Photo by Tina Fineberg for NYT
The Harlem real estate has cooled considerably since the peak of its heyday just a couple of years ago. This morning a New York Times article declared, ‘Harlem’s real estate boom becomes a bust‘ in an article they later renamed, “On a Harlem Block, Boarded-Up Buildings and a Changing Mood.”
The Times article goes on to tell about a block of 134th Street where developers and flippers have been left holding onto property that is *gasp* (clutch your pearls, folks) worth the value of the homes. Imagine that!
It seems that those ‘investors’ were simply profiteers who gambled on getting the shells and abandoned townhouses fixed up in enough time to make a quick million on property that they knew wasn’t worth that price. They lost the bet.
The real estate market in Harlem has always been a tricky one. In an eerie twist of fate, the current market mirrors that of the past. Harlem came to be an area primarily populated by blacks as a result of overbuilding and over pricing. It fell into disrepair as a result of greed on the part of many absent landlords and a disconnect between the residents and the property owners. See a cycle here?
For example the man in the picture above, Craig Charie, is trying to sell an unfinished brownstone at 221 West 134th Street. According to The Times article he had contemplated chopping up a single family home, which belonged to a Harlem family for nearly 90 years, and renting it out to Columbia University students. Sounds similar to what happened in the past when Harlem homeowners had to chop up their beautiful homes into odd configurations to help pay the mortgage. Many of the best deals on the once hot market were a result of these converting rooming houses and SROs that greatly diminished the historic and economic value of these properties. There are new homeowners that are still spending thousands of dollars to undo the damage and neglect from these forsaken gems.
I find it interesting that an influential newspaper like The Times should declare the Harlem market ‘a bust’ when similar situations are taking place in other once hot neighborhoods like Bed-Stuy in Brooklyn. As an interesting note, Forbes just listed Greenwich Village, of all places, as one of “America’s fastest falling neighborhoods.“
The way it played out in Harlem was some people entered the market early enough to benefit from the low prices and rising property values. They now live in beautiful and affordable homes that they wouldn’t have otherwise been able to achieve living in an overpriced market like New York City. There are others who rode out the market in the beginning and later managed to recoup what they invested before things cooled off too much.
I am a bit concerned about how this is going to affect the wonderful new businesses that have invested in Harlem. Are lenders and investors going to pull back even more using The Times article as ammunition for the reason want to hold off on investing any more money into what has been deemed ‘a bust?’
Could the flip side of this story be that there might be Harlem homeowners (not developers) that are actually invested in the neighborhood and content to live in what one Harlem blogger called a less “desirable” area? Could there be people who are not simply flipping houses now that the fickle money tree has whither away and died?
These are just some of the initial thoughts that came to mind while reading The Times piece. What are your thoughts and impressions. Is Harlem a real estate bust or is it simply cooling off and settling into a community that homeowners are willing to invest in long term?
Valgb
July 11, 2009
I just want to say ditto regarding “Anonymous”. I think this person must be a speculator who is dedicated to driving down Harlem real estate prices in order to buy properties and cash in. Believe your eyes, not someone who puts so much passion into hating on the neighborhood. Of course things have slowed down; this deep recession is no joke, but I still see renovation and new investment in Harlem all around my area. Also, some cooling of prices has allowed a more reasonable balance and better relations between new and old Harlem residents.
Pete
July 11, 2009
Any thoughts on the TRD article which ranks the Kalahari #1 in NYC new condo sales for the spring?
http://therealdeal.com/newyork/articles/the-tallest-green-condo-shoots
Doesn’t exactly sound like “bloodbath.” I’m not sure who the anonymous July 8, 9:25am poster is above, but this person magically materializes every time there is an opportunity to talk down Harlem on some blog, and trots out the same tired litany. It’s bizarre.
The other posters have it closer to reality. The dynamics of the real estate markets and credit markets have changed — as they have everywhere. A major initial effect of this has been to take the speculative element out of the market. This element was especially pronounced in Harlem, and few of us here are going to mourn its passing. If the market can now find a more rational and sustainable equilibrium, this will be a positive development for most everyone other than flippers, speculators, and their hangers-on.
al
July 10, 2009
This NYtimes article focuses on one block which does not reflect the typical Harlem brownstone block. In reality most Harlem brownstone blocks now speak of pride of ownership where recently these same Harlem brownstone blocks spoke of generational abuse and neglect of the neighborhood buildings.
ny'er
July 10, 2009
Though they thanged the title of the article, the NY Times was still out of place with its originial intention: to drive fear into potential investors or newcomers into Harlem. The whole country is hurting and the Times is focusing on Harlem– a place that has turned so many corners and has been a success story relative to its past.
