The Arizona Republic reports on the housing bubble in Phoenix. "Home builders are wheeling and dealing like county-fair carnies trying to win over nervous buyers. They're offering incentives like free cars or thousands of dollars to knock down closing fees or to put toward flooring, cabinets and other decorative touches for anyone who will buy an unsold house or sign a contract to have one built."

"Builders now must offer bigger and bigger freebies to keep shoppers coming to the sales office. The biggest discounts are on standing inventory of homes called 'spec,' or speculative, houses. Builders have more spec homes on their hands as buyers back out of contracts, many because they can't sell their existing homes."

"There's even more pressure right now for publicly held builders to book sales. The end of March marks the close of the fiscal year for some of them, and they want their annual numbers to look good to Wall Street."

"'This is proof that the market has turned from a sellers' market to a buyers' market,' said RL Brown, a home-building analyst." "In February, Scott Communities began offering a Honda Civic, Honda Element or $15,000 off the base price of a home. Another home builder was selling a completed spec home with such upgrades as granite counter tops, for $386,000, while the base price of the home in the builder's brochure was $415,000."

"Incentives give builders a way to cut prices without actually reducing the base cost of their homes. Earlier customers could be upset to learn that the base price of the model they bought months ago now has fallen several thousand dollars because the builder miscalculated the market. Offering incentives is 'better than having a crisis of dramatic oversupply,' said (broker) John Foltz. 'It helps to protect neighborhoods pricewise by making adjustments gradually. The worst thing they could do is not recognize a change in the market and let gross oversupply produce a fire sale later on.'"

"Even with incentives, consumers are being very cautious, said Margie O'Campo de Castillo, a broker who represents buyers seeking new and existing homes. 'The incentives help, but I don't see people jumping up and saying, 'Let's go buy,'' she said. 'Right now, there's a lot of gun-shy buyers.'"