An area whose name many believe was coined by realtors seeking to draw more people to a lesser known region, Manhattan Valley was once bustling with growth, investment, and sky rocketing rents. In 2006, residents called on Scott Stringer, Manhattan borough president, to explain and solve their rising rent crises. “Why have rents increased so much in the past few years in Manhattan Valley?” one resident asked at a meeting in September of that year. Stringer’s answer: “You created the community, and now people of wealthy means want to push their way in, and we have to fight back.” Yet today, that trend appears to have reversed as landlords desperate for renters slash rates.
According to Sofia Kim, vice president of StreetEasy—a Web site that tracks real estate trends—there was an 8.7 percent drop in real estate prices in Manhattan Valley in the fourth quarter of 2008, and 45.7 percent of sellers participated in this reduction.
“In general, we are seeing inventory vastly increasing right now,” Kim said. “But in an economic climate that is so uncertain, people are waiting to buy. No one wants to commit.”
With more apartments on the market and fewer buyers with the means to make the long-term commitment, apartment owners struggle to find ways to attract a fickle sea of buyers.
From 2007 to 2008, Manhattan Valley saw a 3.6 percent drop in the median closing price as well as a dramatic 18 percent drop in the median listing price. Real estate experts attribute price cuts to “a huge oversupply,” as Richard Shiu, managing partner of New York Real Estate Partners, explained, adding, “There is just too much out there.”
The banks’ credit crisis is also viewed to be exacerbating the real estate crunch. “Banks are not loaning and if they are doling out new loans, they are very, very strict,” Shiu said. “It is hard to build new projects.”
Michael Buckley, director of the Real Estate Development Program in Columbia’s Graduate School of Architecture, Planning and Preservation, noted that, “Financing for new projects or for rollover of existing mortgages is extremely difficult. These unusual challenges in the next year or so will clearly depress prices.”
Landlords likewise have been challenged by the economic slowdown.
“Rental prices are pretty steep, and my residents are losing their jobs,” Donna Gibbons, executive director of the Manhattan Valley Development Corporation, said. “Landlords have to make decisions when trying to fill property now. You have to worry about the security of the property, and if it is not secure, you will have to rent.”
Kim also said that many landlords have relied on innovative sacrifices. “With people moving out, losing jobs, and breaking leases, some landlords are offering one to even three months of free rent.” She also added that in the current crisis, it is common for landlords to pay broker’s fees as opposed to the usual practice of renters providing broker’s checks.
Still, some Manhattan Valley condos are not faltering. Ariel East and Ariel West—two high rises in Manhattan Valley—have not lowered their asking prices, which range from $1.95 to $3.49 million.
Mike Saleh, concierge at Ariel East, said, “The owner has the money and can hold it”—adding that eight condos remain unsold.
Across the street, concierge John Avaya of Ariel West said that nine condos remained unsold. He suggested that the owners were free from the burden of vacancy since the retail property of their building had been sold. Yet predictions for the long-term future of Manhattan Valley real estate varied.
“We have not hit bottom yet,” Kim said. “The recovery will not start until inventory flattens, prices flatten, and deals start being made.”
“This is a Darwinian economic event,” Buckley said of the current market. “It is frozen except to those with cash.” Buckley predicted that recovery would begin in the fourth quarter of 2010.
Nonetheless, residents of Manhattan Valley shed light on a positive outcome of the crisis.
Renate Nash, who rents an apartment on Central Park West, said, “They should be lowering prices. I have been here since 1971 and worked the whole time, but if I had to pay market value, I could not live here.”