The Orlando Sentinel has this update from Florida. "Home buyers and home sellers are in a virtual stalemate in Central Florida, with housing prices holding at lofty 2005 levels while more properties are hitting the market and lingering longer. Many sellers are clinging to unrealistic price expectations, Central Florida agents say."

"'They not only think it's still 2005, they think it's the summer of 2005, the peak of the market,' said Barbara Brady, a Realtor in Orlando." "So far, local sellers are not making drastic cuts in their asking prices, Realtors and other industry experts say. But the pressure to do so is building. 'The trend is definitely downward,' said Chris McCarty, economist at the University of Florida. 'And it's going to continue.'"

"Nationally and throughout much of Florida, median home prices are beginning to slip, especially in places where the price escalation was most rapid, such as Naples, Miami, Fort Myers and Fort Lauderdale, McCarty said. Speculators who bought homes with riskier financing, such as interest-only mortgages, have been selling despite the declining market, adding to the inventory and downward price pressure."

"A Harvard University study released last week found that nearly one-third of U.S. home buyers last year used riskier mortgages. Many of those homes were bought by speculators, McCarty said, and as those properties are unloaded for less than top dollar, 'it lowers the value of other homes around them.'"

"Certain homes, particularly those priced $300,000 or more, will be tough to sell, McCarty said. 'How many people can afford to live in $300,000 homes without an interest-only loan?' he said. 'By the fourth quarter and the first quarter [of 2007], you'll see the full brunt of the declining real-estate market.'"

"Agent Pamela Ryan has been selling homes in Central Florida for 25 years and said she is 'definitely working harder, 12 to 15 hour days, seven days a week.' That's because while there are many more listings, and some agencies are turning down potential listings after analyzing the offering and concluding that the odds of a sale were not good in today's market."

"'People can take their time. They [buyers] don't feel that sense of urgency,' said agent Ellie Musgrave. Sellers are beginning to respond to the growing inventory and lengthening time on the market by setting prices at more competitive levels. 'Reality is setting in,' she said."

"Builders of new homes and condominiums..ave been pouring resources into marketing and deals in recent months. Cambridge Homes has been offering buyers a Mini Cooper automobile with certain homes, or upgrades of similar value. Other new-home sellers have been pitching discounts on certain lots of $10,000 to $99,000, though such deals have strings attached."

"Orlando has seen an explosion in new-condo construction in recent years, especially downtown; last year it was the second-biggest condo-conversion market in the nation, according to one study. 'Developers [of condo conversions] will pay your closing costs and homeowner-association fees for the first year,' agent David Tanner said. 'So you can have someone with $1,000 down, and they can get into a condo. Where else can you do that?'"

"Tanner said he recommends that existing-home sellers use deal sweeteners as well. 'Clients need to help with the closing costs, maybe a home warranty. Throw in some kind of incentive.'"

"Nationally, some home builders are scaling back on projects, profits are slipping and stock values are taking a hit. UF's McCarty said home foreclosures are rising, and will continue to rise as many homeowners with adjustable-rate mortgages face higher payments they will be hard-pressed to afford."

"'People will start lowering prices even more' to sell in the weakening market, McCarty said. 'A lot of people knew this would happen, but a lot of people were just hoping that it wouldn't.'"