While some economists believe that further declines will happen many feel that the residential real estate market will be one of the first sectors to recover from the recession.  With record foreclosure rates forcing prices down and mortgage interest rates as low as ever homeownership is more affordable than ever before.  With prices falling new housing starts have fallen even further.  In Staten Island, Brooklyn and Queens the number of new building permits issued has fallen 50-70%.  In Manhattan dozens of new projects are being abandoned as developers wait for a sign that the market for luxury housing will improve.  With new housing stats falling once the current inventory is exhausted the normal rules of supply and demand will lead to an increase in market prices as the number of available new units will be way down.  Many defaulting homeowners were themselves first time homebuyers trying to get into starter homes.  Many of these homeowners were not as knowledgeable as they could have been and were more likely to underestimate the true consequences of sub prime loans with variable rates.  The National Board of Realtors affordability index is at an all time high.