The New York Times reports on the collapsing housing bubble. "In California, the Northeast, South Florida and parts of the Southwest, deal sweeteners are playing an increasingly important role in supporting home prices. From large national home builders to individual homeowners, many sellers are offering thousands of dollars in perks, including straight cash, so they do not have to slice deeply into asking prices."

"The use of rebates helps home builders and individual sellers by making the real estate market look healthier than it may truly be and by preventing a snowballing decline in home prices. It also keeps commissions for real estate agents higher than they would otherwise be."

"Economist Mark Zandi estimated that incentives might now be equal to as much as 3 percent of the effective prices of houses across the country. But he and other economists said there was simply no way to know for certain. 'We don’t have any house price indexes that get it right,' said Todd Sinai, at the Wharton School. 'Sellers are..not willing to lower prices enough in downturns; they don’t do it very quickly.'"

"Incentives are most common in the new-home market, where builders are under financial pressure to sell empty homes and have the ability to absorb the financial hit. Executives at the nation’s biggest builders say the giveaways can equal 3 percent to 8 percent of a home’s sale price. If builders instead reduced asking prices by that much, it would be enough to wipe out the year-over-year price gains in many markets."

"'If you were going to sell the house exactly the way it was before, you would be looking at a price decline,' said David Seiders, chief economist at the National Association of Home Builders."

"Consider a three-bedroom house not far from the Golden Gate Bridge, in San Rafael, Calif. Reluctant to cut the price from its current listing of $1.54 million, its owners are instead offering a weeklong vacation time-share, every year for life, worth about $10,000, or an equal amount toward lease of a car."

"'Location and value will give the buyers a reason, this will give them a sense of urgency,' said Tom Wessling, who owns the house and is being transferred to Atlanta. The Wesslings have cut the price of their house twice, by a total of $160,000, since they put it on the market in May. Mr. Wessling believes the home is now 'competitively priced' and hopes the perks, which also include a $10,000 reward for referring a qualified buyer, will be enough to clinch a deal."

"On the west coast of Florida, builders are advertising incentives totaling $40,000, or 6.6 percent to 8 percent of the sales price, on homes that sell for $500,000 to $600,000, said John Dew, a real estate agent in Naples. Builders tend to choose discounts because they worry that reductions in the list price would send a clear signal that the market is in trouble."

"'They already sold the same product to the guy next door and if they reduce the price he is going to scream,' Mr. Dew said. He added that many builders were also offering agents bonuses worth tens of thousands of dollars in finders’ fees for bringing in buyers."

"Mr. Zandi said he believed that the use of perks was now approaching its peak and that sellers would soon be forced to cut list prices more heavily. He predicted that the home-price data released by the Realtors association would show a year-over-year decline, relative to the same month a year earlier, before the end of this year. If so, that would be the first such drop since 1993. The Realtors have never reported a drop in the annual average of national home prices, a fact frequently cited by real estate analysts."

"'The reason the Realtors’ data has never showed an outright decline' before, he said, 'might be that they’re not measuring the effective price.'"

"In effect, the incentives have become a quiet way to cut the price of houses without further damaging the market. Sellers 'don’t want to create this environment of fear in the market that prices are going down, so you should wait to buy,' said Dean Baker, co-director of the Center for Economic Policy Research in Washington, who believes that prices will fall in coming years."