Though many said it wouldn’t happen, it has taken New York City
about nine months to catch up to the rest of the country with regard to
the foreclosure crisis. Certainly, the numbers are lower here than in
other cities, but there is no longer any denying it: Foreclosures are
on the rise in New York City. The question now becomes: Will what is
happening elsewhere in the country — where increasing foreclosures have
resulted in jumps in crime — be part of New York’s future?
At present, the answer is no, but the possibility does exist,
especially in emerging neighborhoods where foreclosures are high. There
is one telling sign that is cause for concern in these areas: Buyers
are already tuned in to the perception of rising crime, regardless of
the reality.
One area to watch is Brooklyn, with its many up-and-coming
neighborhoods. Next to Queens, Brooklyn has been the hardest hit, with
4,895 foreclosure actions initiated in 2007, according to the
Neighborhood Economic Development Advocacy Project (NEDAP).
And this year is likely going to be slightly worse. Based on the
first quarter of 2008, when Brooklyn saw 1,273 foreclosure actions,
NEDAP projects that Brooklyn as a whole could see as many as 5,092
foreclosures by the end of the year.
Aside from the burden foreclosure puts on the local economy —
according to a study done this year by NYU’s Furman Center for Real
Estate and Urban Policy, foreclosures reduce the value of surrounding
properties — and the stress they put on the very real individuals who
default on their mortgages, foreclosures can lead to other collateral
damage, such as the sudden appearance of vacant buildings.
“[Foreclosures] lead to an increased likelihood of vacancy,” said
Ingrid Gould Ellen, co-director of the Furman Center. “But in New York,
the market has been relatively robust. Unlike Cleveland, where homes
are vacant because no one can sell them, here there have been willing
buyers around.”
New York City has so far been lucky in that respect: While cities
like Cleveland and Atlanta have watched their suburbs turn into ghost
towns, New York City has been able to mostly avoid an onslaught of
vacancies.
“There are vacancies, but they don’t last too long,” said Robert
Matthews, chairman of Brooklyn’s Community Board 8, which oversees
parts of Crown Heights, Prospect Heights and Weeksville. Foreclosure
rates in Crown Heights are the 13th worst in the city, with 756 over
the last four years. “It’s not as bad as I had anticipated.”
But with foreclosures on the rise and loans harder and harder to
come by, the possibility that vacant buildings will start cropping up —
especially in emerging neighborhoods like Bed-Stuy, Bushwick and Crown
Heights, where foreclosure rates are high — is a real one.
“Foreclosure is a lengthy process. When the house is empty and
supposedly secured, people go in there and they use it illegally,” said
Nadine Whitted, district manager for Brooklyn’s Community Board 4,
which operates in Bushwick. The neighborhood was the ninth-most
affected with regard to foreclosure actions from 2004 through 2007,
according to NEDAP; it had 890.
“We have problems with stable blocks being now not so stable. It
has an effect on the economy, the community, and if you’re the
next-door neighbor, you better keep your eyes open,” Whitted added.
What she is describing is what’s known as the “broken windows”
theory, which posits that crime is more likely to occur in
neighborhoods where there are visible signs of disorder, such as
abandoned cars or buildings, or even broken windows. These conditions,
the theory goes, act as signals to criminals that society simply isn’t
paying attention.
Some Brooklyn neighborhoods certainly have more signs of that than others.
“Bushwick is a block-by-block situation now,” said David
Maundrell, president of the Brooklyn brokerage aptsandlofts.com. “Some
are great and transformed, and on some there is a lot of drug and crime
activity.”
However, though there is a certain intuitive appeal to the broken
windows theory, it is just that: a theory. In fact, anecdotally, the
opposite is also true: Crime also tends to occur in neighborhoods that
are emerging or on the upswing.
“In certain evolving neighborhoods that have an influx of new
residents, I’m sure there are increased break-ins and muggings, because
[with] the people who live in these neighborhoods, there is an element
there that is prone to resorting to crime. If they see people that have
money, they break into their apartment,” said Maundrell.
Letitia James, a City Council member representing Clinton Hill,
Fort Greene and parts of Crown Heights, Prospect Heights and Bed-Stuy —
agreed: “Increases in robbery and burglary, part of it has to do with
this phenomenon of technology, people walking the streets texting,
playing video games with this very expensive electronic equipment,
being victimized.” In response to a recent rash of muggings in Clinton
Hill, James helped initiate a neighborhood awareness map on the Society
for Clinton Hill Web site in order to bring attention to that and other
crime in the area.
Despite the reality of crime, Maundrell noted that the perception
of crime has a direct relationship to pricing, at least when it comes
to new real estate.
“The price levels change as [notions] of crime go down,” Maundrell
said, addressing Bushwick in particular. “You can have one block where
the apartment is $300,000 and around the corner that same apartment is
20 percent discounted.”
Maundrell also cited a new building in Crown Heights that is two
blocks from the Brooklyn Armory on Atlantic Avenue. The Armory houses a
homeless shelter, and prices at the nearby building were deliberately
discounted because of the perceived impact of the population that
congregates outside the Armory.
“Three blocks up on Washington they’re $625 a square foot, while by
the Armory they’re $525 a square foot,” Maundrell said, noting that he
grew up in Brooklyn and that today “it’s a better, safer place than
ever before.”
That may be true. But that doesn’t make safety any less of a factor for buyers.
“Crime and safety has always been a big concern for buyers, if
they’re not familiar with a neighborhood,” said Tom Le, an associate
vice president at Corcoran, who said he even helps buyers get in touch
with the local precinct. “I always recommend that they look at the
police precinct and check it out for themselves … But I will not
discuss it.”
Le explained that he leaves questions to the police because people
have different comfort levels depending on their experience. Le said he
felt that his weighing in on crime in a given neighborhood could be
misconstrued as either trying to steer a buyer into, or out of, a
neighborhood.
Along similar lines, just talking about crime or foreclosures,
which happens frequently on real estate blogs and in the press, can
have an effect on the perceptions of buyers.
In a sign of the times, Jonathan Butler, creator of Brooklyn-based
real estate blog Brownstoner.com, began posting a regular item called
Foreclosure of the Week. The properties featured are subjectively
chosen from a list of foreclosures provided by the real estate research
site Property Shark.
The idea came to him back in April of 2007, “when the word
[foreclosure] began showing up in the press,” he said. Though the
feature flagged during the fall of last year, he said, “Now I’m posting
them pretty consistently from early this year, as the number of
foreclosures rises.”
“I do think that [attention] about foreclosures in Bed-Stuy has
definitely negatively impacted the psychology for potential buyers,”
Butler added. Bed-Stuy has the second-highest foreclosure rate in the
city, with 2,030 actions filed from 2004 to 2007.
“Bed-Stuy, it’s really like several different neighborhoods. It’s
huge and different block by block. I don’t think this is happening in
Stuyvesant Heights, for example. But for a block that already has empty
lots on it and a handful of nice houses, those kind of blocks that were
already a tougher sell are having a very hard time psychologically,”
Butler said.
Roslyn Huebener, of Brooklyn-based Aguayo and Huebener Realty,
disagreed: “People who are willing to pioneer, to push into emerging
neighborhoods, are making tradeoffs for conveniences. They recognize
there are safety issues, but they’re going for the ultimate goal: to
own or rent a space large enough to accommodate their needs.”
And as far as the foreclosures?
“Vacant buildings do invite intruders and squatters,” she admitted,
but then continued, “It’s something that will pass. It happened only
because of the reckless lending.”