Graceline, Kalahari and Central Harlem market

I agree - I think Harlem is going to plummet. I actually may buy up there eventually because I think long-term it will do well. But there is a lot of supply, not that much infrastructure, etc.

Considering renting up there in 2009 to get a feel for area ..

what about brownstones in Harlem close to 110th st? Would you consider those?
I agree that Harlem should plummet -- so far the developments being mentioned are not offering any substantial reductions --just terms.
I think the crummier developments or the newer ones which will take time to finish will lead the way down.
However, not clear on what happens with brownstones -- the shells are coming down in price so that there are many under a million now, and there is a fair inventory at prices between 1.5 and 3 million that has been coming down in price.
Not sure how the prices of this limited inventory will relate to the condos coming down -- obvious that they will all come down, but are brownstones likely to be more resilient or more likely to drop in price?
There is also the difference between the area closer to Central Park vs above 125th....not sure how much difference there is between S. Harlem and N of 125th. asthe market corrects

I am waiting to see what happens when the first round of closings are done. What I have heard is that the market in NYC in general has been totally dead - very few contract signings. Do you think these developers will drop prices when the pre-construction sales close? I am also wondering how many contracts will actually close on these projects, esp. Graceline. With the seizing up of the credit markets some buyers may have to walk. Then you are left with a building only partially occupied. Probably best to wait and see what shakes out, but I would expect a 30 - 50% decline, the 50% being where the developers go into bankruptcy and fire sales occur. That would probably be the time to buy.

Browntonse have come down a lot - I have been tracking this market as this is what I want to buy. I've seen a lot of places go from around $2.5 mm to $1.8mm-$2, and these are places in good - if not mint - condition. Brownstone inventory is increasing too - about 6 have gone on the market in the last month in the area I am looking (South of 125th Street between 5th and Adam Clayton powell) and there are a number (10 or so) in pre-foreclosure. Not tracking shell prices - I will buy a bit of a fixer-upper, but not something that could have structural problems.

The way I see it, if you time the market right, you could do really well. Ultimately, all of these unsold units in new buildings will become rentals. I still think for Manhattan rentals there is ALWAYS a price, so at some point, they'll get filled, and more retail will move to Harlem to service the people.

I still have some long-term questions about the school situation up there - pretty much forces private school, but there are a lot of good one on the North UES/UWS and Morningside Heights.

you are right kspeak that the 2.5 ones are now around 2 or lower, other than people who are stubbornly hanging on. Many at 2 are near 1.5 and in trouble
Do the 1.5 people end up at 1.0? and 1.0 people at 0.7 or are these heading to 1999-2000 numbers when 500k was probably the benchmark?
I am not seeing as much change closer to Morningside Heights or Central Park so far.
There is one that has come from 2 million to 1.55 on 115th st but it needs quite a bit of work and will not go for over 1.2

I think it is really difficult to look at Harlem in terms of 2000/2003 levels. Especially for brownstones, so many were shells or in a state of ruin back then, you have to consider the work that has been done. I think Harlem is going to trade with the rest of Manhattan now, just at a discount.

To me, there is no doubt that brownstones are a better relative value compared to condos. Even on the outer fringes of UWS/UES that aren't zoned for top public schools, a brownstone costs $5 million (I am not counting ones with rent stabilized tenants). Many harlem brownstones that are in good condition are listing for 2 million now. So they are 1/3-1/2 of the price of ones on the UWS/UES. Condos are really a 25%-30% discount. The relative value is so much better.

I still struggle with the school issue. Safe to say most townhouse buyers are going to be families (unless people want to rent out floors), but you're somewhat forcing yourself into private school. I am not how much of an issue this actually is since there are plenty of places in Manhattan (even pockets of UES/UWS) where this is an issue. Harlem does have some great charter schools though ..

also - on central park north - I think you can rent a 2 or 3 br in 111 Central Park North for like $4500 a month. No way I would buy for $2 million when I can rent for that cheap. I am pretty tempted - would be kind of fun to have the views, test the neighborhood, etc.

I believe it's important to seperate Harlem into it's respective neighborhoods when discussing pricing as well as housing options. I am and have been most bearish on East Harlem. It was the last of the neighborhoods to start revitalizing, and much of the new construction has only started coming online recently. I think it still has a long way to come and will not likely get to the standards of other uptown neighborhoods for a long time.

I took a walk down Fredrick Douglas Blvd from 125th to 110th St a few weeks ago, and it's honestly scary...not in terms of crime, but it's all new construction and still under construction, much of which hasn't come to market yet. I believe this is representative of the oversupply throughout Central Harlem that hasn't been priced in yet. I believe parts of Central Harlem will do ok pricewise in all of this, as is the case throughout Manhattan. Properties that are not generic and have a lot going for them will always have a strength to them that doesn't easily follow the path of the neighborhood pricing. Overall I feel that with so many generic apartments available on the market that prices will inevitably have a tough time finding a support level in this downturn.

