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There are lots of variables to consider. How's this for a start?
- the recent rezoning of 125th Street
- the Columbia University expansion rezoning in West Harlem (above 125th Street),
- the new pier that is supposed to open in the next couple of weeks on the West side around 125th-135th or so (assuming they finish on schedule)
- many shells restored
- many vacant lots filled with new construction housing and retail
- growing racial and income diversity (also a negative to some)
- easy subway access
- friendly neighbors
- possible backlash at some point from opponents of gentrification
- not all areas are desirable and may not improve
- risk due to economic uncertainty today and going forward
Personally I think you if you can find a home that (after the remodeling) will meet your needs at a value that makes sense to you that no one else's opinion should matter to you.
below and/or just above 125th should be fine. Harlem seems to be on it's way and purchasing now might be a good idea, in light of the rezoning and the massive changes that are anticipated.......this will surely increase property values which are already pricey.
Depending on the purchase price, you might want to take a look at a FHA 203k loan where the loan limits are $1,129,250 on 3 families and $1,403,400 on 4 families. Under this program, you can finance the purchase price and potential renovation/remodeling costs. This program allows as little as 5% down on these loan amounts assuming full documentation of income and as a primary residence. 30 year fixed rates can be had in the mid 6% range.
Harlem will be hit the hardest in an overal declining Manhattan real estate market.
Think long and hard about the investment and assume a long time horizon before you see a return.
I agree with realestatejunkie. I hope dg156 is right. However, much of the anticipated change in Harlem will depend not just on rezoning, but on additional government spending (no sure thing given declining tax revenues) and, more importantly, on massive and ongoing private investment. I understand that at least one major retail chain that was supposed to open a store in Harlem as part of the rezoning wave has decided not to go forward, and I'm sure I don't need to tell you about the retrenchment that is going on nationally-- and in Manhattan-- in other sectors of the retail business. It's clear from their public statements that city officials are hoping a lot of the private-sector economic development they're banking on will be driven by the large, national retail chains-- not by sole proprietors and similar small businesses. In an economic environment when the Barnes and Nobles, Tower Records, HMVs etc. are shuttering stores or going out of business altogether in middle-class and wealthy neighborhoods, one has to wonder whether the expected development in Harlem isn't wishful thinking. Even if the retail chains open in Harlem, in a downturn, those stores will be the first to close since they will always likely be subsidized by stronger sales from stores located in areas whose residents have more money to spend than do most of the residents of Harlem. If you have a long time horizon (10 years or more), the current economic realities need not deter you. At the very least, you'd have a nice place to live. However, if you buy now, you should be prepared to lose considerable value over the short to mid-term, and to live without the sorts of services and amenities that are readily and abundantly available downtown.
joedavis - anything up to 125 has gone up unbelievably. Million-dollar condos bought sight unseen. I'm trying to buy east of Broadway. IMHO, in 5 years i"ll priced out. The area between w 100 and up to Columbia is the last more or less affordable piece of proper Manhattan.
meand "in 5 years I'll be priced out".
IMHO, Inquirer is giving you a lot of hype. It is true that there was an explosion of sales at asking price, mostly on condominiums, but that trend is definitively over as is clear from the musical chairs games developers are playing with brokers (Douglas Elliman today, Corcoran tomorrow), and the amount of time properties are sitting on the market (381 Lenox, 2056 Fifth, 267 West 124th anyone?) Have you followed the price decreases in Harlem? Take my word for it: by the end of the year there will be many, many more. My advice to you, joedavis, is to keep a cool head and not be pressured into acting prematurely. You won't regret it.
I'm talking ONLY about the area between Central Park West and Broadway.
In other words, you're NOT talking about Harlem.
very interesting feedback..
there are a lot of high end condos in Harlem that are priced lower than UWS similar properties.
Brownstones, though are a different breed, and the question is who buys them relative to condos, and how that market behaves is not necessarily the same
A brownstone that is $2.5 million in Central Harlem would fetch $5 to $8 million on the Upper West Side, so if the market collapses by 30% overall it is still not clear whether the price gradient enables someone who would buy in Harlem to buy on UWS.
So, if you consider people who are willing to buy in Harlem given all the negatives people have listed, does that likely change their decision? Agreed that the psychology of buying will be adversely affected.
I am still not clear on whether a brownstone remodeling effort is smart or not given the feedback. The concerns/positives that I was considering have been precisely regurgitated
LEt me restate the question:
1) Assume the Manhattan market is largely flat over the next 5 to 10 years, would you buy and remodel a brownstone in Harlem S of 125th and West of say Lenox
2) Assume the Manhattan market is hit with a 20- 30% decline in the next 5 years would you do the same as above?
3) Assume the Manhattan market appreciates at 1/2 the rate of the last few years over the next 5 years, would you do the same?
Thanks a bunch for the responses
Do any of the people who responded actually live in Harlem?
A segregation of response by Harlemites and non would be quite useful
Similarly, an opinion as to brownstone vs ne hi rise condo will be quite useful
Great questions, joedavis. For me, the really big immediate question is: How much does it cost to do a nice gut renovation of a Harlem brownstone? A shell? A building were there are rent-stabilized or rent-controlled tenants that you have to house while you are doing a renovation. A bad renovation that requires doing basic electrical and plumbing and flooring work over again (there seem to be quite a few of those)? There are, indeed, a myriad of variables to consider. The other likely consequence of buying and renovating is that the filing of renovation plans is like an engraved invitation to the Buildings Department to come in a assess you tax liability upward, sometimes for many multiples of the original tax basis. To come clean, it's something I'm thinking about doing, but I'm determined to make sure that the all the risks are factored into my asking (and actual purchasing) price. At the end of the day, I think the ultimate question is whether you yourself are one of those people who is willing, or perhaps even eager, to buy into Harlem, and on what terms? How risk averse are you? How willing are you to accept that the property you buy and renovate may not only stay flat, but actually decrease in value? Is it the property or the potential profit that most motivates you? Only you can answer these questions. I, for my part, I have decided what I'm prepared to do in which circumstances and under what conditions. Maybe I'm just risk averse, but I am not yet prepared to pull the trigger.
joedavis, I posted earlier in this thread. I am a Hamilton Heights resident (West Harlem). As Harlem is a rather large territory broken down into several neighborhoods, the Hamilton Heights/Sugar Hill section is very different than the area you have targeted.
I was not in the market for a brownstone, so I am not sure I could comment with any validity regarding your specific assumptions. I bought a new construction condo and it's not a cookie-cutter generic layout. Many of the new construction condo's do have a cookie-cutter generic layout which I would question once they start aging a bit. If you can find a new condo that meets your needs, it should be easier to customize with finishes that you want rather than a potentially large renovation (asssuming it needs it) for a Brownstone. I would imagine the more cookie-cutter the apartment, the more difficult it will be to sell in a high inventory market- I doubt you would have the same issue with the Brownstone.
It is interesting, how people talk about a big real estate plunge is going to happen in Manhattan from 3 years ago. I wonder if those people are still waiting for this to happen, sitting on their cash (which if they invested in stocks is now not doing well). Seems to me that the Manhattan (and NYC in general) real estate market proved it self quite strong even during the recession...