How Does A Condominium Hold Its Value over 20 Years?

It's a good question. The answer? It depends on when you want to sell. Our buyer just snagged this 2050 square foot, 3 bedroom condominium for essentially the same price that this unit sold for in 2005. Let's go back and do a little history and see if that could have changed.

2003

This condominium building started its life as a manufacturing building in 1898, and was converted into a 32-unit boutique loft project in 2003. This unit, 3C sold at that time for $1.66mm, or $816 per square foot. Some perspective: The 10th floor penthouse sold a few months later for $9.775mm, or $1582 per square foot. Almost double what 3C sold for. It had great views and outdoor space. Most of the units sold, but the developer kept a few as rentals as the market evolved. Could someone have sold 3C for a profit as the market improved? Why yes!

2005

3C sold just two years later for $2.625mm. So the original owner made nearly $1mm in a short time. Bravo! But then we see a gap of 15 years before anyone tried to sell 3C again. What happened during that time?

2011

In 2011, the other penthouse sold for $11 million, or $2750 per square foot. That's almost exactly triple what 3C sold for on a per square foot basis. 

In 2014, Unit 9D sold for nearly $2400 per square foot. So there was traction in the building. 6C, nearly identical to 3C, tried to follow suit, but wasn't able to find a buyer at a $4.995mm asking price. 3C, too, tried to cash out at a $3.3mm asking price, to no avail. So there was a peak in the building around 2014-2016, and that's where things get interesting. It seems that had 3C tried to sell in that 2014-2016 window, he might have made out. But he didn't. 

2020

Other units in the building were finding things more difficult as well. For instance, in 2019, unit 8B couldn't find a buyer at a $1861-per-square-foot asking price, which was telling (they had started at an eye-popping $2775/square foot asking price in 2017, however). 

3C Tried to sell again during the pandemic, at a time when rental tenants were hard to find. A buyer, however, emerged. The owner from 2005 unloaded his property at $2.875mm, which allowed him to probably break even after 15 years of ownership. The new buyer likely thought that he was really making out. After all, he could finance at rates below 3%. And he found a tenant at a number ($11,000/month) that would more than cover his costs. His return based on my calculations was about 3%. 

2024

This is where things get interesting. Another high-floor unit sold for about $2400 per square foot.  With that in mind, the owner decided he would see if he could profit from his "COVID deal." The apartment hit the market at $3,750,000 ($1845/square foot), and proceeded to chase the market down, down and down. What I would point out is that neither this owner, nor the previous owner, had done any renovations to the kitchens or baths except replace an appliance or two. So we're talking about 20 year-old fixtures throughout the unit. The apartment wasn't staged, nor was it cleaned. Was there any surprise that there were no takers? The owner had also missed the 2021 sale of another low-floor unit for under $1200 per square foot. 

2025

Enter my buyers, who saw the unit when it was last asking $2,995,000. By our lights, the property should be valued under $2.8mm, based on other recent low-floor sales in the building (link here). The seller, carrying an empty apartment, was finally ready to capitulate. And our buyers picked up the unit for about $100,000 below the "COVID Deal" price. Was our buyer thrilled? Yes. Was the seller happy to lose about $300,000 plus the cost of carrying an empty unit? Probably not. 

In Summary

There seems to be a lost decade, between 2014 and 2025, when many properties saw appreciation, but then gave it all back during COVID and the subsequent rising mortgage rate environment. Will we see another run up as rates subside, and older properties get renovated? I believe so. But contrary to what people think, NYC properties are not immune to ups and downs. Congratulations to our buyers! They are very excited to have found a property during what we think is a market lull.