West Harlem did not have the sheer volume of new construction as Central Harlem, nor does it have the crime or volume of housing projects of East Harlem (or parts of Cental Harlem for that matter). Ultimately, as a part of Harlem, it too will have difficulty finding a support level...however most pricing did not get as out of control here. Columbia has substantial influence on this area, and obviously controls a large portion of future development.

The arbitrary border North or South of 125th Street is more psychological than anything. In fact I believe that the eastern section of 125th St is far more dangerous than many other areas north of 125th St. If you live near 145th Street, you have express trains that only add 1 stop on the subway from 125th. For a beautiful brownstone neighborhood with a feel similiar to the West Village- check out the Sugar Hill section of Hamilton Heights- particularly around Convent Ave and the lower 140's.

Full disclosure, I own in West Harlem, but only purchased after doing considerable due diligence.

Samerun - I total agree with you about Central Harlem - there is so much volume of new construction it going to take a long time to absorb. It is scary in this way ..

Long term, I think this is good. You need "critical mass" of market rate housing (sales or rentals) to get the amenities there. To me, this is this biggest issue in Central Harlem. Until this boom, it had very little market-rate housing. The way I see it, eventually all of these condos get filled - maybe not as sales, but as rentals. This will help bring critical mass of people which will bring more retail. That is why I think if you time it right - wait to buy until 2010 probably - I think you could do very well in Central Harlem. I think housing projects are not that bad in South Central Harlem - the big stretch ends on Lenox - so in the long-term I am bullish on Central Harlem but I would not touch it now with where prices are now. Full disclosure, I am only looking at brownstones so you don't have the "oversupply" issue

I agree about East Harlem. It has the most crime, the most housing projects, and it lacks the nice housing stock/transportion options of West and Central Harlem. Not saying it never gets there but I think it will do the worst.

I also think West Harlem is farther along than Central Harlem right now and agree the West 140s is safer than 125th and 3rd (or even probably 125th and Lennox). I'm not sure why I am not looking at that area more - have not ruled it out, but I guess I'd rather be close to central park/UES and UWS schools and restaurants. I may take another look at West Harlem though - I find it interesting that most people I've spoken to on this board went to West Harlem rather than Central Harlem. Just out of curiousity - do you have children? Where do they go to school?

kspeak -- factoring in the potential downside what is the max you would be willing to pay for a reasonably remodeled brownstone (no major "details" that have been restored to a high degree) but decent updates so you would be happy moving in?

schools -- the PS that is on 120th and Morningside is rated highly I believe -- a reflection of in-migration in to that area?
Also, if you are west of FD and up to 122nd or 123rd you are in the upper UWS catchment for public schools - we have friends who chose that are for that reason

semerun -- interesting comments re West Harlem. I did look at a brownstone on 138th -- street is just above the nice new restaurants by Fairway. Was not too attractive, and the subway is the 1 line 3 blocks away -- that is OK. Amenities were worse than the 110th FD area and I saw a few drug transactions -- so gave up quickly

However, I think you are in a different area altogether than the area by RSD, and may check it out.
BTW Columbia is in trouble -- hiring freezes/possible layoffs etc so I would not count on the Columbia Expansion happening at nearly the rate that was projected even a few months back and the connection between the 140-145th area near Convent and the Columbia 25-50 year expansion in Manhattanville is likely there but unlikely to be as dramatic as the connection just below Morningside Park or along the RSD extension of the Manhattanville campus. However, CUNY also has had significant expansion plans that have a much more significant bearing for gentrification in your area.

Great discussion about Harlem. Kspeak, good point about the new development bringing about infrastructure improvement and retail. My concern is that with the continuing economic downturn, the City will not have the money for the improvements and retail will also not be willing to invest. Any thoughts or concerns about this?

Hi Kspeak,

I totally agree with you on the critical mass issue. The appreciation Central Harlem has seen was not substainable considering it's rise in such a short time horizon. Over time these apartments will be absorbed,the retail will follow, prices will stablize and eventually rise yet again.

At the moment, I think the retail options are generally better in parts of Central Harlem than my neighborhood of Hamilton Heights- but both are changing. I don't trust any of the dry cleaners in the neighborhood- I had no problems with the dry cleaners growing up in Rockland, or when I moved to Harrison (we seem to be following each other on these boards, lol) but here, it's been nothing but problems.

I need to right the right woman first before I even think about having kids,lol. Honestly, when I signed the contract on my apartment, I would have never considered buying here with a family. I saw the potential, but there were a lot of drug dealers here 3 1/2 years ago and my block was one of the worst in the entire precinct. But I knew in my gut that things would change in just a few years and felt I could deal with it. Litle by little things were improving, but the most dramatic shifts have taken place in the last 6 months -the billionaire that bought the 4 buildings across the street from me 2 years ago finally started evicting the drug dealers and the bulk of the problem people. Comparing this summer to last summer was the difference between night and day.

There is a pre-foreclosure on 147th St (incorrectly listed on Streeteasy as Central Harlem when it's Hamilton Heights) for 250k. It's a fully occupied SRO, but as a townhouse it would probably be somewhat easier to turn it into a 1 family home. If one family townhouses are going for 1.8 million, this requires a lot of restoration work and legal, but figure all in, it would probably only cost about 1 million.

