Northeast US catches a whiff of buying revival

After one of the worst slumps in memory, the housing market in the Northeast US is stirring to life with more buyers on the prowl and bigger crowds at home showings.

But few are in a rush to buy and many of those willing to spend find it hard to get mortgages, suggesting a strong recovery is still some way off and those hoping for a swift return to the go-go days will be disappointed.

Many home-buyers are like 26-year-old Jessica Doctoroff, who is taking her time as she hunts for her first home in the densely populated neighbourhoods around Somerville, a middle-class Massachusetts city that neighbours Boston.

After years of renting and living with roommates, the insurance manager wants her own home and is ready to buy. She has viewed about 20 condominium apartments since February and has seen plenty of bargains get even better.

One two-bedroom apartment had its price cut by $25,000 (Dh91,826) and another was reduced just 10 days on the market.

"I don't feel like there is a rush," she said after viewing a 109 sqm (1,177 sqft) two-bedroom apartment priced at $499,000. "There's a lot more people coming out to look at these places, that's true, but there's a lot more property on the market."

Massachusetts was one of the frothiest markets in the boom. In the first quarter of 2000, the state ranked first in the pace of year-on-year house price rises in the country. And from 1995 to 2004, home sales notched double-digit growth.

But the recession is hammering the region. Home sales fell by 11 per cent year-over-year in February in Massachusetts, 15 per cent in neighbouring Rhode Island, 22 per cent in Maine and 26 per cent in Connecticut, according to the Federal Reserve's Beige Book survey of economic conditions released last week.

Home prices fared even worse. The median price of a home in those four states plus New Hampshire fell 17 per cent or more year-over-year, including a 26 per cent drop in Rhode Island where the unemployment rate has scaled double digits.

Brokers agree those numbers are dismal but expectations are high for a spring thaw in sales.

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