The 300K condo comes to Manhattan -- Harlem leads the way

I agree with the general idea - prices will come down but the area has come too far to totally go back

agreed with kspeak. Prices will come down, but the area is no longer comparable to 2000-2003 levels considering all the changes. Even if prices do come down to that level, it seems like it would be very short lived.

history never lies. Harlem will drop precipitously in price. the volume is always a precursor to price.
50% is my guess over 3-4 years. And it will stay there a LONG time.
Ditto midwest and financial.

I don't know Harlem. But the premise here seems to be that if a neighborhood, or sub-neighborhood, has seen some significant improvements over the past four or five years, then it's unreasonable to assume that prices could regress to five-year-old levels, when the district was noticeably less nice.

Sorry, I have a problem with this premise.

If we were talking about the wild wild west, where nobody had ever tried to price real estate before, that kind of thing would have some validity. But we're talking about Manhattan, where valuing real estate has been a primary occupation of the populace for the last several decades.

How close is it to the subway? Are there bus lines that run nearby? Is there parking? Is there a park nearby? Is there any kind of good retail in the area, are there grocery stores that aren't disgusting?

How about the schools? Do they suck? Are they half way decent? Is it a neighborhood that anybody has ever heard of, does it have any kind of character or history?

These are the primary ingredients that go into on-the-ground pricing of real estate in Manhattan, and these ingredients are for the most part not very changeable. And people have been pricing these things into real estate for the last couple of generations, going back 50 or 60 years.

By "on the ground" considerations, I mean the neighborhood-specific stuff that does not count among the larger, overarching factors that create the main valuations for real estate: ie, how much debt is available, how cheap or expensive is it, and how much demand for housing exists?

These are the key things that determine prices and that are apart from specific neighborhood characteristics.

So to get back to the subject at hand, if Harlem or certain parts of Harlem look a bit nicer than they did five years ago, that's not going to make much difference in where the pricing bottom occurs for real estate.

The only neighborhood-specific things that could affect pricing would be how close is it the subway and are there any parks nearby, or major roads, and how good are the schools, and none of those things have changed since 2003. Sorry.

This idea that people have fixed up their houses and put out flower pots and so that is going to prop up the prices is sort of ridiculous. What's happening to the market is huge, way way way bigger than that. If that was all it took to keep prices propped up then everybody would be able to sell their coops at asking price.

GraffitiGrammarian,

Your assumptions might hold true in many places throughout the nation, but they surely do not hold true in Harlem. In 1998 you could buy a brownstone shell for 15-25k in my section of Harlem of Hamilton Heights. In 2003, that shell would be 200k. In 2006, that same brownstone shell would be 900k+. Today that same shell might cost 700-800k. In a few months or perhaps a year plus, that shell might only cost 500k. There are a fraction of brownstone shells available today that there were 10 years ago...and even 5 years ago for that matter. It took time for the seismic shift to take hold.

This is not about putting out flower pots. This was a drastic change...see for yourself:
http://forum.skyscraperpage.com/showthread.php?t=149448

Many parts of Harlem have excellent access to the subway- I live near 145th st and I have the A and D express and B, C, and 1 local trains all within a 3-4 minute walk from my apartment. Bus lines and parks are readily accessible.

All of this meant nothing until both reality and perceptions had changed. Harlem was ravaged by decades of decay and violent crime- and the last 15 years has allowed a major revitalization, so yes, it was very much like the wild west...even if it is in Manhattan. When I signed on the dotted line 3 1/2 years ago to buy my place- my block was horrible, but I had a feeling it was all going to change. Today, most of the drug dealers have been evicted from their apartments- and most of them lived on the block...and the evictions only started over the last few months- they will continue. I don't know where these people are moving to, but it sure doesn't seem like they are staying in the neighborhood. Crime has continued to drop in the precinct. My property taxes are only $3 per month (not a typo) for a reason- it was set when it wasn't clear that the neighborhood was going to change and it was still the wild west of Manhattan.

I do expect my property value to drop dramatically during this period, but I don't believe that crime is likely to return to the way it was (it is reasonable to believe that it will increase, but not reasonable to assume that it will revert back to what it was). The past five years have had dramatic shifts in demographics- both racial as well as income levels. Even if income levels come down throughout the city due to a horrible economy- unless people start running scared from here -it's not going to revert back to the extreme poor that was represented here for so long. I have even noticed a dramatic shift in demographics just in the last 2 years. Having attended police community meetings, all of those new owners tend to be looking to form community to make sure that the improvements not only stick, but continue to improve.

You have both Columbia and City College expanding their campuses, you have an emerging restaurant row, you have parks and bike lanes built or improved in the last few years. You even have a subway stop that has been closed at nights for a decade reopen. I can go on and on, but I think my point is clear.

With all of this evidence in hand of drastic change...what is ridiculous is to assume that all is identical to 2003.

I've been looking seriously in Harlem since the beginning of the year and sold my Chelsea condo at the top of the market with the expectation that I would buy right away. I am so glad I waited. I wish I could be as sanguine as Semerun about the "evidence of hand of drastic change". I believe an evidence-based view (macro and micro) of the current real estate market and its implications for Harlem could well lead to a drop in price basis that takes us back past 2003. We are facing the worst economic conditions in this country since the Depression. Only a faith-based, fact averse refusal to acknowledge that fundamental reality can proceed as though Harlem will be immune or will experience only a 20-25% drop in sale prices. We're talking about a unsustainable 300% increase in value in Harlem as a whole. I've lived in New York since the 70s. What short memories people have. I can remember friends not being able to sell their apartments in the late 80s-early 90s because they couldn't even get what they had paid several years before. I remember crack and the crime that went along with it. I remember completely substandard city services in Harlem because of precipitous city and state budget cuts. There is a strange disconnect between this thread, history ("We can't go back because we've come too far?) and current realities. None of this is to say that I won't buy in Harlem, but I don't imagine there's going to be a lot of demand for those 1.2-1.8 million condos that are beginning to saturate the Harlem market. Maybe single homes are in a slightly different category, particularly those whose current owners bought them for a song ages ago. But when you consider the credit crunch and the likelihood that folks simply won't be able to borrow the money they need to complete renovation on the average Harlem townhouse (you can already find lots of properties where work was started and then suspended), I don't know that we should expect to see drastic drops in that sector of the market. Reality bites.