I am curious as to what will happen to Central Harlem. The condo in a brownstone I was looking at went up 300% in 5 years. It didn't sell, and instead of lowering the price, the owners took it out of the market last week. It seems logical that fringe neighborhoods that went up so much in value will go down faster and deeper than more established areas, but I don't see this happening. Harlem will certainly lose the considerable support it received from Wall St. It looks like a good amount of commercial spaces will be vacant, and many people thinks that crime could go up. Nevertheless, it looks like residential prices are going down at the same rate than the UWS, not a bit more. How is this possible?

As bearish as I am on the economy in general, the world isn't ending. If there are people living in apartments, retail will come - slower, yes, but it will come, especially once the credit markets recover (this won't happen overnight but by 2010 things will thaw).

I am not sure about the 125th street rezoning / Columbia expansion plans. I think Columbia expansion still happens no matter what kind of trouble Columbia is in - maybe not the "second phase" but I think a lot of the money is already raised for the first phase. I think the 125th street rezoning is a different story - MLB is not going to take that space on 125th street. On the other hand, Bloomberg is committed to this rezoning, and he'll probably be our mayor for another 5 years. That's a LONG time, and it doesn't have to be complete under his tenure as mayor - it just has to start.

I have heard good things about that school on 120th and morningside. I don't think it's in the "top" category yet but it is improving rapidly from what I hear. It's true you are in the UWS school district south of 125th/west of 5th avenue - but your neighborhood school is still not going to be the UWS schools so an uphill battle.

The last thing I will say on Harlem is this: I think a black president is good for the area. Harlem has huge symbolic signficance as the capital of black America. I'm a big believer in "tipping point" theories and I think it's hard to understate the importance of what seeing a black family in the White House will for the community. It's not going to change things overnight, but it matters - it gives hope to people in a community who did not have anything for a long time. I think it also helps blur racial lines and move us towards a post-racial society. I have said before that unfortunately I think a form of racism - whites/asians not wanting to move to a neighborhood that is perceived as a black neighorhood because they'll stand out - is the major reason that blocks and blocks of gorgeous housing stock close to Central Park and near subways is MUCH cheaper than the Lower East side and even cheaper than much of Brooklyn.

I checked out the Harlem market in person last week.
Kalahari looks really solid, I was told a while ago (erroneously) that construction had been suspended, but everything is done and 85% of units are sold and closed on. Apts are beautiful with a nice gym, outdoor space for residents and other amenities.
Graceline Court looks like a disaster. I don't think anyone has moved in yet, although the sign outside indicates apts are available for immediate occupancy. One of the neighboors told me that they were working feverishly during Dec. in a rush to get things done. Did they get a C of O yet? The sales office was closed when I was there, so I could not see any of the units. It appears only slightly more than 50% sold, with no activity for months. Does anyone know when/if the first closing occurred? Fannie Mae requirements now require 71% sold units to qualify, this would put Graceline at risk is Buyers cannot get conforming loans.

As far as I know, Fannie has not increased their pre-sales to 70%, yet. There are some bank that are requiring 70% pre-sale. Our pre-sale is 51% and it still is for Fannie as well. This isnt to say that Fannie and Freddie arent thinking is bringing it back to 70% pre-sale like it was in the past. And this could be announced soon. We certainly are preparing for the increase in pre-sales. There are many more condos that are less than 70% than there are ones that have 70% sold. And just to clarify, pre-sales requirements are for units in contract, doesnt have to be closed.

I rented in Harlem for 16 months, great floor through apartment on 120th opposite marcus garvey park.

Basically it was a 'trial rental' with the view to purchasing a duplex or co-renovating an entire shell in conjunction with someone.

We just purchased a floor through in brooklyn heights.....

Basically loved the harlem architecture but just couldn't put up with the lack of restaurants or the attitudes of people living there.

There is an underlying lack of respect for community and property with people not willing to spend the money to keep their footpaths and external areas clean and tidy.

I know i sound like a prude but i think the main issue is everyone knows prices are going to go up eventually and are hanging out for 'the gold ring' but in the mean time letting their brownstones deteriorate.

Lennox avenue could be a rival to 5th avenue with a north south view to the park but not going to happen without a wholesale turnover of people not willing to do their part in keeping the place clean and without a major influx of restaurants and retail to bring new infrastructure to the area.

Cheers,
Dean

8th Avenue (FDB) from 110th to 125th ALREADY looks a million times better in terms of retail, etc, than the rest of Harlem. It really looks pretty much just like the upper west side. Perhaps its the proximity to Columbia, I am not sure. However, having looked to move here in 2000, and being dissuaded by the lack of nice apartments, and then moving here in 2007, I can safely say that 8th ave is the future of Harlem - at least below 125th and west of Park (and maybe second.) You build THAT many nice apartments, be they condos or rentals, and sure enough, we go from zero starbucks in 200 to three going on four now.

I would say its like Hell's kitchen in 1989.