Video: Compelling Compton

By Jane Wells Correspondent
CNBC
updated 7/5/2005 12:29:40 PM ET 2005-07-05T16:29:40

As home prices in hot markets across the nation continue to grow, it’s getting harder and harder to find affordable opportunities. As a result, home buyers are looking in areas they wouldn’t have even considered five years ago. And even in such neighborhoods, cheap isn’t really all that cheap.

Take, for example, Compton and Harlem. Houses in Compton are selling for up to 20 percent more than the asking price. And values in Harlem have jumped four-fold in the past eight years.

Straight into Compton
The Haqq-Adams family knows all about skyrocketing prices, bidding wars and lack of supply. But we’re not talking about the red-hot housing market in Beverly Hills, 90210. This is Compton, 90220.

“They’re going for 10 to 20 percent over the asking price in Compton and South L.A.,” said Dana Andrews-Collings, a real-estate agent for ZipRealty.

Proof that a rising tide lifts all boats, Compton is going through much of the same real-estate mania as everywhere else. But it’s also getting a new look from investors who have overcome qualms about its reputation, seeing it as one of the last affordable places to invest in Los Angeles.

“I actually have several clients that will say ‘I want to see this property’ and we come and look and they’ve never been here before and they’re looking now because that’s what they can afford,” Andrews-Collings added.

But affordability is a relative term. The national median home price is about $210,000. That will get you absolutely nothing in Compton.

Prospective buyers include everyone from grandparents to new parents.

L.A. native Tunisia Haqq-Adams works for United Airlines, and her family is buying this home under a program in which the city cleans up and refurbishes the residence. She feels she has lucked out, after a year of searching.

“I went to properties that were little boxes, that were only 605 square feet. People are on the property ... stacked this high with people that want to purchase that property,” Haqq-Adams said.

School cafeteria worker Wanda Holden and H.L. Jackson are in their 60s and looking to buy for the first time after their rent went up 50 percent overnight.

“Well it would be great to have a house to call your own, so nobody can say get out,” Jackson said.

They figure they’d better buy now before they’re priced … straight outta Compton.

“Someone said on TV the other day that in about a week the prices should start falling back down,” he said.

But will he act?

“I’m afraid because if we wait too long it’s out of the question and if we get something and are not satisfied, we’re stuck, so what do a poor man do?”

Andrews-Collings says many of her buyers are investors looking to flip the houses for a profit or rent them out, though it’s getting to the point where rents may not be able to keep up with a landlord’s mortgage payment.

Moving on up … to Harlem
Want to know where real-estate values have more than quadrupled in the last eight years?

Miami? Vegas? San Diego? Try Harlem.

“I have clients who may have purchased maybe 7 or 8 years ago maybe in the $250,000 range who are now selling at $2 million,” said Sheilisa McNeal of Harlem Homes Realty.

Harlem’s legendary brownstones cannot be had for under $1 million, even as shells. McNeal is looking for a buyer for a triplex listed at just under $1.8 million.

In East Harlem — or Spanish Harlem — developers of one condominium say prices per square foot have doubled since building began last year.

“These started out between $320 and $390 per foot, and ended up — through successive price increases — at over $770 per foot,” said Chris Halliburton of Warburg Realty.

“And finding something that is low enough from an acquisition cost standpoint ... it’s been exceedingly tough,” added Wall Street investor and prospective homebuyer Ivan Hopkins.

Hopkins is hoping to buy, and he's not alone. Turns out in a hot real-estate market, no neighborhood is immune to redevelopment.

“You have over 7.2 square miles of land, over 500,000 people residing and you have spending power of nearly $2 billion. For a retailer or a purveyor of housing, I’d have to say there’s very little risk of going into an area like Harlem,” said Quintin Primo, chairman and CEO of Capri Capital.

JP Morgan Chase has provided loans to four new construction developments in Harlem. Other lenders can’t wait to do deals, unlike the old days. But as prices skyrocket, some locals are feeling pushed out.

“I too don’t live in Harlem now. I can’t afford it to be quite honest with you,” McNeal said.

Yet while she says open houses aren’t quite as mobbed as they were a year ago, and she expects price appreciation to slow, appreciation will continue. There just aren’t enough places for sale to meet the demand.

“You know the operative word is bargain. I mean there are a lot of fixer uppers. I don’t know if I would consider them bargains or not,” Halliburton said.

These days, it seems in New York, movin’ on up means way up … to Harlem.

© 2012 CNBC, Inc. All Rights Reserved

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.95%
$30K home equity loan FICO 5.19%
$75K home equity loan FICO 4.58%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.40%
13.40%
Cash Back Cards 17.92%
17.91%
Rewards Cards 17.12%
17.11%
Source: Bankrate.com