The Washington Post has this update on the DC area. "A giant development company is withdrawing its offer to give a Virginia town an unprecedented amount of money in exchange for approval to build a subdivision, citing the cooling housing market for the change of heart. Centex Homes said it can no longer afford to offer Warrenton $22 million, almost half the town's annual budget, to approve 300 luxury homes for seniors within its borders in Fauquier County."

"'It was possible to consider such [an offer] as remotely feasible only in a rising market,' wrote Robert K. Davis, the company's division president. '[We] would not have made that agreement had it been possible to predict the timing of the current residential downturn.'"

"Centex officials declined to comment beyond the letter. Warrenton officials said they will continue to negotiate with the company. 'The tooth fairy brought us a lot of money,' said John Lewis, a Town Council member."

"Last month, Centex defended the concessions, which industry specialists called a bribe, saying they were the 'cost of doing business' in Virginia. In this week's letter, however, Davis said the compromise would be an untenable loss because it 'represents a 56 percent decrease in the potential yield of the property.'"

"The outlook for home sales has changed in recent months. Home prices in the Washington area declined this summer for the first time in five years, and some economists predict that the trend may deepen in the coming years."

The Washington Times. "Strong demand for rental housing in the Washington area is making developers who switched their apartment buildings to condominiums during the red-hot real estate market rethink their business strategies."

"About 25 percent to 40 percent of the housing units being built as condominiums instead will be sold as apartments in the next 18 months, according to Marcus & Millichap. In addition, some apartments that were converted to condos are likely to be switched back to rentals."

"The cooling market is creating concerns among Washington-area real estate developers who were betting their investments on condos. 'We have clearly entered a period in which the supply of condominium housing exceeds demand, particularly in certain submarkets where significant development has occurred over the last two to three years,' said David DeSantis, for developer PN Hoffman. 'It is not clear at this point how long the oversupply condition will last.'"

"Other developers do not want to wait for their condominium markets to improve, preferring instead to auction their projects to the highest bidder. 'We've noticed a definite surge in calls from developers in the D.C.-Baltimore area who are looking for a way to sell units they thought would be long gone by now,' said Carl Carter, of J.P. King Auction Co. 'Some tell us they're being hurt by ongoing costs like interest, taxes, maintenance and marketing costs they didn't plan for.'"

"Some of them built condos thinking they would sell promptly but did not plan for a slumping market. 'Now they want to stop the bleeding, recover their investment and move on to the next opportunity, and an auction lets them do that,' Mr. Carter said."