I do think that New York’s Harlem neighborhood is worth talking about, though, as it is world-famous and one of the brightest spots I have recently seen in the U.S. housing market. Harlem is a neighborhood in northern Manhattan with a tough reputation.
I was born in New York City. My father studied at Columbia University, next to Harlem, and one of my early childhood memories was often waking up in the middle of the night to find my mother staring out my bedroom window at the bus stop, waiting for my father to return home safely. She told me that gangs in Harlem had initiation rites that included shooting or maiming a white man. This was only a few years after West Side Story had become a hit Broadway musical.
Fast forward to year 2001, and that is when the world first got a glimpse of a Harlem renaissance. That was the year that former president Bill Clinton established his office on 125th Street in Harlem.
New York City has been blessed with a period of good government and good policing, and Harlem has become a neighborhood secure enough for anyone to live in. As I watched out my window at the Aloft by W Hotel in Harlem, I saw a rich diversity of residents, from poor to prosperous, black to white, all walking at night without fear or conflict. I walked by the famed Apollo Theater to find the sidewalk in front mobbed by camera-wielding tourists and a line of white people waiting to get into this historic Black theater. I dined at a French restaurant where there were many men in suits.
I recently appraised a failed condo project in Harlem. This was partially completed new construction, with the exterior façade already finished. The loan applicant in this instance was actually the foreclosing lender, a very entrepreneurial firm which had the staffing resources to complete the development of the project.
This was not a case, though, of Harlem being not yet ready for condos. There have been a number of condo projects already completed and sold out, including a large project across the street from the subject, where the last sale was a one bedroom condo selling for $365,000. A check of the MLS showed only 3 units for sale in this zip code, with prices starting at $329,000.
It should come as no surprise, though, that Harlem has become a seller’s market for condos. You can’t keep a good location down forever, and Harlem fits the urban geographer’s classic model of decay followed by renewal. Harlem is just a few minutes farther by subway from Midtown or Downtown jobs than the Upper East Side or Upper West Side, yet where else in Manhattan can one buy a new condo for $365,000? This is about half the price one would pay for a comparable-quality unit in one of Manhattan’s established white collar neighborhoods, and the shortage of affordable housing in Manhattan has been a constant complaint of middle class professionals working there.
The prevailing shortage of housing in Manhattan and Harlem’s gentrification and convenient location has thus created good residential development and investment opportunities.
PS: The construction loan was funded by Kennedy Funding of Englewood Cliffs, NJ.