Welcome to the bottom: Part Two

Excerpts from an article by Adrian Sainz, David Twiddy, Daniel Wagner, Alex Veiga, AP

Northeast states: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont

After home on Long Island sat on the market for four months recently, the sellers' real estate agent told them to drop the price from the mid-$600s to $599,000. The house sold the next weekend.

In Merrick, about 30 miles east of New York City, homes are starting to sell "as long as they're priced right," the agent said.

In January, with the ground and financial markets still frozen, few would have believed that the worst of the housing crisis in the Northeast would turn around within six months.

But the evidence is clear: home resales in the region in June hit a seasonally adjusted pace of 820,000, up 28% from the beginning of the year. Sales of new homes were also up slightly and construction in the region more than doubled.

Even the median sales price of $249,400 in June was up 10% from January and was off just 6% from year-ago levels, according to the National Association of Realtors.

"We certainly had our share of problems, but overall the severity of what happened here was far less" than what happened elsewhere, says Michael Lynch, an economist with IHS Global Insight.
Pittsburgh has the region's strongest home market in terms of sales and prices because the city saw less of a housing bubble and the area has 7.7% unemployment rate that is below the national rate.

One of the weakest markets, by contrast, was Providence, where a jobless rate of 12% exacerbated the city's foreclosure crisis. Too many residents took out risky subprime loans they couldn't afford when the interest rates spiked within a few years. Today, more than one in 10 homeowners with a mortgage in the state is at least one month behind or in foreclosure.

The Northeast, more than any other region, felt the full force of the credit crisis that reshaped Wall Street. Manhattan's real estate market, long immune from price declines, tanked this year as tens of thousands of people lost their jobs.

Prices of for-sale apartments plunged in the second quarter by the largest amount in decades.

Prices have fallen, on average, between 13 and 19%, according to four reports published recently by real estate firms.

Regional outlook: The region should experience "a nice rebound in home construction" over the rest of the year, according to IHS Global Insight, an economic research firm. Sales for new and existing homes are likely to rise. Just don't expect your home's value to shoot up. Rising unemployment will lead to more foreclosures, and that will keep a lid on prices.