The LA Times has this report on the San Diego housing market. "Finally, the seemingly unstoppable ascent of real estate here has stopped. Sellers are chopping prices to get deals done. Buyers worry that values will continue to fall, putting their investment at risk. There's widespread uncertainty, and some anxiety, about what happens next."

"San Diego had the wildest run-up among major California cities. The boom was stoked by cheap loans, changes in tax law, creative financing and a generalized mania that fed upon itself. The market also began to fade first in San Diego. Whatever happens here, optimists and pessimists agree, will happen later in the rest of the state."

"At a sales office in the Ocean Beach neighborhood, broker David Davis said the market had already bottomed out. 'Our No. 1 industry is now tourism,' Davis said. 'Unless they take away the sun, we'll be fine.'"

"If Davis radiates cheer, the fliers taped to the window outside the office door tell a different story. 'Huge Price Reduction,' one says. Another says both 'Reduced' and '$15,000 Credit.'"

"In some cases, the prices are dropping faster than the fliers can be reprinted. A two-bedroom town home has its price of $324,900 crossed out with a marking pen, replaced by $309,900. Another house, a four-bedroom in suburban La Mesa, has a printed price of $575,000. Below that is handwritten $549,000. Scribbled below that is a new minimum: $499,000."

"'Houses really need to fall by 50% to become affordable again,' said Tom Scott, executive director of the San Diego Housing Federation. 'It would be better for everyone if the price of housing fell.'"

"'We've built a whole economy based on selling each other homes,' Rich Toscano said. 'That's not sustainable.' To illustrate his point, he offered a tour of downtown. Around every corner, it seemed, was another crane putting up another massive condo building. Many will have hundreds of units."

"'I'm surprised we haven't covered all of San Diego with granite countertops by now,' he said."

"The housing category dropping the most in value here, DataQuick says, are newly built single-family homes and new condos. Median prices of these are down 8% since June 2005. Condos for resale are down much less, 2.1%, but sales volume has slumped by about a third. 'There's an 11-month supply on the market downtown,' Toscano said."

"Toscano says that the decline he is forecasting won't happen overnight. When he extends the tour through a number of residential neighborhoods, what's most striking is not the presence of 'For Sale' signs but their absence. 'We're at the very, very beginning of this,' he said."