The Arizona Republic reports on the housing bubble in the Phoenix area. "Metropolitan Phoenix's housing market started 2005 with a bang but ended it amid concerns of a price bubble. Home values soared and houses sold within days in most neighborhoods during the first six months of the year. But then investors began to bail, listings climbed and asking prices stared surpassing home appraisals."

"By September, the market was showing signs of cooling. In October, home prices slipped slightly."

"Resale listings exceeded 30,000 in January, nearly nine times the level of the same month of last year. Selling time increased from about 5 1/2 days to 49. Sellers are frustrated because they are getting few offers, and many are cutting prices. Buyers seeing the slowing have become much more cautious."

"Neil Brooks, an agent in northeast Phoenix, said shoppers are trying lowball offers of $30,000 to $50,000 less than asking prices as a starting spot in negotiations. 'Last year, it was the sellers who were being very aggressive, and now it's the buyers,' he said. 'There's so much inventory, they can sit back and spend their time looking at bazillions of homes.'"

"'The market has done a complete about-face,' said Barbara Sage, a northwest Valley and Sun City specialist. 'Last year, 14 offers for a home would come across at once, clogging up the fax machine.' Now, she said, after showing a property the seller's agent will call and tell her the 'owner is anxious to sell.' She tells them with a 'yawn' that her buyer has a few more properties to look at."

"'The days of multiple offers made on sight-unseen properties and offers well above list price are gone for now,' said (realtor) Cecil Duarte. 'The market has softened. Inventory ballooned, and the days are here again for buyers to negotiate on price, terms and even seller contributions toward closing costs. Homes lasting on the market longer will affect prices,' he said. 'If we get that speculated 'dump and run' by investors, I expect to see prices to get competitive, and sellers offering incentives like they did in the early 1990s.'"

"The slowdown has hit the new-home market as well. Builders that were overwhelmed with demand a year ago now are offering such freebies as thousands off spec homes, free pools or price cuts on upgrades to bring back the buyers. Doug Fulton said the slowdown was obvious to him on a recent flying tour of Pinal County. He said the number of new-house slabs in Maricopa was down by a third or more compared with six months ago."

"Fulton said executives of public builders are under pressure from Wall Street to duplicate last year's results in the Phoenix market this year. He said that would be difficult and said he would be happy with the 10 to 15 percent price increases he expects this year."

'"It's no longer 'build it and they will come.' That's not what will happen in '06,' Fulton said. 'It will be a battle. Corporate expectations are very high.'"

"Pete Kanton is trying to sell several of his own Valley residential properties as well as some for clients. 'All are priced competitively, at or below what other homes of similar size and amenities have sold for in the areas,' he said. 'All have been marketed on MLS, signs, classified ads and mailing to the neighborhood. But none have sold.'"

"In addition to the normal drop in activity, the first quarter of the year the market appears to be in a 'holding' pattern,' Kanton said. 'Buyers are anxiously waiting to see if sellers will begin those price reductions many have speculated about, and sellers are looking at comps their agent puts in front of them from middle to late summer and into last fall when the market peaked and not willing to lower their list price because others got that price.'"

"Shannon Osborn put her home in the 85254 ZIP code in north Scottsdale on the market last December. She has lowered her price twice so it's $25,000 less than where she started. Her real estate agent is running several ads, but so far the only potential buyers who have come to see it want to 'flip the house' so they don't even come close to the asking price."

"'With what I owe and what I have put into it, I am not going to give it away,' she said. 'My home is beautiful and all the new interior remodel is beautiful. So I am at a loss on ideas.'"

"(Realtor) Margie O'Campo de Castillo said the housing market still is strong. 'But homes won't appreciate like last year,' she said. 'Sellers can't over inflate their prices anymore. If you don't think the market is slowing, just look at all the open houses.'"

"So you bought a couple of houses in the Valley during the height of the real estate frenzy last year, hoping to flip them for quick profits. But with prices stabilizing and sales slowing, what do you do now? Try cozying up with a copy of Arizona's Residential Landlord Tenant Act."

"Absentee investors from California and other states, who have helped push up Arizona home prices, might be in for some surprises when it comes to managing properties. 'At your own home, you can ignore little problems like a leaky faucet or dripping pipes,' (property manager) Debbie Norton said. 'But a person paying rent expects that to be taken care of.'"

"Patience is another virtue of landlords, not just in dealing with tenants and repairmen but also in taking a long-term outlook with rental properties. After the sharp run-up in housing prices in recent years, 'rents don't come close to covering payments,' Norton said. That implies landlords need enough financial stability to sit on money-losing properties for years, if necessary. 'Rents are still low and you can't buy a single-family home today in the Phoenix area and expect a positive cash flow,' Ray Wendel warns."