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Neighborhood Watch

How vulnerable are you? A risk analysis.


Is your neighborhood oversupplied with condos? Still in demand? Cruising along? Cruising for a fall? Here's the definitive guide, with risk factors (see key at right) for each neighborhood.


THE OLD GUARD: FIFTH AVENUE, PARK AVENUE, CENTRAL PARK WEST
It’s called the Gold Coast for a reason: Buyers and sellers here operate on a rarefied plane where the larger economy barely affects their real-estate choices. “Historically, Gold Coast markets tend to see a lesser degree of volatility,” says appraiser Jonathan Miller. “You’re paying to buy into a more established location.” That may be because exclusive co-ops and their boards demand such deep cash reserves and such big down payments that virtually everyone in this world can afford to buy or sell at any time. Broker Michele Kleier has sold here for decades and says that “even in the difficult times in the early nineties, I had good years.” In the roughest stretch of recent decades, between 1990 and 1995, the average price per square foot in the Fifth Avenue–Park Avenue corridor fell just 14.5 percent, according to Miller Samuel data. (The similarly genteel neighborhood around Sutton and Beekman Places fell 27.8 percent.) Median sale prices of four-bedroom apartments dipped for just two years—1991 and 1992—then went back up, even as nearly everything else continued to drift down. If there’s one spot of vulnerability, it’s Central Park West, where A-class buildings—the Beresford, the El Dorado—stand cheek-by-jowl with less desirable ones, leaving it less insulated than the other golden thoroughfares. As for those $50 million trophy spaces we all keep reading about, Miller explains that they will simply disappear from the market. Their owners will wait to trot them out when the bull market roars again.


UPPER EAST SIDE AND UPPER WEST SIDE
Apologies to the lefties on Riverside Drive, but—voting patterns and Fairway aside—there’s barely any difference between the Upper West and Upper East Sides today. “They’re a lot more alike than ever before,” says broker Barbara Fox, who has bought and sold—and lived—in both neighborhoods. “If there’s a serious downturn, it naturally affects everything. But [these areas] are the last to be hit and some of the first to recover.” That’s in large part because their good school districts are a selling point among Manhattan’s new parenting class, notes Corcoran’s Deanna Kory. The West Side is, right now, a bit more expensive than its eastern counterpart, according to the most recent data from the appraisal firm Miller Samuel; condos and co-ops there run $1,153 per square foot, compared with $1,134 across the park. Inventory remains low—exacerbated by so many homeowners’ combining apartments to accommodate their growing broods, adds Kory—which is keeping prices up. Plus those fussy co-op boards help. Although most buildings aren’t like the all-cash Dakota and 740 Park, they “have a layer of qualifications that they apply, and if you can pass, there’s usually no question about being creditworthy,” says Perry Gaa of New York Mortgage Company. “I haven’t seen any issue with financing since the credit crunch began.” Trouble spots are likely to be the fringe stretches of the neighborhoods, like northeastern Yorkville and the far West Sixties.


HARLEM
Well, it looks a lot better than it did in the high-crime years, and despite Harlem’s fast and recent rise, there are just eight foreclosures on the docket. Still, trouble’s brewing: According to the 2006 “State of New York City’s Housing and Neighborhoods” report published by the Furman Center for Real Estate and Urban Policy, 30 percent of refinance loans in Central Harlem in 2005 fell in the subprime category; 10.8 percent in East Harlem; and 10.4 percent in Hamilton Heights. (The Upper East Side’s rate, by comparison, is 1.6 percent.) Yes, some Australian mogul may have set a record by paying $12 million for the penthouse at 111 Central Park North, but “it’s an emerging market, and that’s where a lot of the subprime lending starts,” explains Miller. “You have people priced out of lower Manhattan squeezing and making it work with less than a prime mortgage.” A decent number of those people won’t be able to make their payments when interest rates rise; that means sudden fire sales; that in turn brings oversupply, driving prices down. That Central and East Harlem are packed with new condos can’t help, either: In 2005, the Department of Buildings issued 940 new certificates of occupancy in these areas, nearly double the number given out on the Upper West Side. Brownstone owners in West Harlem are going to be best off; many buyers of new condos, particularly those whose developers have vanished and left them with leaking pipes and buckling floors, have somewhat more to worry about.


WASHINGTON HEIGHTS AND INWOOD
Though prices have risen remarkably at the top end of Manhattan, the ascent has been steady and relatively stable. (In 2006, apartments here cost, on average, $505 per square foot, slightly more than triple that of 2000, according to Miller Samuel data, but still 50 percent cheaper than a couple of miles to the south, in Zabar’s Land.) That may be because there’s so little new condo building in the area. The properties that are for sale are virtually all in prewar buildings, many of high quality (and getting better, as new money flows in and freshens up their battered details). These structures are often full of larger three- and four-bedroom apartments, making them attractive to families who, even if prices were to fall citywide, would not be able to afford the large spaces they need in the West Eighties and Nineties. That particular demographic is likely to keep filtering into the area, creating a healthy “gradual growing,” says Corcoran’s Kelly Cole, who specializes in the area. Adds Paul Cole of Trachtman & Bach, “When you buy up there, you’re not paying for the hype, because there is no hype.” Of the two, “Washington Heights is a little more immune than Inwood, which has a slightly limited appeal because it’s so far,” says Cole. The Audubon Terrace section in the West 150s, with its prewar condos and established co-ops, will likely weather any storms, as will the ever-popular Hudson Heights in the West 180s and low 190s. East of Broadway? “[It’s] more pioneering,” she says, delicately.


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