Graffiti and Cherrywood - pretty harsh language about "faith-based, fact-averse" theories. Nobody is saying that prices are only going to drop 20%-25% in Harlem. I think all of Manhattan drops and Harlem more severely. Actually I don't see any facts in either of your responses - I see only lecture about real estate fundementals but no facts that support why Harlem is reverting back to a crack-ridden slum (something its 2003 prices were burdened by).

Samerun's point about "coming too far" is one I agree with - prices went up 300% since 2003. I don't see prices going down to ONE SIXTH of what they were. That's all. E.g., I don't see being able to pick up an entire brownstone in good condition (e.g. not a shell) for $400k or a 3BR condo for $150k. I am not going to deny that Harlem lags Manhattan below 96th street in terms of restaurants/bars but it has decent options now.

Actually, generally, I think Harlem has better "bones" than many places that shot up in value - better than the Lower East Side, Red Hook, Williamsburg, etc. Say, hypothetically, I live on 120th between Lennox and Adam Clayton. Specifically:

1) I'm right on top of the 2/3, 5 minutes from the A/C and B/D, and 10 minute from the 4/5/6 - better subway access than most of Manhattan. Lots of buses too.

2) Aesthetic beauty - between Harlem architectures and low buildings and wide street (lots of light) I would say Harlem is physically one of Manhattan's nicer areas. I grant this is always a matter of opinion but I think it is safe to say there are others who see this too.

3) I am closer to Central Park than anybody on the UES who lives East of Third Avenue - and also close to Morningside and Mt. Morris parks

4) Schools. Public schools - you are part off District 3 which includes UWS schools. Admittedly probably an uphill battle to get into the best schools there. But there are tons of example of nice neighbhorhoods in Manhattan/Brooklyn where your "neighborhood" school is not that good - Brooklyn Heights, Carnegie Hill, etc - and you can say if you live in Brooklyn Heights you can send your kid to school in Cobble Hill or in Carnegie Hill to PS 6, but that's the same argument as Harlem and UWS Schools. Harlem's elementary school on 120th and Morningside is rapidly improving. Some excellent charter schools. And you're close to UWS/UES and Morninside Heights private schools as well. It's not an "A" in this category but I think in terms of overall options on par with many "prime but not super prime" parts of Manhattan.

This is what I mean by "bones" - things other newly gentrified areas can't replicate. Red Hook can't put a subway in and LES or Williamsburg can't get Harlem's architecture or proximity to good private/charter school options should you lose the public school battle. In terms of "amenities" Harlem has improved too.

1) I have all of the basics covered: several dry cleaners on Lennox, a place to get cofffe (Settepani on Lennox and Starbucks on FDB), Fine Fare for groceries (admittedly not the best grocery store but not "ghetto" either) and if I want a better selection/higher quality I can go to Fairway or Citarella, Duane Reade on Adam Clayton blvd. There is a farmer's market in Morningside park on weekends. New York Sports Club on 115th and 5th and also on 125th and FDB.

2) Entertainment. It's not the best restaurant neighborhood but it has improved. Piatto D'Oro is nearby for Italian, Pateserrie des Ambassades and Settepani are great for brunch, Harlem Vintage (wine store/Wine Bar) for wine, Perks not a bad spot to have a beer, MoBay has good drinks and pretty good food, same with Moca Lounge. Good mexican place near Central Park North and and Ottamanelli opening up there soon. I can walk 15 minutes and be in restaurant row in West Harlem which has better options for both restaurants/bars. Big movie theater on 125th street and some good restaurants right above 125th street.

All of these things came AFTER 2000 to Harlem. This is "facts-based" - things have changed.

There is the risk that a severe economic downturn means many of these restaurants fold up shop. Do I think this happens? No. It's true some retail has struggled in Harlem even before the downturn. But most of this was frankly, just bad ideas (like the Caviar/Champagne Bar) or places with bad service (Harlem tea room - probably a bad idea too). The places that offer something mainstream people actually want (Italian, brunch, coffee) and do it halfway decent are doing well - Settepani is almost always packed and Piatto D'Oro expanded recentely. People are cutting back but the world isn't ending. And I think to the extent people cut back, this will be made up for by the fact that EVENTUALLY all of that oversupply of condos gets filled up - maybe very cheaply, but in Manhattan there is always a price for rentals if nothing else. The dirtly little secret is that oversupply is exactly what the neighbhorhood needs because it will bring more market-rate housing and more middle-class/professional people to the area. In the near-term that will cause prices to crash, but long-term, it helps the neighborhood get critical mass.

Crime will likely increase again during the economic downturn, but Bloomberg has been pretty clear that the single biggest lesson from urban planning during the 1970s, 1980s, and 1990s is that you've got to police the streets and make people feel safe. So I don't see a total reversion, and I don't think I am niave for saying this.

Lastly, a little history lesson. Harlem in the late 80s/early 90s to now. Things have changed fundamentally

http://forum.skyscraperpage.com/showthread.php?t=149448

I think this is pretty "facts based" in its approach. Near-term is going to be ugly do to oversupply but people who time it well (wait a bit) or bought 4 years ago before the run-up will do nicely.

