The Arizona Republic has this update from Phoenix. "Home builders had a chance to buy a prime piece of land in northeast Phoenix's Desert Ridge development Tuesday. But sticker shock kept them on the sidelines. No builder or investor was willing to pay the Arizona State Land Department's $150 million asking price for the 325-acre parcel of state land near the busy intersection of Loop 101 and Arizona 51."

"For the past few years, land in Desert Ridge sparked bidding wars as home prices and sales in the area soared. But the market has changed dramatically since then. 'The real estate market is in transition, and land sales have obviously slowed down,' said Mark Winkleman, state land commissioner."

"He said the Desert Ridge land was appraised at nearly $462,000 an acre early this year based on last year's nearly record sales prices. The state agency is working now to get the 325-acre parcel reappraised based on today's less-frenzied housing market. The prices on the parcels are bound to go down."

"'I am not sure appraisals mean much now because everybody is scratching their heads trying to figure out where the bottom of the real estate market is and if we have hit it,' said Michael Lieb, a land broker who worked with Gray Development in January when it paid $33.4 million for 32 acres in Desert Ridge. It was one of several bidders at a competitive standing-room-only auction where the opening bid was upped 43 times."

"Only a handful of home builders and real estate brokers showed up to watch the auction Tuesday. Even in June, when there were only a few bidders for two large pieces of state land in Peoria, the auction auditorium was packed. More than 50 builders, brokers and investors showed up for that auction, trying to gauge the future of the real estate market based on the bidding."

"Home builders went on a buying spree last year when a record $7.7 billion was spent on residential land across the metropolitan area. Instead of buying land now, some home builders are trying to sell sites to other builders or are even walking away from deposits on big parcels. Analysts have begun to question the amount of land home builders bought last year and what they are going to do with it now."

"Builders have been hurt by higher mortgage rates and deals that have fallen through when potential buyers are unable to sell their existing homes. Construction of new homes across metropolitan Phoenix is down 19 percent from last year's record pace, according RL Brown's Phoenix Housing Market Letter."