The Arizona Republic is cautiously informing readers of the housing bubble. "Metropolitan Phoenix's housing market is cooling, but it still managed to snag the title of the nation's hot spot for home price gains in 2005. In the Valley, 2005 housing prices soared 48.9 percent above 2004 levels, according to the Realtors' report."

"But that growth was fueled by record increases in the first half of the year. By the end of the fourth quarter, prices had risen less than 1 percent, that's $400, from where they were at the end of the third quarter. The report is just the latest sign of a slowdown in what had been a sizzling market."

"'There are sellers who think the frenzy from last year is still going on, and they can inflate their prices,' said (realtor) Margie O'Campo de Castillo. 'But they aren't getting the offers they want, and their homes are sitting on the market.'"

"The scene is much the same across the country, particularly in areas where large price increases were fueled by heavy investor activity. The investor buying-spree started in Southern California, particularly in San Diego, in 2002. After prices skyrocketed in those areas, many of the same speculative buyers cashed out and flocked to Las Vegas. By early 2005, investors had found metropolitan Phoenix."

"They also have found Florida. But several of the Sunshine State's top markets also are seeing a tapering of prices. Orlando, like Phoenix, saw prices rise less than 1 percent in the fourth quarter. David Lereah, chief economist for the NAR, said the dip nationally is an early sign of a market adjustment. Housing analysts say the adjustment will be bigger and more painful on the coasts, where home prices are much higher."

"In the Valley, the median price of an existing Valley home fell last month to $257,000 from $260,000 in December. And 5,260 existing Valley homes changed hands in January, compared with a record high of 10,700 in August. The pace of sales has slowly been tapering off since fall. There were 6,480 resales in December."

"As early as September, home prices had begun to surpass appraisals, and investors began to sell in droves."

"Jay Butler, director of the Real Estate Center, said it's still unclear how big of an overall impact investors had on the Valley's housing market and how much their departure will hurt it. He estimates speculators inflated metropolitan Phoenix home prices by as much as 25 percent in 2005."