And to clarify - when I say "do well" I am not suggesting that somebody can pick up a Harlem condo/brownstone in 2010 and flip two years later. I'm saying they'll be able to pick up a nice place to live for cheap, which if they have a long time horizon (10 years) will appreciate nicely.

generally agree with kspeak
the practical question is effectively the timing one which is really a price point one --
I just did a quick craigslist scan and rents are down in Harlem as well -- the oversupply of the new condos is kicking in -- they seem to be offering rentals instead of taking a price reduction on a sale

so, recognizing that one is unlikely to be able to time the bottom, it may make sense to consider "safe" price points -- is that 500k, $1 million, 1.5 million for a reasonably renovated brownstone?
The current low marker seems to be around $1.6 to 1.75 million in the South Harlem area and there are only 2-3 in that general price range that have had the basic systems renovated recently

The more common marker is >$1.9 million

Joedavis - agree that timing is the difficult thing and practically I am not sure when I'll pull the trigger.

I don't want to overtime the market. For me, if I can pick up a mint condition (needing absolutely no work) brownstone for less than $1.5 million or one in good condition (structure and details intact but would need new kitchen, bathrooms, and central A/C) for $1 million I may consider buying. For me what it comes down to is a $7500 monthly mortgage ($5000 post tax) is pretty affordable for my husband and I and equivalent to what it would cost to rent a 2 bedroom downtown. Even if it gets cheaper, at some point, I don't care- we'll have bought a place we can live in forever, have a family, never have to move. It may force private school, but I am not super-concerned: I know too many people who paid through the nose for a top school district then got screwed.

But everybody has their own considerations ...

kspeak, Precisely which of the factual claims I made do you find unfounded? Is it not a fact that this country is facing the worse financial crisis since the Great Depresssion? That Treasury has yet to figure out a way to use the $700 billion bailout fund in a way that will actually persuade banks to start lending? That massive private layoffs are likely to be a fact of life for some time to come? That massive government layoffs are not far behind? That there simply won't be the money at the state and federal level to adequately fund police, schools and other essential services? That there isn't already an oversupply of new private housing stock in Harlem? No amount of magical thinking is going to change those basic facts and those facts will have a profound and negative impact on Harlem prices far beyond what most developers and sellers want to admit. Look at the number of shells on Streeteasy with asking prices in the 1-1.5 million dollar range, or the condos that are asking for up to 1/8 million dollars? In the face of the structural downturn in the American economy-- job losses, seized up credit, decreased consumer spending, increased bankruptcies-- a downturn Nouriel Roubini and many other reputable economists are saying will be more like an "L" than a "V" (rapid drop with protracted, not just "near term" flat prices) it'll take more than good bones and subway lines to avoid these new realities, and their consequences the Harlem real estate market.

I am not saying there is going to be a rapid recovery - never argued that. I just think Harlem has changed fundamentally since the late 1990s and some of the price run up is justified. The claim was that the neighbhorhood had not changed at all, and there were no facts to support that. That's all. I agree on the oversupply issue - that is why I said if a buyer times it right they could get a great place for cheap.

I don't mean to sound harsh. Some of you folks may live in Harlem and love it and want to protect the value of your investment there, and that's fine.

I'm jes sayin' -- the places that saw the biggest recent run up in prices are the same places where the bubble is going to deflate the fastest. The fact that Harlem saw most of its improvement occur over the past five years is a fact that argues for a bigger price decline there versus other neighborhoods, not a smaller decline.

I made a comment the other day on a thread here about a very upscale one-bed coop on a prime street in the West Village. Some folks had argued that the place was worth less than half its asking price.

I was a bit surprised by that; maybe they were right, I dunno. But prime streets in the West Village are going to hold their value much better than any part of Harlem.

I'm not against Harlem, the parts of it I've seen are lovely and I've strolled down Strivers Row and its one of the loveliest streest in Manhattan, in its way.

I'm jes sayin' -- it's pretty much a given that the districts that saw the biggest recent inflation as the bubble got bigger are the very districts that are going to see the biggest, fastest deflation as the bubble gets smaller. That's the way it works.

Now you could argue that Harlem is a special case, because it was long under-valued, and somehow the market now is going to adjust to properly value the district, in spite of the overall deflation that is occuring. You could argue that, but I don't see anybodyn here trying to make that argument.

Like Harlem, other districts that saw big recent price increases -- including Crown Heights and Fort Greene and Clinton Hill in Brooklyn -- those districts are going to deflate very quickly too. They will all be among the hardest hit.

But not Greenwich Village or the Upper West Side or other long-established nabes. Those districts are going to see the least price declines.

ps: I meant to say, I agree with Cherrywood.

I agree Harlem will see bigger price declines than established neighborhoods in percentages terms (if the Upper East Side falls 40%, Harlem will fall more).

But for Harlem to fall to 2003 prices, it would have to fall to 1/6 of its 2007-2008 prices. When I say Harlem has "gone too far" I don't mean it's immune to price declines - I just mean it won't fall by 80% in value.

5-10 years ago, nobody would even talk about Harlem and Manhattan real estate in the same sentence. Now, people do - this is a seismic shift. Harlem deserves a discount to most of Manhattan - amenities aren't completely there and it is somewhat less safe - but before 2003, Harlem cost less than 20% of what other parts of Manhattan did. I don't see this reverting. I see a 50% discount to most of Manhattan at most ...

ps - "you could argue that Harlem is a special case, because it was long under-valued"

- precisely what I am arguing if you actually read what I had written. But I have always acknowledged that emerging neighborhoods get hit the most in a downturn. I am aware of "how it works" - but also of the fundamental changes that have occured in Harlem.

