discovery for quite a while (not writing it, obviously; just mulling). Pulling together some interesting riffs by other bloggers and news articles and market activity (and market inactivity), all in service of the idea that one of the problems with The (current) Market is that it is so thin that it is hard to know where the right price is for a particular Manhattan loft. In that situation, with actual loft closing information rather scarce, it is critically important that sellers pay attention to prices that do not work. Seems kind of simple, no? (simple as in simpleton, btw)

Perhaps this will be a start of a string that will, together, compose a long-ish post on price discovery ....

A new Manhattan loft listing in out-of-the-way Tribeca reminded that there had been an interesting loft offered for sale in that same building last year ... I wondered what happened to that one? I noted just now that that one did not sell, after having been offered for about 3 months. So, we learned that that price for that loft ($1,300/ft) did not work,right?

Then I noticed that yet another loft in that building that has been for sale for most of the last 7 months for just over $1,000/ft. So, you'd think we've learned that that price for that loft does not work either (no price change in 7 months is pretty stubborn, no?). But that one is still "on the market" in the sense that it is an active listing, and perhaps in the sense that they will entertain any offers -- though they are unlikely to get many.

if a price fails in The Market, but no one is paying attention ...
That new one? Offered at $7/ft less than the unsuccessful-for-7-months loft (one dollar off per month??).

head-scratching ensues (no hilarity, yet)
As far as I can tell from the prose, pix and plans, the three lofts in question are in comparable condition.

As far as I can tell, The Market has resisted Loft #2 (in our sequence above) at about $1,000/ft. As far as I can tell, there is no reason to think that a $7/ft "discount" on Loft #3 will be any more attractive to The Market. As far as I can tell, the seller (and agent) for Loft #3 learned nothing from the (non)sale of Loft #2, which has lasted 7 months -- so far. Head scratching ensues ....