My father bought a home up in Hudson Valley over 20 years ago for $115,000. At that time, a comparable home in a decent neighborhood in New York City would’ve sold for less. He must of initially invested over 50K and another 100K over the 20 year period bringing the total investment to about 250K. He placed it on the market for $200,000 this Spring and didn’t get one offer. Now thats sad. Especially taking into consideration how much energy and effort they put into the home. It wasnt an investment to make a quick buck; it was their retirement. That’s where the NY Times, if anything, should write about.
anon
July 9, 2009
Funny-the times just changed the headline to “On a Harlem Block, Boarded-Up Buildings and a Changing Mood”….i guess they decided one block wasnt really a whole neighborhood.
one thing
July 9, 2009
we’re a family and we paid 700K to live in harlem because this way we could afford a bedroom for everyone…lots of space…a parking spot…and still have money left over for private school.
you kind of talk out of your ass a lot.
Harlem132
July 9, 2009
ny’er > “It is actually a neighborhood with real people…”
“Harlem will continue to thrive and this is only the begininng”.
_
Spirited talk with no substance. It can be effectively argued that Harlem is a region with vast numbers of people who cannot afford to live in Manhattan, yet do, largely on backs of the taxpayers of New York. In sum, Harlem is a community that relies on social welfare programs to keep the citizenry “status quo”.
“Thrive”? Who’s thriving in Harlem? Certainly not Black business or people. UF has published and chronicled the long list of Harlem Black businesses that have gone out of business (the old like Copelands and the new like the Harlem Tea Room).
I like to speak glowingly and romantically about Harlem too, however I also like to speak honestly about Harlem. Spirited talk is meaningless while also ignoring and turning a blind eye to the facts on the ground, the vast numbers of deeply entrenched in generational welfare.
That’s the elephant in the room. “Thrive” in Manhattan when the average income is $32,000? Thrive when Black male unemployment exceeds 55%? Sorry, the truth on the ground, the demographics state otherwise. Spotted and isolated gentrification yes – however only that, spotted and isolated. 1 New Condo Bldg that cannot sell @ $800/sq’ does not counter balance a project with several hundred welfare class people and no disposable income.
Much of Harlem strikes me as being in “fantasy land”. I hear a lot of spirited cultural base talk…..while the public schools are awful and how do you attract families to buy $750,000 apartments when the schools are horrible? There’s a disconnect, a not acknowledging of fact and conditions on the ground.
Ironically it kind of reminds me of the Michael Jackson thing. Blacks largely herald and celebrate Michael Jackson as if he was a God or something, while disregarding how he justified being a 40+ year old man and sleeping in a bed with young children that are not your own…as being something right and appropriate, how he paid off a family $22M to settle a child molestation legal action, how we was a full blown hard core drug addict.
Blacks tend to see Harlem & MJ without the thorns…
ny'er
July 8, 2009
Harlem is beautiful regardless of the drop in prices or what the NY Times has to say. It is actually a neighborhood with real people unlike the zombie areas of the rest of Manhattan.
Harlem will continue to thrive and this is only the begininng. Black people are genius… just give them the opportunity. My president is black, the best golfer is too. The MVP of the NBA, The KING OF POP.
On a serious note; human attitudes have tremendously shifted with respect to race relations. The animosity that was prevalent amongst black, whites and latinos has simmered down greatly. This will stand to benefit multi racial neighborhoods such as Harlem where diversity rules!!!
Bob Dobbs
July 8, 2009
Actually, I’m seeing more commercial activity in Harlem now that the hype has died down. I think when things were running amok retail landlords were holding out for unrealistic rents based on the madness. Now that the hype is gone, I’m seeing storefront actually filling up – I guess the retail landlords remembered the rent dollars you do get are better than the downtown rents you can’t get but think you deserve.