GrafitiGrammarian,

Please take a look again at what I wrote in my last direct response to you, as well as what kspeak wrote. We both made the same arguement that it was undervalued for too long (How many places in Manhattan were you able a to buy a townhouse near 5 subway lines for 15-25k not too long ago- even if it did need 500k+ worth or work).

As an owner here you might be tempted to believe that I am biased on the pricing aspect- but it really isn't the case. I signed my contract in 2005, and by early 2007 the price of my apartment had appreciated in excess of 50%...I realized then that the run up was unstainable and we were heading for a signficant downfall. I had come to enjoy my new home, so I wasn't willing to take the cash and run.

Cherrywood can go and quote Roubini, fact is, I agreed with Roubini views before it was clear that we were in trouble- although I am admittedly a little biased on that one as an alum of Stern. My argument was not that Harlem wasn't going to suffer but that Harlem was long undervalued and is not the same neighborhood it was back in 2000 or even 2003 for that matter.

Take a casual look at Streeteasy listings: we are already seeing 30% drops in asking prices in so-called "prime" neighborhoods. A week after I closed on the sale of my apartment in Chelsea, my downstairs neighbor (identical apartment but with outdoor space) decided to list with a broker; a week after that the asking price had dropped by 200K. In a market economy "value" is determined not by proximity to subway lines, restaurants, branches of Chase or Citibank, or grocery stores but by the willingness of prospective buyers to pay the prices sellers are asking. Semerun concedes that the Harlem property s/he owns will likely drop dramatically in value in the 6-12 months to come. That's because people won't be willing to pay what they were once willing to pay. The question is of how much people will be willing to pay is something that no one can possibly know. What I think we can reasonably say is that there is no reason to think that the market will eventually decide that, notwithstanding the changes Semerun mention, the value of Harlem property today should fall to what it was 5 years ago. It'll be interesting to see how these conversations change in as we get figures about the Q4 of 2009.

first i agree that everything will drop significantly, and Harlem perhaps more so.
However, the prime neighborhoods with high priced properties have very few people who could afford them and fewer after the financial sector mess. Will the 3 million property I cant afford come down to 1.5 million? If so, I am in the game. On the other hand, if it is only down to 2 million, and a Harlem property is at 1.2 it is still fair game. The current comparable Harlem property is 1.5 to 1.8, and the number of people who can afford in this price range may be larger -- I actually don't know
If it is larger, then the differential between the prime and the HArlem may be somewhat smaller.

I think this is the intuitive argument the others are offering, noting that the quality of the infrastructure has improved in Harlem to the point that it is a choice of some sort

I think kspeak has a point about Harlem, and that applies to DUMBO and many other areas in Brooklyn. On the one hand they are the least established 'nice'areas of the city (nice areas: UES, UWS, etc. Areas that flirted with the adjective 'nice'for 2 weeks in realtorspeak before the crisis hit: Bushwick, Bed-Stuy) On the other hand, they HAVE changed so substantially during the last 10 years and appreciated so crazily that even if they fall 50%, they would still show a nice average appreciation 1998-2009. The UES is roughly the same as it was 10 years ago, Harlem is not, and that makes the comparison and the expectation of prices to return to 2002 0r 2003 unfair.

I am not an owner of property in Harlem - I am a potential buyer at some point (would not touch right now), so frankly I have no reason to cheer for anything but price declines. Nobody can really say with certainty what anybody will be willing to pay in 2 years anywhere in Manhattan - but the point stands that Harlem is being discussed in the same sentence as the Upper East Side or the Village. 10 years ago it was the "wild west" of Manhattan and property values were not tracked. I just don't think it's going to become a crack den again, which is what its 2003 prices more or less reflected. When people were talking about "manhattan" real estate in 2000, people weren't talking about Harlem. Harlem is not yet prime Manhattan ..

The biggest risk to Harlem for somebody like samerun who bought their property in 2005 and has already seen it double is not price declines per se. Prices may fall below 2005 prices, but if you like your places and the neighbhorhood, you still got a nice place for cheap ($250 per square foot), and even if prices fall to $200 per square foot, if you're happy, who cares? I'd still rather be samerun that somebody who paid $1000 PSF to live in Murray Hill - and I realize not everybody would, but that's the whole point: you're buying a home for you.

The biggest risk is for an owner (not an investor), of course, de-gentrification. I have said before that at some point, I want a place to live, and if I can get a brownstone I love for what it would cost me to rent a 2 bedroom downtown, I would consider buying (this only requires a 25% decline approximately). The reason I would only "consider" and not definitely buy has less to do with the possibility of price decline and more to do with the risk the neighborhood takes a dramatic downturn. I do not think this will happen - critical mass will only increase as the unsold condos become filled eventually. First, most of the condo projects in Harlem were completed only in the past 2 years and many are still unsold. A lot more people will be moving there over the next 3 years - this will take a while as owners realize they can't sell condos and offer them as rentals, and I think even the rentals will be pretty cheap (I think there is always a price for rentals in Manhattan though). Second, the link between recession and crime is shockingly minimal (most sociologists found that the 1990s decline in crime had little to do with the economy), and the primary link is related to policing activities. Yes, the number of police will be cut, but I think lessons have been learned from the 1970s/1980s and Bloomberg will be careful. Third, the schools and retail and cleanliness of the neighborhood have improved. Could I be wrong? Yes. Do I think crime will increase somewhat? Yes. But, at the end of the day, I think it will be okay. It's something I'll monitor closely though ...

top sentence - meant to say "Harlem is not yet prime Manhattan, but it's now somewhat of a choice"

I still agree with kspeak. I could easily see prices reverting back to 2005 levels at this point, and perhaps even 2004, but not 2003 which was reflective of a different era. At some point during 2004 or 2005 pricing in Harlem started hitting a tipping point where it was more reflective of no longer being the wild west.

