We just closed a sale for a buyer with whom we have been working for six years.

Six years! My son was a baby when we started working together. Now he’s finishing first grade.

That’s one way to measure it. How else should we think about it?

2017 – The NYC market was peaking (report here)
2018- The market was slowing down, as the stock market was raging (report here)
2019- the housing market was slowing further (link here). The returns were in private equity and the public markets

2020- COVID came along and threw everything off, especially in real estate in New York.
2021- The housing market rebounded starting in Spring 2021 in New York City.
2022- The market was booming for the first half of the year, until a little something happened.

Mortgage rates went up.

All along, my all-cash buyers had a very specific set of needs. Great building, the right size- not too big, not too small- and in move-in condition. They walked away from three other deals during those six years, for a variety of reasons. Irritating seller, obfuscating coop board, getting outbid, getting cold feet. Perhaps during COVID a steal could have been had, but anyone older than 60 wasn’t coming near New York City if they could avoid it.

By The End of 2022

What they settled on and negotiated hard for was in a high-end building along Central Park West. 2400 square feet, with reasonable maintenance and white glove service.

And I think they accidentally saved almost two million dollars waiting for it.

Here’s the math:

They purchased a unit for $3,600,000. Move-in condition, other than needing about $100,000 in new windows. So all in, $3.7mm.

Six years earlier, in 2017, the price for the same apartment on a higher floor was- get this- $4,250,000. Even at that price, it needed at least $500,000 of renovation work. Today that would cost at least $750,000. So the difference when you’d be done? $5 million vs $3.7mm.

That’s $1.3mm. They weren’t living in the city full-time yet, so you could argue that during that time, their $3.6mm was also earning a return in the stock market, too. Want to be very conservative? They spent perhaps $10,000 a year visiting- and I’m sure that’s way too high. And they perhaps made 3% in returns on their money per year. So that’s $90,000 per year. 6 years x $90,000 is $540,000.

Add $1.3mm plus $540,000 (which surely was higher if they had a good investment professional) and you have $1.84mm in savings.

The line I like to use, “It’s smarter to be lucky than it’s lucky to be smart.” Bravo to my patient buyers. They should have a lot to celebrate!