The Galveston Daily News has this update from the coast of Texas. "When Jay and Stacey Torres put their island home up for sale in February, they expected to cash in on a market where prices were soaring and buyers were engaging in bidding wars. 'We expected it to fly,' Stacey Torres said. But nearly seven months later, their Market Street house still is for sale. The couple even reduced the price from $280,000 to $265,000."

"After a giddy market last year, when some Galveston sellers were reporting profits of more than $200,000 on sales of $640,000 homes, is the party over?"

"With hundreds of 'For Sale' signs on the island, there’s no denying the hangover. And there’s no denying buyers have the upper hand. 'It’s the slowest many of us have ever seen,' said David Bowers, a Realtor in Galveston. 'A lot of people felt like the market was so overpriced, and a lot of people have lowered their prices.'"

"To add insult to injury, existing Galveston homes are competing with new and less expensive homes on the mainland, where builders are upping the ante, offering everything from $10,500 off the purchase price to free media rooms and appliance upgrades."

"So is there reason for alarm? 'I would characterize it as a cooling, not as a catastrophe,' said D’Ann Petersen, (at) the Federal Reserve Bank of Dallas. said. 'More people are taking a little longer to look and make decisions. They’re asking for more things, and builders are giving it to them.'"

"'In Texas, the ready availability of land and low entry costs attract homebuilders, creating a competitive marketplace that keeps a lid on price increases,' Petersen said."

"Galveston has never been like the rest of Texas. While Houston prices remained relatively stable last year, island prices soared. Out-of-state speculators were buying property, site unseen, and flipping to the next buyer. At the same time, land tracts available for development on the Texas coast are becoming scarce."

"In 2005, the median price of a home in the Galveston MLS was $162,300 compared with $99,800 in 2000, a nearly 63 percent jump, according to Texas A&M University."

"As prices soared, so did property taxes. Then came island flight. Hundreds of residents, either hoping to cash in on soaring prices or flee soaring property taxes, hammered 'For Sale' signs in their lawns and waited. Some are still waiting."

"Between Sixth and 45th streets, there are 82 homes for sale with prices more than $200,000. But only two sales are pending. Year-to-date, for the same area and price range, 14 homes have sold compared with 26 for the same period the year before, Bowers said."

"Sales also are lagging on the once sizzling West End, where there are 328 homes priced above $200,000 for sale, with only 15 sales pending. Year-to-date, 154 homes in that price range on the West End sold, compared with 182 for the same period last year."

"Builders continue to push ahead in Galveston County, receiving 3,148 permits for single-family homes in 2005, compared with 2,235 in 2000, a 41 percent increase. Trophy Homes, which is building in League City, is offering 6 percent discount on the base price of a home, up to $10,500 on homes with prices that start in the $120,000 range. Buyers also can choose from a variety of upgrades."

"Sellers of older homes, or even 3-year-old homes in new subdivisions, might have to offer incentives to compete with sellers of new homes. 'If you want to compete in the market, you’re going to have to compete not on the list price, but on the net price, after you factor in incentives,' said Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University. 'Or be prepared to give incentives.'"