The reality- I bought an apartment that is large enough for me to stay in for quite a long time even when I meet a woman and have a child, and I have no plans on leaving any time soon. Perhaps the price I paid was fair, perhaps it was too high (the peak not withstanding)...but I am happy with the purchase I made.

> I think kspeak has a point about Harlem, and that applies to DUMBO and many other areas in Brooklyn.

I don't think DUMBO is a valid comparison. It went from no legal residents to thousands of yuppies instantly. And it borders on BH and downtown and vinegar hill, which are all relatively safe.

I think a closer comparison would be Bed Stuy. There has been gentrification there, but not all the way. I think those are the neighborhoods that will have issues.... the second and third tier ones.

DUMBO, on the other hand, is already the most expensive in Brooklyn.

I'll grant DUMBO is an a different category than Harlem - farther along in the gentrification phase.

I don't really have an opinion about Bed-Stuy. Is has nice housing stock and good subway access so it kind of makes sense (unlike Williamsburg which has ugly housing stock and worse subway access, or Red Hook which has NO subway access).

Harlem is still Manhattan, and I think there is some value in this, no matter how great Brooklyn has become (I'm not saying Harlem is worth more than Brooklyn Heights or Park Slope because of this - just that it's worth more than non-prime Broolkyn). Also you have Columbia and Central Park and 125th street (people can mock 125th street all they want - ut it is now a tourist destination) and "destination" spots adjacent to or in the middle of Harlem. Lastly, you have all the condo development in Harlem (Bed-Stuy was more of brownstone story, although it too had some condo development) - I think it's harder to get "critical mass" that way. People say this is a bad thing, and it leads to oversupply - which it of course will in the short-term - but in the long-term, this is a good thing, as it will bring more people paying market-rate housing to Harlem (likely as rentals, but the point still stands). Harlem is also a brand-name - many of these connotations are bad, but some are good - and I think this well help over the long term. Bottom line I think Harlem has more inherent value than Bed-Stuy but I think Bed-Stuy is also cheaper, so hard to say which will fall more in percentage terms. No question emerging neighborhoods get hit harder ...

> jst that it's worth more than non-prime Broolkyn

And (over)priced accordingly...

I think Harlem is just way too big to have gotten "over the hump" of gentrification. Way too much inventory, and much of it too close to projects. Plus, challenges with schools, a big issue given the focus on larger apartments.

I agree Harlem is overpriced - I just think it's not going backwards significantly in terms of gentrification (nor would I claim the reverse - that is going to get nice very quickly). I don't think anybody on this board things going to do anything but go down significantly in value in the near term.

It's "too big" - I am not sure this is true when you split it up into East Harlem (west of park really -the true barrier isn't really 5th but Park Avenue with its above-ground subway), West Harlem (north of 125th and West of Amterdam), Central Harlem (South of 125th between Morgninsde and Park), and Harlem (north of 125th and East of Amsterdam) which I think all will go different ways. West and Central will do the best.

The school situation isn't perfect, but no worse than many Manhattan neighborhoods except for certain parts of UWS/UES, Tribeca, and West Village where your neighborhood school is the likes of PS 6 or PS 41 or PS 234. Just like being in certain parts of Carnegie Hill or UWS, your neighborhood schools may not be top, but you're in a District with good schools so you have a shot. South Harlem is in District 3 (same as UWS) - this is why one has to talk about Harlem as different sub-neighborhoods. PS 190 is improving quickly and there are some good charter schools in the picture, and lots of nearby private schools options. It's definitely true that to command sky-high prices you need to have a completely top public school, but there are plenty of respectable neighborhoods in Manhattan that don't have this. Ditto with Brooklyn - Brooklyn Heights does not have a great public elementary school (nearby Cobble Hill does - but this the same arguments as Harlem/UWS). Clearly private school is in the picture for a lot of people. It's also no doubt true that within all of Manhattan people who own places with a top "neighbhorhood" school will do the best.

As for project concentration - again, specific to neighborhood (East Harlem being the worst followed by Harlem). West Harlem and South Harlem have a few scattered projects (South Harlem at the SE corner on NW corner), but so do the Southern and Northern parts of UWS, Chelsea, LES, ec.

lots of junk from kspeak and semerum. schools and subways. clearly not professional investors. reflexivity aka negative feedback aka downtrend/momentum is FAR more important in determining price direction.
Markets rule. not housing details.
Amazingly childish.

nicer comment by nicercatch?
300k for a Harlem condo = ? for UWS condo from a smart investor?
Are any investors planning to sell in a highly downtrending market? momentum selling should be happening now? no?

would love to get a brownstone in South Harlem for under 500k -- any investors on this board who are interested in unloading their worthless assets please let me know

joedavis - agreed. anybody want to sell me their brownstone (non shell) in South Harlem please do!!!

nicercatch - no reason to be nasty. seriously. nobody here is claiming anything other that the market is going down ... the question at hand is whether the area becomes a slum again.

that is - for under $500k. let's hope!

nyc10022> jst that it's worth more than non-prime Broolkyn

And (over)priced accordingly...

I think Harlem is just way too big to have gotten "over the hump" of gentrification. Way too much inventory, and much of it too close to projects. Plus, challenges with schools, a big issue given the focus on larger apartments.

