The Real Deal recently had an article titled "Bad timing hurts Harlem condos" and after reading it, we think the naming of it might be a bit skewed. It's true that the luxury condo market is slow but isn't it slow everywhere else? The article discusses how developments have seen movement in units once there are price cuts and many provide more incentives to get buyers in. We were informed today that Graceline Court in South Harlem is now 80% sold and the article points out that this condo building has discontinued handing out discounts because sales are picking up. What is the driving force that sells apartments in this economy? Apparently it is the price reductions and the value that the buyer is getting in these new buildings. Within this type of market, developers lose a little in their profit margins but it seems many of the buildings have not been forced to go rental. Basically, buyers are getting good deals and developers are having to cut back a little. Read more in the Real Deal article: LINK. Those interesting in the six units left in Graceline Court can check it out here: www.gracelinecourt.com. Photo by Ulysses
the point is made early in the article that developers broke ground just as the market began to grind to a halt. now there are a tremendous amount of units coming to market, competing with fewer buyers than during the boom. condo sales are slow in other areas to be sure, but inventory is relatively lower in those neighborhoods that were more or less built out before everything went to pot.
ReplyDeleteThis blog said, "Basically, buyers are getting good deals". Oh really? How do you know? Your crystal ball? That kind of speech is part of the hype machine of the real estate industrial complex as you have zero foundation to support it.
ReplyDeleteWhen Corcoran and Warburg closed their Harlem offices last year, do you think they did this because they (the real insiders) are bullish on Harlem going forward?
Harlem condos were founded on HPD / Set-a-side perks and lottery driven developments (Renaissance bldg at 116th and Lenox, Rosa Parks, Tubman, all that inventory on Madison between 117th and 119th, Strivers at the top of 135th & FDB, all those coops on 145th, etc.) etc.). This was the first wave of developments - ALL lottery incentive driven to where if you were lucky enough to get picked, buying in was a total no brainer.
The second wave? The people that paid sans perks and incentives? All driven by loose lending, low bars, the nonsense of the mortgage markets of 2002-2008. Anyone could get a mortgage in this era.
If you pay attention, there is no bedrock, no history, no support or foundation to Harlem real estate condo prices or values (new construction especially). It's all basically a house of cards, prices and values said to be "x" because so and so says so...and nothing more. Unlike other areas of Manhattan, Harlem has no history, or foundation whatsoever of $700 ppsf for example in the 20th Century. Not even $500 ppsf in the 20th Century.
Harlem prices and values are a total construct of Mortgage hijinks and canned, propped mechanisms to foster the appearance and illusion of "value". The first wave of buyers got perks galore (the lottery winners), the second wave benefited from loose lending, now today - the real estate industry wants to posture and act as if the Harlem market is constructed - when in truth, again, a house of cards.
If this was a stock, no one would quibble or argue. No history pre-2000? No substance, no years of sound solid bedrock? Just some lucky insiders who bought far below would-be market values based on incentive driven tactics coupled with the luck of the lottery?
The result? The well documented story of the Normandie condo buyers in 2006, who sold in 2009, and lost $300,000 in the process. Today's Harlem condo buyer is like the "last in" sucker on a stock that's was a prop from the start. Today's Harlem market is reliant on people to ignore fact, deny truth, just drink the kool-aid and that's that.
All this talk about "bad timing", blah blah blah, pulleeezzze. If you buy a condo in Harlem today, you're buying into a hope - not a history, not a foundation, not a track record. You yourself are being asked to be the guinea pig, the person that creates the market, as before you, there was no open and free market anywhere close to what you are paying. That's all well and good, but let's be honest about what you are doing....
The real estate complex simply romanticizes that the Harlem buyer is buying into history, just at prices on par with the UWS.
There is a TON of inventory in Harlem today, and coming online going forward, all driven based on metrics and nonsense that no longer applies. The result? The "Deals" will be 300 ppsf in 2011 for new inventory....just watch - that's far more in line, but still no where close to the lotter winning pioneers of Harlem condos, like my friend that got a 2 bedroom at the Renaissance building for less than $9,000 - that's it, that's all (and monthly maintenance is all they pay, about $1500/month, but the shares are theirs). Mind you this building where people paid basically peanuts is directly diagonally across the street from the bldg in this blog entry where people paid a TON more. PT Barnum was right....suckers are born every day...
The Harlem condo market simply does not past any one's "sniff test".
Yeah, and people bought brownstones from the government in the 90's for $1 dollar. What's your point?
ReplyDeleteAbsolute nonsense anon #1. So many inaccuracies where do we start?
ReplyDelete"You're buying into a hope - not a history, not a foundation".