Marissa
July 8, 2009
Developers’ greed is residents’ potential gain, IMHO. Harlem is more vibrant than ever because of the boom, and yes, prices are back to being FAIR. This provides a great opportunity for upwardly mobile people who want to commit themselves to the sustainable development of Harlem to make comfortable homes here–I am one of those people. I’m not yet at a place where I can afford to pay $2500 a month for a one-bedroom, but I’m a young, black professional who is a responsible tenant and who wants to see Harlem thrive. Hopefully, like-minded people will also take advantage of the newly “low” prices!
Anonymous
July 8, 2009
Only the tip of the iceberg. This is a long term, slow burn dive we are seeing unfold. D. Bell, the Times article is not the harbinger, it’s reporting old news to those within the industry, it’s behind the curve. The Harbginer on the future of Harlem (in the context of development) was (1) Vornado cancelling plans (Harlem Park); (2) Riverton & Savoy both defaulting; (3) Seeing developers go bankrupt (5th on the Park, the Lenox Grand and having mortgage companies decline mortgages they earlier “OK’ed” – they discovered there was not substance to the valuations.
It also does not help to see Corcoran & Warburg close their Harlem offices. That’s a long term vote of no confidence. The Big Box retail to come on the East side means nothing. These are not “feathers in one’s cap”, these are undesirable developments to communities, they are NIMBY’s, no community wants a Big Box in their community – they want it in the community next door (convenience to them, yet not having to deal with the headache & downside of them).
In sum, those with the most inside players, and the most to gain, have abandoned their stakes and interest in Harlem. Harlem has no potential to return to the momentum it had in 2005/2006 for example until all of Manhattan below 110th St. is recovered in full and again causing spillage and overflow into Harlem, something I sense will take 7 – 10 years, if at all. Keep in mind much of this Harlem hype was fueld by cheap money to anyone with a pulse, that will not happen again.
We saw the buyers of an apartment at 119th & Lenox in the Normandie Bldg over a 3 year period loss $400,000 and 35% in value between their purchase price in ’06 and sale price in ’09. This is the new Harlem for those that bought during the hype era. Harlem’s problem for apartments is the asking prices are on par with those in far more desirable areas of Manhattan.
There will be a blood bath in Harlem real estate. Those sellers of their apartment in the Normandie that lost 35% value in 3 years illustrate the very beginning of the blood bath to come. 35% – 50% losses in value short term will be common…and it will be worse long term. This whole thing was built on the “bigger fool” theory, and unfortunately the mortgage industry straightened out their act, and the pool of “fools” has dwindled…
tacony palmyra
July 8, 2009
During the housing bubble, the Times was practically obsessed with gentrification in Harlem and how horrible it was that white people and more affluent POCs were moving in. Now that the bubble burst, they’re writing about how horrible it is that the neighborhood’s NOT gentrifying as quickly as it was before.
I think the point is that the Times loves to sell papers decrying how horrible things are in Harlem. No matter what’s going on, negativity reigns supreme.
In general, I think the media has really strained to find concrete examples of the recession and housing crisis in places where they aren’t as physically obvious. My block has more businesses open today than it did two years ago. Anomalies don’t sell papers though.
As for your take on things, D. Bell, is there really no value to SROs and rooming houses in Harlem brownstones? Where are poor people to live (without subsidies)? Is it barbaric for people to rent rooms? You’re making affordable housing sound like a bad thing. I’ve lived in an SRO before. It’d be sad to think that you would have rather my landlord kicked me out and re-converted the building to a large single family home when there were so many who’d kill to rent a small, affordable room.
D. Bell
July 8, 2009
Tacony, I think you misunderstood my point about converting single family homes into rooming housings. From the examples of beautiful townhouses that were converted into rooming housings in Harlem, there was so many damage by the renters that much of the historic value and details were lost. Ask any homeowner who has to renovate these places compared to one who has a home that did not rent rooms. That was the point I was making. Sorry if it wasn’t clear.
al
July 8, 2009
This is to be expected, just like everything else in America now, including the Dow Jones Industrial Average, everything is down. What would be really weird is if Harlem RE held its boom prices when everything else is down. Q) Is this the end of civilization?, A) no, Q) is this the end of the new Harlem, A) No. Harlem has turned a corner in the last few years, the biggest and most significant being Harlem is now an option for all Americans where it wasn’t before.