A report from the New York Times. "After several tumultuous weeks on Wall Street, New York City seems increasingly likely to fall into recession, many economists and analysts say. To get a sense of what that might look like, one need only cross the Hudson River. New Jersey’s economy has already slipped into reverse. Its biggest employers have stopped hiring, and some have started firing. Its unemployment rate is rising fast, and the values of its houses are falling even faster."

"Perched on a pink vinyl seat in the first booth of his roadside diner here, Gus Thermenos can hear and feel the financial fear gripping his customers. A foursome of men who worked at the nearby campus of Bear Stearns had been lunchtime regulars, Mr. Thermenos said, gesturing toward an empty booth over his shoulder. But they stopped coming a few months ago. 'Three of them got laid off,' he said."

"With one young child and a second on the way, Mr. Thermenos was also fretting about the falling value of the house he bought in Hackettstown, about 20 miles west. After paying about $500,000 two years ago, he said, it was unsettling to see similar houses now being listed for $400,000 to $425,000."

"'How could you know?' Mr. Thermenos said. 'We didn’t see this coming.'"

The Courier Post from New Jersey. "A plan to create an estimated $40 million trust fund to help New Jersey residents who have subprime mortgages avoid losing their homes is instead creating a growing controversy. 'The process being suggested is too costly and too onerous, and it could stop businesses from lending in New Jersey,' cautioned E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey."

"There were more than 134,000 subprime mortgages in New Jersey as of June 30, and 32.5 percent of them were in foreclosure or close to it, according to the Mortgage Bankers Association National Delinquency Survey. The state's housing and mortgage agency estimates another 10,000 to 20,000 subprime loans will fall into these categories over the next two years if the situation continues unabated."

"'I don't think the individuals who were trying to secure these loans thought that at some point they were going to lose their jobs to the degree that jobs have been lost, that the values of their homes were going to decrease to the point that they are less than the money that they owe,' said Assembly Majority Leader Bonnie Watson Coleman, D-Mercer, before the Assembly Budget Committee last week."

Gannett New Jersey. "New Jersey homeowners, chiefly the middle class...have to face the twin horns of a much larger beast declining wages and the rampant growth of property taxes. Call it the Jersey Squeeze."

"The bite that property taxes take out of a homeowner's wallet is up nearly 40 percent since 2000, a Gannett New Jersey review of state and federal tax data found. And property taxes are on track to claim, on average, nearly 10 cents out of every dollar earned this year — the highest rate in the nation. The New Jersey rate was 7 cents in 2000. The average New Jersey income is actually down about $2,600 from 2000, when adjusted for inflation, according to federal income tax data and estimates for 2008."

"Douglas S. Massey, professor of sociology and public affairs at Princeton University... and his colleagues in September found that New Jersey has a split-personality economy. Housing costs, property taxes and other expenses are driving low- and moderate-income families out of the state, but at the same time attracting high-income workers who traditionally push up the price of real estate."

"'I think the long-term pressures have been toward greater inequalities in income and wealth, and that is reflected in housing,' Massey said. 'Geographically, we have become more unequal.'"

The Baltimore Sun from Maryland. "The decline in home prices in the Baltimore metro area accelerated last month - the average fell below the 2005 figure. The average sale price in Baltimore and its five surrounding counties dropped to about $296,000, according to numbers released yesterday by Rockville-based Metropolitan Regional Information Systems."

"Moody's Economy.com estimates that nearly 10 percent of homeowners in the Baltimore metro area owe more than or exactly as much as their properties are worth. That's about 7,700 homes."

"'There are areas of the country where ... there are many more homeowners underwater than Baltimore,' said Mark Zandi, chief economist of Economy.com. 'But all the indicators of affordability would suggest, and inventory would suggest, that prices need to fall more.'"

"Louren Reddick and a partner converted a Baltimore church into four condos, and he's hoping to get a buyer for the last one by dropping the asking price from $369,000 to about $332,000. The two-bedroom, 2 1/2 -bath property originally hit the market in January 2007. The promise of property taxes frozen for the next 10 years thanks to historic tax credits wasn't inducement enough."

"'If I have to give 10 percent off to move a property, I'm prepared to do it,' said Reddick, of Frenchman White Corp. 'I'm basically selling it at cost. ... I think right now, you're getting the best prices you've seen in the last 10 years, maybe even longer.'"

"Because buying typically slows down between Thanksgiving and New Year's Day, this is the time for sellers to act if their asking prices are too high, said Ross Mackesey, a VP at Coldwell Banker in Baltimore. 'You're going to wait a while if you don't do something now,' he said."

