MarketWatch reports on Bakersfield, California. "Just 12 months ago, this sun-baked Southern California city was one of the hottest real-estate markets in the country. Those days now are dust in Bakersfield's gusty winds. 'Yeah, we miss those times,' Darrell Muhammed, a local agent, said of last year's market."

"Concern mounts that an ever-increasing housing inventory, coupled with coming hikes for variable rate mortgage holders, could send the market south in a hurry. Trouble signs are everywhere. At Lennar Corp.'s Artisan/Terra Vista tract on the city's west side, about 20 homes only a year old are back on the market."

"They compete with dozens of other new houses Lennar is building in later phases of the same development, which agents say makes the older homes tougher to sell. Six of the resales are within view of each other on the same street. 'It's very tough market,' said Joginder Gill, the agent trying to sell one of the six houses. 'If you look at past history, it's going to go way, way down.'"

"Leslie Appleton-Young, chief economist for the California Association of Realtors, said, 'It's been completely unsustainable.' To many, the Bakersfield situation was inevitable. 'Why shouldn't there be retrenchment in housing?" said Stuart Gabriel, of the University of Southern California. 'It's appropriate that housing take a breather.'"

"Gill, the real estate agent trying to sell the home in the Lennar tract, says it was about a year ago that the market started turning. He's about to take over as agent for one home that was put on the market a year ago for $950,000. It, like many other homes, has been reduced several times. He's about to re-list it for $785,000."

"Despite the more competitive climate, it doesn't seem as if builders intend to slow down at all. Jim Eggert, a city planner, says there only are about 300 to 350 fewer building permits taken out throughout Bakersfield when compared with last year. 'They're still out building, but I don't know if they're selling,' Eggert said. 'These prices have to come down a little bit. They have to.'"

"The next 12 months should be revealing, said appraiser Gary Crabtree. 'I do think we're in for a period of some foreclosures in 2007,' Crabtree said. A flood of resold homes could also hit the market. 'It could very well be that some of these people are looking at these interest rate increases and are trying to get out,' he said."

"'It's what I would say is balanced,' said Don Cohen, president of the Bakersfield Association of Realtors. 'You're seeing what I saw in the '90s but you haven't seen since 2000.' Others, however, wonder whether the Bakersfield real estate market..will keep heading down. Agent Ryan McDonald said the jump in inventory is disturbing. 'I don't think it's normalized,' he said. 'I definitely think it's reverted to the buyers.'"

The Monterey Herald. "July was a record month for Monterey County home sales. But it's not the kind of record anyone would want. As prices slipped and sales slowed compared to the previous month, unsold home inventory for July jumped to its highest level yet, and sales slumped by 50 percent over the previous summer's sales volume."

"July's single-family home inventory was at an all-time high of 2,502. Median home prices dropped to $659,000 in July, down from $687,5000 the previous month, according to numbers provided by the real estate association. That median home price for July also slipped behind the median price of $698,000 for the same month a year ago."

"But while prices in Monterey County haven't dropped as drastically as in some regions of the country, the number of homes selling, or not selling, is the most dramatic shift in the local real estate environment. For Monterey County, July's unsold inventory index was 14 months; Salinas was 15."

"Buyers continue to gain ground compared to recent years, some sellers are resorting to incentives to lure buyers in. 'There's a lot of that going on,' said Sandy Haney, CEO of the Monterey County Association of Realtors."

"And skittish buyers, fearing they might be paying too much as prices drop, are becoming bolder in escrow, even asking to renegotiate. 'Sellers don't know what hit,' said Haney, 'and buyers are trying to figure it all out.'"

"(Realtor) Pam Panzis concedes that it's a tough market right now. 'I know there are new agents who are wondering, 'Why did I get into this business?' she said."