The economy is currently in free fall. Try as they might, optimistic commentators can no longer pin the bad news on market psychology. Just today, Harvard Professor Robert Barro was on CNBC and writing in the Wall Street Journal of a study he recently completed. It estimates a 20-30% chance of the recession becoming a depression.
A little while ago, the world’s two most famous traders, Warren Buffet and George Soros predicted diametrically opposed economic fates. Buffet said the bottom had been reached, Soros said it hadn’t. Today, Soros is wealthier than ever before, and Buffet’s investment firm is currently under siege from the traders on Wall Street.
Citigroup is almost a penny stock.
If you are yearning for the good news: Regarding the freefall itself, it is hard to envision it becoming more rapid: the economy is already shedding jobs almost as fast as it can, given the current structure of the national labor market.
During the past two quarters, this macroeconomic malaise has finally caught up to the New York City apartment market. With the two so entangled, the story of the national economy and the New York apartment market has converged for the time being.
The real question seems to become when we are at the bottom? The middle of 2009 is the most optimistic of predictions, with the end of the year looking to be the most likely point for national economic growth to become again positive.
Similar predictions are being made about the New York City real estate market. What is clear right now is that the bottom is not here yet. However, that bottom will likely be at some point in the next four quarters.
In the financial chaos of the current times, it is easy to lose sight of the long-term opportunities brought on by such loss and volatility. The Manhattan apartment market is declining in value and will continue to decline. Long before it stops, however, it will fall past the point of its typical market value.
The expression is not bought at the bottom, sell high. It buys low, sells high. The reason is that it’s impossible to find the exact bottom without a whole lot of luck. Buying low, however, is something that can be done. For the next couple quarters of 2009, the New York City real estate market will undoubtedly be at its low.
Looking for Bottom in N.Y. Real Estate [ NYTimes ]