You guys need to come down to reality, Harlem will never gentrify way too much rent control and projects to ever be a viable place to live. I'm born and bred in New York so I know what I'm talking about. My ex-girlfriend had many problems when she worked up there last summer...let's say it was not safe and this was during the day. This neighborhood was hyped...build it and they will buy it during the boom boom years!

interesting -- can you elaborate re the problems your gf experienced. The safety is a big concern
Lenox seems to regularly have shootings but the area near Morningside Park seems a bit nicer looking -- on the other hand a cop told us 112-114th is prime drug territory
However, that may not be so different from 103-107 or the low 90s in the UWS
I have been monitoring crime for some time and Central Harlem -- precint 28 seems to have roughly the same to 50% higher reports than Morningside Precint 26.
The crime numbers in Midtown West and Chelsea are not lower -- often higher, but there may be a reporting issue -- HArlemites may just overlook reporting or acting on crimes.
we did walk by a woman on 126th at noon or so who suddenly dropped her pants sat down and went on the sidewalk
and by a pre-teenage girl on 122nd near ACP who was telling someone on a cell phone how she had just been raped
On the other hand almost all people we have talked to who live in the area seem to be very +ve about it.

The link kspeak provided speaks to the structural changes in the area, but yes projects large and small are there as they are in UWS and one is on alert walking in either area

McHale - Have several friends up their who have never had a problem, and like it. Most are renters, so they have no vested interest in saying this, really. You are entitled to your opinion, of course, but to act like everybody else is naive because you are a "born and bred New Yorker" is ridiculous. From my experience a lot of "born and bred" New Yorkers are often stuck in their vision of the way a neighorhood used to be. Especially when you are going on your "ex-girlfriends" testimony - Samerun lives up there and you assume somebody you used to date who worked up there for a single summer knows best. I know people who think the Lower East Side and East Village is still totally dangerous and unsafe during the day (many of them are born and bred new yorkers). I suppose it depends upon where you are in Harlem but I have spent a ton of time up there - both day and night - and never been bothered.

And when you say "never" you lose credibility. Never is a really, really long time ...

Yes it's called street smarts and you only get them from from growing up in New York. I only mentioned my EX because she worked up there and had problems. I also worked in the area not too long ago and my brother works the area too so things are not what they seem on the surface. To compare Harlem with the rest of the city is a pipe dream and wait till the economy turns and we'll see crime ramp up again.

joedavis
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interesting -- can you elaborate re the problems your gf experienced.

Yes she wasn't the right color and told on numerous occasions this is not her neighborhood.

Nicercatch,

Ok...so the billionaire real estate investor that bought the 4 buildings across the street from my building is not a professional investor? Or what about the credibility of a famous economist that is an investor in my building (he correctly called these problems before they were clear- but was not a flipper, rather a long term investor). Apparently I am in good company. Sort of reminds me of the recent Presidential Debate...when Obama clarified who he spent his time with.

I bought my apartment because I knew I would get a good price with low carrying costs and would be large enough for my long term needs. I also saw a changing neighborhood. As Treasurer for my building the common charges are below $500/month for most apartments and our taxes are generally in the $3/month range. On top of that our reserves are growing at a healthy clip- despite last years rapid increase in energy costs. Surely a professional value investor will be looking at these types of things.

My home purchase was just that- a home first, investment was secondary. When I was looking to buy, my initial first choice neighborhood was the Village...but then I came across this apartment at about 1/3rd the cost. Yes, the services were not there, and I realized I would need to deal with drug dealers for a few years, but the change was clearly occuring. I wanted a larger apartment than I could afford in the village, and it was important for me that the floorplan was not cookie-cutter generic.

>>> On crime

Please refer to this - the stats suggest that with the exception of East Harlem exactly what joedavos said.

http://media.nymag.com/docs/08/01/080114crimemaps.pdf

>> Yes it's called street smarts and you only get them from from growing up in New York

You have no idea where I am from or anybody else (joedavis, samerun, etc.). The arrogance of this statement is incredible. New York is many things but it is not the most dangerous city in the U.S. Period.

>> Wait till the economy turns and we'll see crime ramp up again

I have done extensive reading on this subject and the evidence is minimal. Crime fell dramatically in the mid-1990s and people assume this is only because of the economic growth. And yet Canada - a country whose economy stalled in the 1990s - also experienced this drop in crime. In the 1960s and 1980s in the U.S., the economy was strong, and crime still spiked. There is minimal evidence that it affects property crimes and virtually no evidence it affects violent crime EXCEPT to the extent there is dramatic curtailment in police force. I do expect some curtailment of police, but not dramatic curtailment. You can certainly chose to disagree with me on the link between crime and economic downturns, but my opinion is informed.

I have friends who still work the 28, let's leave it at that. You want to buy up there in an area with this economic sunami coming be my guest.

McHale -

I appreciate spirited debate and people having their own opinions and sharing real insights and specific problems/thoughts (e.g., my ex-girlfriend had this happen to her in harlem, my police friend in Precinct 28 told me this) on neighbhorhoods - but not personal attacks during which you claim the somebody you don't even know lacks street smarts or which you automatically assume you know more than them. So please feel free to share specific reports from your friends in Precinct 28 or your ex-girlfriend, but don't dilute them with nasty comments or vaguely ominious statements.

I actually find it interesting that your ex-gf was harrassed. I am a white female with blonde hair -meaning I stand out in Harlem completely as I can't pass for Latina the way many brunettes could - and haven't really been harrassed. People say things to you, but mostly its "hello" or asking for change on occassion (which happens throughtout NYC) - people are actually more friendly on the whole I find.

Cheers,

Kspeak

lots of delusion on this post.
2 weeks ago I was running up central park to 11oth where a shooting just happened. But it obviously is OK because sociologists blablabla. BS.
just being polite here.
joedavis and semerum seem to have an emotional investment to defend at all cost. Kspeak is in intellectual delusion.always wrong with a lot of data (know the story of fat tony? in Taleb's book: the black swan and fooled by randomness)
for everybody else: stay away from there and protect ur money.

