The Modesto Bee reports from California. "Clamorous construction sounds are fading in the Northern San Joaquin Valley as the once booming building industry slows. In Modesto, 16 building permits were issued this September compared with 60 in September 2005. 'We look to be in the middle of a correction,' said Steve Madison, of the Building Industry Association of Central California. 'Obviously, we would love to be selling more houses.'"

"Buyers are harder to find now, Madison said, 'so builders are only constructing homes they have an order for' because they don't want to be stuck with unsold inventory. But many of region's builders have finished or near-finished houses for sale at discounted prices or offered with incentives."

"'Builders are giving up (land purchase) options and contracts, leaving money on the table. That's happening all over California,' said consultant GregPaquin, noting that land is being returned to farmers and property brokers."

The Sacramento Bee. "Builders with excess inventory are cutting prices or offering sales incentives. Many are contending with high rates of buyers backing out of sales contracts. About 20 percent of new homebuyers backed out of contracts during the summer, according to Hanley Wood."

"Wells Fargo Bank CEO Officer Richard Kovacevich said he believes real estate prices statewide will stabilize by next spring. 'Buyers 'may be under water 10 percent for a while, but you can ride it through,' he said."

"The shift to a buyer's market has prompted price cuts by several home builders. Centex Homes is advertising $50,000 cuts in Woodland, Elk Grove and Placer County. Sacramento-based JTS Communities has advertised 'liquidation' pricing and up to $200,000 discounts on some homes. Miami-based Lennar Homes has advertised price cuts of up to $80,000 in Antelope and Yuba and Sutter counties."

"'Places with high Mello-Roos fees and high homeowners association fees aren't going to sell,' said Kathryn Boyce, a Sacramento analyst."

The Orange County Register. "Orange County's home prices continued to soften last month as sellers weathered the slowest September in 14 years. It's the third monthly decline in a row."

"'Even though the numbers look like things are not all that bad, we see a storm brewing,' said Greg Norris, a project manager for the Norris Group. 'We see a lot of foreclosures coming, we see prices dropping, we see sellers starting to get desperate.'"

"Coldwell Banker's Mac Mackenzie said he's not seeing any home selling for more this year than it was last year. 'We have to reduce the prices just to get an offer, to make the home sellable,' he said."

The LA Times. "After 90 days, four price reductions and a couple of low-ball offers, Jose Morales withdrew his three-bedroom Riverside bungalow rather than cut his $415,000 asking price, already down from an original $486,000."

"'When my real estate agent told me I should drop the price again, I said 'That's it. We don't have to move,' he said."

"'The market hasn't gone into that desperation mode yet, but we see it as in the earliest stage of the downward pressure on prices," said Economist Esmael Adibi, at Chapman University in Orange."

"He forecasts that a year from now, the supply of Southern California homes for sale could be considerably higher. That's because 'a good portion' of recent home buyers with riskier adjustable-rate mortgages with a minimum payment option will find it difficult to make monthly payments or won't have enough equity to make refinancing worthwhile, he said."

"'How many of this group will be able to get out of a bad situation … if they face payment shock or financial distress and will need to sell?' Adibi asked."

"The Contra Costa Times from California. "Solano and Contra Costa counties, where much of the Bay Area's once-booming housing market soared in recent years, now have the third- and fourth-highest rate, respectively, of foreclosure in California. A year ago, Contra Costa County ranked 11th on the list."

"The numbers are rising at a time when many borrowers who took out adjustable-rate loans years ago are now paying bigger mortgages after the end of introductory rates. 'I think that's the biggest trigger,' said real-estate agent Earl Rozran. 'All of a sudden, payments have jumped a couple hundred dollars.'"

"Statewide, 14,806 properties in September were in some type of foreclosure proceeding. 'I think what we are starting to see in California is the effect of (rising) adjustable-rate mortgages. The whole state has risen pretty dramatically over the last six months,' said Rick Sharga, VP at RealtyTrac.com."

The North County Times. "Foreclosure activity has shown a dramatic increase in San Diego and Riverside counties, far outpacing most of California and the rest of the nation, according to a foreclosure tracking firm. San Diego County had 4,069 properties in some stage of foreclosure for the quarter that ended in September, compared with 970 properties for the same quarter in 2005, an increase of 319 percent."

"Riverside had 4,403 such properties for the most recent quarter, versus 1,297 for the same quarter in 2005, an increase of 239 percent."

"Alan Gin, professor of economics at the University of San Diego, blamed the trend on the region's high cost of housing. 'The housing prices are so much higher here that people got stretched getting into a home,' Gin said. 'If you got into a $600,000 home in San Diego, you're much more likely to default than someone in a $200,000 home in Dallas.'"

"Mark Fabela, director-elect for the board of the North San Diego County Association of Realtors, said the foreclosure increases were because of dropping housing prices. When housing prices decline, some people can't refinance their way out of high mortgages. 'People actually overextended themselves,' Fabela said. 'They get to the point where they can't make the payments.'"

The Daily News. "The state's foreclosure activity has risen more than 40 percent over the last two months. 'I think a lot of buyers unfortunately got into some risky loans that may not have been in their interest,' said James Joseph, (broker) in Whittier."

"Increased foreclosures are a product of a market slowdown, said David Reid, a licensed real estate broker and licensed contractor. The market was moving so fast for a few years that homes would sell before they went to foreclosure, he said. But now that the market has slowed, homes are not selling and are foreclosed."

"In recent years, people had to decide within hours whether or not to buy a home, he said. 'Maybe those who bought the homes stretched because they had to make a quick decision,' Reid said."

The Ventura County Star. "There is a psychological component to markets that is hard to quantify, but it can show up in statistics. In September, Ventura County's median home price dropped 3.3 percent from a year earlier, the first decrease in more than five years."

"Economist Bill Watkins said..the sudden drop in sales that has plagued California's summer selling season probably has more to do with consumer mood. 'They heard so much about a bubble that they are sitting out,' he said."

"Mortgage broker Tino Montelongo said ..there are many people who got used to tapping equity in their homes to get cash, but they cannot refinance because their property isn't worth more today than when it was purchased six months or a year ago."

"Others, Montelongo said, might have owned for a long time, refinanced several times and cashed out all their equity. 'They overextended themselves,' he said."

"Watkins, a Ventura resident, said his advice is not to panic. 'I don't have any property for sale,' he said."