Renewal Takes Root in D.C.'s Blighted Ivy City

"Sold" signs pepper the block where Lisa McCamey bought a shell of a building last summer. Since then, she has decided to continue buying into the neighborhood. (By Sarah L. Voisin -- The Washington Post)
By Paul Schwartzman
Washington Post Staff Writer
Sunday, July 10, 2005

The streets are lined with abandoned, weed-strewn lots and dilapidated brick buildings, one of which caught Lisa McCamey's eye last summer. The neighborhood's most prominent landmark -- a 93-year-old school -- has been boarded up for more than two decades, across from a strip of worn tenements where children and adults use the pavement as their outdoor living room.

This is Ivy City in Northeast Washington, one of the poorest pockets in the region, where McCamey, an Alexandria-based developer, overcame initial trepidation and bought a shell of a building not far from the old school. She figured she could convert it into a couple of rental apartments for low-income tenants.

Since then, she has discovered that she's not the only one investing in the neighborhood, and she is rethinking her plan. Drug peddlers and prostitutes still linger, but down the block a pair of vacant buildings have been reborn as four condominiums, each for about $250,000. A sagging, empty house was remodeled and faced in red cedar and sold for $330,000. In an adjoining vacant lot, a developer is building a five-bedroom house with granite kitchen counters and a Jacuzzi -- and a list price of nearly $400,000.

Now McCamey sees her building as two condominiums -- "no marble, no granite, just plain-Jane apartments" -- each for $250,000. "The ones down the street sold," she said, standing outside her building, its windows punched out and flooring covered in construction rubble. "The possibility is there."

Sweeping east across the District, the real estate gold rush has taken developers and speculators to such long-forgotten neighborhoods as Columbia Heights and Trinidad. But none may be as forlorn as Ivy City, a vista of rickety homes, vacant land and warehouses spread across a dozen or so blocks between New York Avenue and Mount Olivet Cemetery.

In recent months, the neighborhood's disrepair was sufficient to prompt a District planning official to suggest that the city relocate the residents. By the time those words were uttered, developers and investors -- in search of a dwindling supply of cheap city land -- had reached the neighborhood, driving up prices and causing anxiety among residents who fear they will be priced out.

"There has been an upward surge in the market," said Geraldine Gardner, a project manager for the Office of the Deputy Mayor for Planning and Economic Development. "It's not surprising that it came to Ivy City, but it is surprising how fast the land is appreciating."

What is playing out in Ivy City is the beginning of a cycle that has unfolded more fully in Shaw and Columbia Heights in Northwest, and Harlem and the South Bronx in New York -- poor and blue-collar areas where professionals moved into buildings remade into luxury apartments.

Fueled by low interest-rate mortgages, investors are betting that demand for housing remains strong and that prices keep rising. That scenario is not without risk, particularly in such areas as Ivy City, if interest rates rise and demand ebbs.

"You can point to neighborhoods that have been turned around, such as Logan Circle and U Street, but there's a limit to how far that will go, and to assume that it will keep going is hard to see," said Dean Baker, co-director of the District-based Center for Economic and Policy Research.

Baker cautioned that first-time home buyers, lured to Ivy City and similar places by short-term loans requiring no cash up front, could face ballooning mortgage payments in a few years and might have difficulty unloading properties if the market falls. "These people are going to find themselves with much larger payments, and in many cases they won't be prepared," he said. "They're expecting home prices to rise, and they very well could fall, and they could fall a lot."

In Ivy City, the risk is one that developers and home buyers are willing to take, if only because there are still deals to be found there. Once the site of a racetrack and a railroad roundhouse, Ivy City has always been home to a mix of poor and blue-collar residents. It was known in the 1980s for its open air drug markets, which prompted police to usher in the National Guard to set up floodlights to fend off dealers.

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