NYT: Housing Boom Cools in Harlem With Economic Mood

Here's to all the fools who were serving and drinking the Kool-Aid. http://www.nytimes.com/2009/07/08/nyregion/08harlem.html?hp A neighborhood transformed by soaring home prices is now caught in a breathtaking fall. By CHRISTINE HAUGHNEY Of all the New York City neighborhoods swept up in the real estate boom of the last decade, few became as hot as Harlem. It grew increasingly gentrified and... [more]

Here's to all the fools who were serving and drinking the Kool-Aid. http://www.nytimes.com/2009/07/08/nyregion/08harlem.html?hp A neighborhood transformed by soaring home prices is now caught in a breathtaking fall. By CHRISTINE HAUGHNEY Of all the New York City neighborhoods swept up in the real estate boom of the last decade, few became as hot as Harlem. It grew increasingly gentrified and integrated. Its economy developed a lively pulse, and its town homes — stately, historic, but often neglected — fetched prices unheard-of for the area. But that sense of electricity and evolution, which thrilled some residents and troubled others, has been unplugged. And a single block — West 134th Street between Frederick Douglass Boulevard and Adam Clayton Powell Jr. Boulevard — offers a vivid illustration of just how cool the market and the mood have turned. On that block, developers have been trying to figure out what to do with at least four town houses they bought during the boom. Two years ago, the developers planned to renovate the homes and resell them for more than $1 million apiece. But they are leaving them boarded up, letting them fall into foreclosure or selling them, in one case for less than $600,000. Craig Charie, who is trying to sell an unfinished brownstone at 221 West 134th Street, said he had contemplated chopping up the home, which belonged to a Harlem family for nearly 90 years, and renting it out to Columbia University students. “It’s not my first choice,” Mr. Charie said. “It’s a beautiful place.” His appreciation for the potential of the homes is shared by the affluent blacks and whites, families and young artists who have settled in the neighborhood in recent years. And many say they are confident that Harlem will recover its real estate dynamism — that the transformation in the last 10 years has amounted to more than just rising home values. The shopping districts and redevelopment projects that have emerged, they say, constitute a durable set of changes. Some even see a benefit to the market’s cooling, saying it will allow a greater opportunity for residents, new and old, to work together to restore some of the neighborhood feel that had been lost through gentrification. Still, for many involved in Harlem’s remaking — real estate agents, bankers, shop owners, new residents — the swing in real estate fortunes has been breathtaking. From 2004 to 2007, according to StreetEasy.com, a real estate Web site, the median sale price for the area’s town houses jumped by about 150 percent, to $1.4 million from $554,250. By contrast, the price on the Upper East Side rose by only 38 percent. And the volume of sales of town homes in Harlem far outpaced that of any other neighborhood. “They became highly sought after,” said Jonathan Miller, the president of Miller Samuel, an appraisal firm, “because of the prices that were being seen to the south, and that people found they could get a lot for their money.” But the appetite for the homes was quickly sated after ailing banks began sharply curtailing the lending that had paid for the costly renovations many of the properties required. Shells of brownstones that cost more than $1 million two years ago are now fetching less than half that price, according to brokers with Massey Knakal Realty Services. And fewer homes are changing hands. In the first half of this year, 11 Harlem town homes sold for an average of $1.1 million; in the same period of 2008, 27 town homes sold for an average of $1.3 million. In many cases, brokers will not even agree to try to sell the properties because there are no buyers, said Victor Sozio, the director of sales for Massey Knakal’s Harlem office, who is selling Mr. Charie’s property. And the slide may only be beginning; early signs indicate that it will be far more severe than the downturn that has hit much of the nation. The decline is frustrating not only to those who bought Harlem homes hoping to resell them, but also to longtime owners who had anticipated seeing long-abandoned parts of their blocks spruced up. William J. Brown, a brownstone owner whose family has lived in and around the 134th Street block for four generations, said the area seemed to be turning a corner a few years ago. “It feels like a regression,” Mr. Brown said. “It seems the progress has halted or stopped.” Certainly, the results for the properties on 134th Street have not been what the neighbors had hoped for. The house at 259 West 134th Street has been renovated and is for sale. But at 245, where it appears that renovations began with new windows, a foreclosure auction is scheduled for next week, according to data tracked by PropertyShark.com. The houses at 255 and 257 are boarded up; PropertyShark records show the latter in pre-foreclosure as of November. For Amos Palmer, the previous owner of Mr. Charie’s brownstone, the time to sell was 2006. Mr. Palmer contacted Michael Meier, a Prudential Douglas Elliman broker, and said he wanted to sell the home and move closer to his sons. A long line of potential buyers wanted to see it, Mr. Meier said, and five made offers. Mr. Charie, a lawyer and real estate investor who had bought and renovated properties with his sister Alison, paid $750,000 in March 2007. He said he expected to make a solid profit. He planned to spend nearly $550,000 on restoring original features, like the dark wood stair railings and the brownstone exterior, and hoped to resell the home for as much as $1.6 million. He was so eager to move forward that he offered to clean out the odds and ends of Mr. Palmer’s family. Two years later, that task remains. Mr. Charie halted renovation plans in June 2008 because he feared that no matter what he did, he would not be able to sell the property. He recently reduced the price to $599,000. If he cannot get that, he might turn the home into rental apartments, even though he is reluctant to sacrifice the original moldings to reconfigure the space. Down on 119th Street, a town house Mr. Charie bought in 2007 and renovated has been languishing on the market since last year, despite a price cut to $1.3 million from $1.695 million. But he is far from soured on town house investments. “I’m not done with Harlem,” he said. “I just have to shift what I do.” [less]