They actually love Blondes up there , not fair :) It was pretty bad for her she called me crying a couple of times.... she also had her wallet lifted while she was getting lunch. It's not someplace I would want to live, it's was driven up by speculators don't matter who moved in across the street.
Relax I wasn't launching personal attacks......just because I said street smarts???? I never said it was the most dangerous place in the US so please don't put words in my mouth.... just telling it like it is. Right now with the economy on the verge of collapse and the massive layoffs coming (ex 53, 000 at Citibank and at least half will be in New York) I can see things turning bad especially in neighborhoods that will now never fully gentrify. If you really believe that this will be like anything other than something resembling the Great Depression then do I have a bridge to sell you!

I live in the 30th Precinct, and not only do I watch the crime reports weekly, but I also see how much it has improved first hand looking out my window. I attend the monthly Police Community meetings and during the last meeting the Officer in charge of the meeting has stated that the decrease in crime in the precinct puts it at number #2 in the city on the improvement front. I am white, jewish (and look very traditional ashkenazic jewish) 5'4 male- short, and probably perceived as an easy target- but I don't have any problems. Nor has any of the single women that have lived in my building ( a few are young and attractive too).

I can't speak on an educated level about the 28th Precinct other than opinions. Everyblock.com gives me the weekly crime stats of the 26th, 30th, 32, and 33rd Precincts to my RSS reader. While it seems to me that the 26th and 30th Precincts have been the safer areas- I have noticed crime has been decreasing across all 4.

It's a shame how quickly this substantive quality of this discussion degenerated about . . .3 hours ago (not talking about you, nyc10022).

Nicercatch - More crime in harlem than most of lower manhattan - not being denied anywhere (see posts above). But actually, aggregate crime data is better than pointing to random data points. We can list examples of violence downtown too or I can tell you that the only people I know personally who have been mugged in the last 5 years in NYC were mugged in Murray Hill and the Financial District. But I am not going to use this to claim that Harlem is therefore safer than these neighorhoods based upon random data points. When it comes to crime stats, overall data matters more than isolated stories.

And you can say all of you want about b.s. theories - but the fact remains crime spiked during the economic booms of both the 1980s and 1960s.

Lastly - I will say this: I do not believe we are headed for the great depression. Before you say naive, let me also say I have been extremely negative on the economy for a long time - telling my friends and family to stay out of the stock market for more than a year (when the S&P soared last October), not to buy real estate, etc. because we were in for the worst recession we've seen in years. Further, I still believe there is significant downside risk to the stock market and that ALL of manhattan real estate will fall and Harlem the hardest. I do not believe we are headed for a "V-shaped" recovery either. This will get very nasty, but I do not believe this will be the great depression. Unemployment may go up to 12%-15%, but I doubt 25%-30%.

P.S. - Even Roubini (who cherrywood quoted as if we weren't familiar - actually, I subscribe to his blog) has said he does not think this is the great depression either.

G'night.

I'm a Harlem booster. Why? Check this out:

http://www.spatialinformationdesignlab.org/publications.php?id=84

This a pdf of a report created by Columbia University. Go to 20. (It's the 20th spread. The page numbers at the bottom of the page say 38 and 39.) The two maps of New York City show the percent of adult males admitted to prison and the expense, block by block. Notice anything about upper Manhattan? More than half the males in much of Harlem were locked up in 2003. Those numbers are dropping now. Fewer arrests, fewer people in jail.

All of this conversation about whether things have changed in Harlem -- it lacks reality to me. I don't think the Harlem detractors understand how damaged Harlem was very recently. It's like pointing out someone's limp after he gets up out of a wheelchair. All this new business in Harlem was inconceivable a couple years ago. Now we take Starbucks and grocery stores and bank branches for granted. Yeah, Harlem's still got a limp. You got a problem?

In the eighties more than half of the buildings in Harlem were owned by the city because owners stopped paying property tax, according to city officials. The owners just gave their buildings up.

A shooting on 110th? Just one shooting? Did the shooter eat the victim? Excuse me, but the 28th Precinct had forty-one murders in 1990. In 2007 it had four. Stop and savor that difference. Forty-one. Four.

kspeak-Again you take things out of context- I said "resembling the Great Depression" and your post backs up that up.... this will resemble the Big D. We have safety nets now....unemployment insurance, The FDIC insuring bank deposits now up to $250, and the federal Reserve etc....

McHale- fair enough. Not going to argue over words. There is a tendency on this board for people to lecture to everybody "you have no idea how bad this is going to get" - my response, is 1) none of us know ANYTHING for certain, so let's admit we're just debating 2) actually I do think it's going to get very bad and 3) the safety nets you cited above

"Even Roubini" (whom-- not who-- I didn't exactly quote, but merely referenced) "has said he does not think this is the great depression either." I certainly didn't say that the current economic crisis amounted to the great depression, when unemployment levels were a full 20% higher than they are now. In each of my posts I've simply tried to make the obvious, but overlooked, point that notwithstanding the welcome changes for the better that have taken place in Harlem in the last 10-15 years, it would be imprudent to buy at current asking prices in the hope that the global and domestic macroeconomic challenges we're up against won't have a profound effect on the quality of life and on the ultimate market value of residential real estate in Harlem.

Nobody has argued it's prudent to buy at current asking prices - including samerun, who owns. The argument is just that SOME of that 300% run up in the last 5 years is justfified because it was the "wild west" of Manhattan and, as Bendex pointed out, has changed fundamentally in a way that exceeds putting out a few flower pots.

It's going to fall - hard and harder than prime Manhattan and I could see 50% declines very easily - but I don't see prices falling to 2003 levels, which would mean 1/6 of current levels. Call me crazy ...

Quality of life will fall in Harlem - and the rest of the city - as services are cut. I see it being fairly consistent across the city. This time they won't get away with shutting down subway entrances and not picking up garbage in Harlem, but keeping up services in the rest of the city (the stuff they pulled off in the 19770s). I agree a cut in the police force will be more damaging to Harlem than elsewhere just because the presence of police is probably of relatively greater importance.