The Washington Post. "The current crisis is a rude awakening after years of charmed prices and quick sales. Sellers become depressed as their homes stagnate on the market. They get insulted when they receive lowball offers. Buyers feel entitled to a deal and fret about finding the bottom of the curve. The process has become so emotional on both sides that psychologists rank it on par with divorce and even death."

"'In this particular climate, I think emotions are the key factor,' said David Eigen, a California psychologist who has studied the housing market. 'And the emotions are capital F-E-A-R.'"

"But sellers are not the only ones with outsize expectations. Kathryn Higgins, a New York real estate agent who has a master's degree in psychology, said buyers have become self-righteous during these economic doldrums. Those who have the cash for down payments and are preapproved for loans feel that they are 'part of a privileged class,' she said. She cautioned buyers against becoming too demanding."

"'Just because you have the money and you have the mortgage, the seller's not going to give it away,' Higgins said."

"Alicia Caine of Hyattsville moved to the Washington area about 10 months ago and has been hunting for a home in the $300,000 range in Prince George's County. About two months ago, Caine found a promising prospect in Riverdale. It had been on the market for a while, and the price had dropped accordingly. She bid $5,000 below the list price and asked for help with closing costs. She was soundly rebuffed. Caine then upped the ante to $1,000 above asking, though she still requested some closing help."

"Still no deal. 'If you're not willing to take the asking price, then you shouldn't have dropped it that low,' Caine said. 'I felt like I was being jerked around.'"

"She checked on the house later and found the seller had raised the asking price. The house has since gone off the market, and Caine has become so worried about the state of the economy that she is no longer looking to move."

"Fairfax's median sales price was $375,000 in August. That's nearly a 22 percent drop since August 2007. The last time prices fell lower was in April 2004, said John McClain, a senior fellow at George Mason University."

"Prince William and Loudoun counties...have been devastated by an unusually high share of aggressively priced foreclosures. Sales in those counties have been climbing for a few months as buyers have been snapping up deals. In Prince William, the number of homes sold shot up 100 percent last month as prices plummeted nearly 42 percent since last year to $251,384. In Loudoun prices dropped 24.6 percent to $335,000, and sales rose by 28 percent."

"In Fairfax County, about half of the homes for sale are bank-owned properties, said Barry Merchant, senior policy analyst at the Virginia Housing Development Authority. Unemployment in both Virginia and Maryland rose 0.2 percent to near-record highs in August, according to the Bureau of Labor Statistics, a decline experts attribute to the collapse of the housing market in recent month."

"According to the D.C. Department of Employment Services, 23,600 people were unemployed in August. The number of wage and salary jobs dropped by 400. Contracting, transportation, utilities and information services were among the sectors that lost jobs."

"'We're starting to see people pulling back -- they're not filling jobs they had before,' said Barbara B. Lang, CEO of the D.C. Chamber of Commerce."

"Jobs are up in contracting, hospitality, government and health care, but down in construction, telecommunications and transportation, said William F. Mezger, chief economist at the Virginia Employment Commission. 'What's surprising in a good area like Northern Virginia, the duration of unemployment is several weeks longer than not-so-good areas,' Mezger said."

The Virginian Pilot. "Beth Soliz and her husband purchased their Portsmouth home in 2006 for $252,000. In July, Soliz's husband was offered a promotion that meant moving to Annapolis, Md. 'We originally listed the house at $250,000, just to break even,' said Soliz."

"When no offers came, the couple worked with their mortgage company to see whether it would let them sell the house for less to pay off the loan."

"Figures from Real Estate Information Network show just 153 homes have been sold short this year in Hampton Roads. An additional 352 homes currently on the market are listed as short sales. That's about 2 percent of the nearly 15,000 homes on the market in the region, but real estate experts say those numbers just scratch the surface."

"'We're seeing it more now than we ever have,' said Steve Rockefeller, vice president of SunTrust Mortgage's Virginia Beach office."

"Rockefeller said the long waits during a short sale are caused in part because banks' lending divisions are swamped with work, dealing with both foreclosures and short sales. 'There is tremendous volume and backlog,' he said.'

"Kim Johnson, an agent for Prudential Decker Realty, said dealing with short sales in this market is almost becoming unavoidable. 'In Northern Virginia, you almost can't participate in the real estate market unless you deal with short sales,' she said. 'Here in this market people could kind of pick and choose.'"

"Some simply cannot afford their monthly payments, whether they took on too large a loan or the interest rate reset on their adjustable rate mortgage. Some have lost a job. Others, such as the Solizes, need to relocate. With no buyers, the Portsmouth couple realized a short sale was the only option, Beth Soliz said. 'Walking away from it just wouldn't work.'"

"The couple eventually sold the house for $226,000 and plans to repay the difference to the bank."