Upstate more like another state

Hardcore New York City denizens who think upstate begins at 96th Street forget that there are two New Yorks: the city and its 8 million residents, and the rest of the state, mostly to the north and west, where the other 11 million live.

When it comes to real estate prices, the two could not be further apart.

The median price for an apartment in New York City was $835,000 in the first quarter of 2007, up 4.5 percent from $799,000 the previous quarter, according to appraisal firm Miller Samuel. With the growing disparity in prices, a typical Manhattan apartment could pay for eight houses upstate.

The counties that form the outer ring of the New York metro area are closely linked to the city’s fortunes, and it shows in the real estate prices there. Houses in Westchester, Putnam, Rockland, Dutchess and Orange counties had a median price of $435,550 in February 2007.

Farther upstate, the residential real estate market is another world. Beyond the Catskills and Columbia County, where many downstaters own second homes, prices rarely undergo dramatic shifts. The primary cause is the region’s depressed manufacturing economy, which is vulnerable to business cycles, according to the National Association of Realtors.

Despite the recent run-up downstate, the median house price in the counties of the four major upstate urban areas — Albany, Syracuse, Rochester and Buffalo — was $128,547 in February 2007. Remove Albany, and that figure drops to $109,780. In a dozen upstate counties, the median home price is lower than $75,000. In Lewis and Allegany counties, the median price is $51,500.

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After performance declined at industrial giants such as Kodak and Xerox, which carried cities like Syracuse, Rochester and Buffalo for decades, job seekers, particularly those without tenure or advanced degrees, found it difficult to make ends meet. Now medical centers and universities are often among the largest employers in these areas.

Compared with New York City prices, of course, the cost of upstate real estate is shockingly low. “Here you can buy a four-story, 16,000-square-foot building for $500,000,” said Sara Zappi, vice president of TL Metzger and Associates in Albany. “I own a 300-square-foot studio in Manhattan that is worth as much.”

Upfront affordability is obvious, but high taxes can erode equity. Large-scale investors are rare, though Fortune magazine’s ranking of the top 10 housing markets expected to rise in 2007 placed Syracuse fifth with a projected 4.8 percent climb. Rochester, predicted to go up 4.5 percent, ranked seventh.

Despite the economic limitations, Buffalo, Syracuse and Albany’s downtowns are experiencing modest rebirths as developers convert warehouses and factories into rentals and even a handful of condos.

Though visionary plans designed to revitalize urban cores and jump-start development have long been floated and promoted, cynics point to a legacy of delays and setbacks. Such projects include DestiNY USA, a large research, office, commercial and hotel complex in Syracuse, and the so-called Fast Ferry between Rochester and Toronto.

See next month’s issue for a look at the obstacles developers face in several major upstate urban areas.