Hmmm. Let's see, of any neighborhood within Manhattan I would suggest Harlem perhaps has the most vibrant history of them all. Everywhere you walk (yes walk, it is a great walking district!) there are constant reminders of how the area has grown and changed throughout the years. I used to live on the UES, nice enough area, but completely devoid of character and noticeable history. Harlem is a history aficionados dream. The fact that you read and comment on a site like this ought to make that fairly obvious.
As for Corcoran ditching Harlem, expect to see an office back up and running fairly soon. Corcoran are handling negotiations for SoHa 118.
Oh, and as for there being a "TON of inventory" (another huge generalization) Graceline Court on 116th & Lenox has hit the 80% sold mark.
I ride the A train from 125th st. on a daily basis (15 mins to midtown btw) with a diverse group of passengers. Change is definitely here and it will continue.
This is probably the most exciting time in years for Harlem and the communites. Your bitterness is palpable (you aren't Sai Baba are you?).
The idea that there's "too much" housing inventory anywhere in New York City is kind of a skewed way to look at things. Housing in this city is ungodly expensive. You could fill every housing unit in the city if you lowered the prices enough. Harlem isn't Detroit. There aren't blocks of abandoned buildings left anymore. Of course the people who invested, planned, and built these new buildings in gentrifying neighborhoods at the height of the bubble are unwilling to lower prices to what the market will actually bear because they don't want to lose money -- or they're hedging their bets on a quick turnaround to make more money. This is to be expected. This is basically what always happens during a downturn. The units will eventually be filled as buyers and sellers meet at a reasonable price. I wish the media would stop speaking of the "glut" of housing that the housing bubble and downturn have produced. There isn't enough housing in this city; most of us are competing amongst each other for the small stock of housing we can afford, pay sky high rent, and look longingly at the new glass towers we're barred from entering.
ReplyDeleteIronically, Harlem is the "capital of black culture" in America largely because of a housing downturn that forced developers to rent their brand new brownstones to black tenants when there wasn't enough demand from whites moving uptown. I'm sure media reports of the day probably also decried that event.
A major part of the downturn in those days was that cars became more common and people just moved to the suburbs. Thus the population decrease and the need for landlords to rent out to minorities. The opposite is true today since younger generations are deciding to leave suburban life and stay in the city even after having kids. Harlem is one of the last affordable places in the city with brownstones and open sky.
ReplyDeleteNo, I was referring to an earlier period, when Harlem became developed, not the 50s-80s urban decline. From wikipedia:
ReplyDelete"The mass migration of blacks into the area began in 1904, due to another real estate crash, the worsening of conditions for blacks elsewhere in the city, and the leadership of a black real estate entrepreneur named Phillip Payton, Jr. After the collapse of the 1890s, new speculation and construction started up again in 1903 and the resulting glut of housing led to a crash in values in 1904 and 1905 that eclipsed the late-19th century slowdown."
This ushered in the Harlem Renaissance, arguably the most notable period in the neighborhood's history. This was long before the era of suburban sprawl and urban decline.
I have to give anon #1 credit. For doggedness. They've been making the same exact point on Curbed and other blogs for at least five years now. The argument never changes and anon never engages in a discussion. Why anon is so persistent, even after being shown to be wrong time after time, is a mystery. Entertaining, but a mystery nonetheless.
ReplyDeleteChris and anon 4:16 p.m.,
ReplyDeleteThe first anon certainly sounds like the fellow Sai Baba from Curbed. If it isn't him, it's someone who has been posting that vert same comment for about 3 years now. It's someone who wishes Harlem reverts all the gains it has made in the past decade or so. However, the foundation that's in place is too strong to break. The transportation, the housing stock, the history, and the diversity make Harlem a truly special place.
i do wish all you Anons would take the time to pick a screen name. It gets difficult following threads with so many Anons.
ReplyDeleteAnd I can't imagine Sai Baba not signing his name. He certainly does like to go on. And on. And on.
4:16 Anon here. Sai Baba isn't the Curbed commenters real name unless he is an elderly Indian mystic/conman.
ReplyDeleteOur anonymous visitor writes with conviction but almost always gets their facts wrong or they deliberately misrepresent factual information.
Take the Normandie owners who had to sell at a loss for example. The 800lb gorilla that anon didn't mention (and never mentions in their screeds) is that millions of people across the country who bought when the market was high and had to sell after the crash lost lots of money. Why single out Harlem? Anon also doesn't mention that the Normandie owners had personal circumstances that forced them to sell at a loss. Had they not had their problems they would still be in the Normandie.
Regarding the Normandie owners who took that HUGE loss after owning for a short time: the most convincing comment I have read was from a poster who said, "No one takes that kind of loss without a compelling and probably personal reason." Divorce? Catastrophic life change? We don't know anything about what motivated that sale or how desperate the seller was to get out of the apartment, and I certainly haven't observed that magnitude of loss to be a trend in Harlem.
ReplyDelete