Let's Speculate

by Kasia Janczura

Given historical trends, the housing most likely has not hit bottom. As stated in the latest issue of the Economist, “the housing market started the crisis so it is natural to think that house prices must recover before it ends.” Given that the current recession is expected to be the worst since the Second World War, the odds favor the fact that the bottom has not yet been reached. That means we should be examining the market with caution and speculating the right time to jump back into the game.

So while the drastic decrease in prices looks attractive, it is time to wait for some of the sellers to adjust to buyers’ expectations. It might take a while for Bobby Abreu or Flavio Briatore to lower their stupendous penthouse price tags and the more uncertainty we have in the market, the more risk-averse we become, and less willing to start buying. Seeing that some sellers have yet to acknowledge the grim consequences of the house bubble bursting, buyers won’t leap in until prices reflect the true value of the assets.

New York City’s eye-catching real estate playground is yielding to current times by slashing the prices of once fervently sought-after real estate. The assets that are selling are those which successfully manage buyer’s expectations, such as Williamsburg’s recent development Mason Fisk. Green developments are following the trend, with Sterling Green Condo in Prospect Park presenting affordable prices to prospective buyers. Manhattan’s real estate has welcomed back $200,000 studios in certain areas of the island. Further, Julian Schnable’s Palazzo Chupi’s price fell down 7% since January, William Ackman lists his sweet place for $10 million instead of $12 million, and the 11 E. 74th Street Mansion falls from $35 million in 2007 to the current mere $15 million. Better yet, some sellers are resorting to auctions to spur interest amongst the buyers. The cards are in the hands of the buyers, and sellers are accepting this.

While the inflated market prices adjust, let’s speculate when the actual bottom will hit. The uncertainty in the market, which has an impact on the guarantee of a steady income, will keep many buyers out. But those who do reenter at the right time will have a surplus of supply of which to take advantage. Let us wait.