McHale, I'm also a native New Yorker, growing up on the Upper West Side from the mid-1960s. My grandmother thought along the same lines you do -- begging my mother to move us out of the then-dangerous UWS to Long Island (the natural progression from housey Queens, where my mother spent the second half of her childhood; that was the natural progression from Williamsburgh, where my grandmother moved from (naturally) the Lower East Side.

She pooh-poohed the influx of writers and actors and artists and such, and saw the UWS only getting worse and worse -- no place to raise children. And, of course, declining endlessly in value.

I've lived in Harlem for seven years, first in a condo near Morningside Park (which I cashed out of mid-2007 because of the writing on the wall citywide), and now near Riverbank Park. The only crime I've heard of even third-hand was a homeless-->homeless murder (sad, but not threatening to the general public) -- and I was social with the neighborhood dog-walking gossip, so I would've heard about anything else. I think nothing of taking the subway home at 4AM.

You should check out the crime stats for NYC neighborhoods -- I think you'll be surprised to see that the West Village is much worse than anything in northern Manhattan (although not nearly as bad as anything in Chicago, of course. [Sorry, premptive commentary required])

1970s crime can be attributed to many things other than the economy -- importation of race-relations problems from the South, which is no longer a factor to the extent it was; family trauma resulting from the Vietnam draft; veteran heroin-addiction originating in Vietnam; redlining and block-busting; Federal policies (especially transportation and housing) sucking money from cities to suburbs; etc. etc. etc.

Also, I'm not sure if anyone's mentioned it here, but Governor Paterson is from Harlem, so we can expect a little guardian-angeling. If his ratings hold up, he's also a shoo-in for reelection.

> with Brooklyn - Brooklyn Heights does not have a great public elementary school (nearby Cobble Hill
> does - but this the same arguments as Harlem/UWS).

Difference being 1) a couple blocks from center to center and 2) the "secondary" choices don't compare. To pretend that because its not "great" then its as bad as bad makes no sense. The BH schools are not fantastic, but they are doable... and far better than the Harlem choices.

Critical mass is the difference. BH/Cobble Hill/CG/etc. They all made it way over the hump. Harlem did not.

PS 180 (Central Harlem) is actually not that far behind PS 08 (Brooklyn Heights), and has skyrocketed recentely. It's only in the past few years that PS 08 has become a "passable" option - but Brooklyn Heights has been desirable for a long time (parents had resigned themselves to private schools). I have heard there is a good school in West Harlem near CUNY as well but am less familiar with it. With Harlem you have to be very specific to setion because it is a big area.

https://www.nystart.gov/publicweb-rc/2007/c5/AOR-2007-310300010180.pdf

https://www.nystart.gov/publicweb-rc/2007/c2/AOR-2007-331300010008.pdf

On the "critical mass" point ... I hear this argument. Harlem had farther to come and started later which is why it isn't as far along. And there is no way Harlem real estate won't plummet in the near term. But that inventory glut will eventually help with the critical mass ... once the condo developers start renting them out, that is.

The argument isn't about Harlem real estate in the short-term which is poised for a nasty fall. The argument is that it's a decent place to live in some parts and that people who bought before the massive run up (e.g, 2003-2005) OR who wait for prices to fall can pick up a gorgeous place to live in Manhattan at a very attractive price, AND if they are long-term holders (10+ years) will do decentely.

> But that inventory glut will eventually help with the critical mass ... once the condo developers
> start renting them out, that is.

I think its the opposite. There will be less building and less conversion. The challenge with much of harlem is the project and "needs development" to "developed" ratio. Even with all they've built and fixed up, its still a VERY small portion relative to what happened in the Brooklyn prime neighborhoods.

Harlem is jsut too big to ever get a move in critical mass in such a short period.

There doesn't have to be "new conversions" (it doesn't take a genius to figure out that nobody is going to convert buildings in a down market!) but a good portion of the largest developments have not even opened yet or just opened (Fifth on the Park still being built but nearly done, Khalari,etc.) so many of the "market rate" people aren't even there yet. Ultimately, they will get filled - as rentals if not condos (safe to assume condos won't sell at the prices developes want).

nyc10022 -- I agree that Harlem as a whole is big and will crash.
However, the fact that it is big disguises the fact that the pocket that has seen substantial development near the UWS -- 110th to 123rd or so west of Lenox -- may hold up a bit better -- worse than UWS but not necessarily worse than Morningside Heights or UWS above 96th EaSt of Broadway

I have looked in the entire area for a year and will likely buy during the dip -- best deal in UWS or this part of Harlem (which seems to have attracted a lot of young families and Columbia people)

So far the lowball offers -- 20-30% below ask are not bearing fruit -- not making offers on buildings/apts that are not interesting to me so the highly publicized here, yet very few apts that have come into my price zone so far, do not count.

It is starting to look like shells in the area of Harlem of interest may come down to 500-600k which opens an interesting development possibility -- 4000 sq ft finished in a townhouse for under 1.25 -1.5 million.
Perhaps the condos will crash more dramatically in this part of Harlem, especially the highly unattractive Fitzgerald, but many of the others in this area are still being quite stubborn. On prime UWS a comparable apt or townhouse is 2x to 4x of the prices so the gradient is still there and instead of widening may actually compress since the 97 to 110 blocks between Amsterdam/Broadway and Columbus , while in the UWS have seen very little positive development and qualitatively are not very different from Harlem. Same for Morningside Heights above 120th

correction -- there is a giant housing /retail project on Columbus/Amsterdam between 97th and 100th with Whole foods and the like so this will change the landscape there, but the projected pricing there some time back was $1500/sq ft, so it will be very interesting to see where they actually end up -- $700/sq ft would be sweet