A housing report from the Christian Science Monitor. "Six months ago, the 1920s-era Southern bungalow in Atlanta's Kirkwood neighborhood probably would have sold at its full price asking price of $325,000. But after playing hardball with the seller in the past few months, Phil Hagedorn and his fiancée got the price down by $25,000. And the seller paid the closing costs."

"'I had a gut feeling that [the price drop] was going to happen,' said Mr. Hagedorn."

"To make houses more affordable, developers are agreeing to upgrade kitchens free of charge, make the first year of mortgage payments, and pay closing costs. Incentives and deals vary around the nation, says Michael Lerner, president a national builder based in Chicago."

"'In Sarasota, buyers are looking for the best price. In Miami, it's upgrades to the kitchen and bathroom and help on closing costs. In Phoenix, prices have been rolled back to 2002 levels to clear out inventory,' he says."

"Even in some of the hottest markets, such as New York, prices are falling. They're now at the same level as 1-1/2 years ago, estimates real estate broker Christopher Mathieson, a principal at JC DeNiro & Associates."

"On the other hand, the market has turned quite difficult for people who bought homes to renovate and resell, or 'flip.' 'You see a lot of houses where they do renovations that are the least expensive: They use builder-grade everything, and then they find out they can't sell them because they're not what people are looking for,' says Sara Jane Klingaman, part owner of Ten Fingers Unique Restoration in Atlanta. 'So the houses sit and sit and sit until the price drops enough that somebody's willing to buy it despite the renovation.'"

"'No offer is ridiculous. There are a lot of 'For Sale' signs along with a lot of new construction, and we think that's ... making sellers nervous,' says Maria Azuri in Atlanta. 'So we're seeing sellers doing more to make it possible to sell, including lowering the price, and even offering to do a 1 percent buy-down on the mortgage interest.'"

"'There are now deals where, if people qualify for a 6 percent loan, they get a little freebie because the seller comes to the party and brings in some extra money to supplement the buyer's payments for the first two years,' says John Baen, a real estate expert at the University of North Texas. 'For the buyer right now, it's win, win, win all over the place.'"

"However, even falling prices may not be enough to stabilize some markets that have seen skyrocketing appreciation and development. For example, in Palm Beach County, Fla., the median home price has appreciated 148 percent since 2000."

"But the biggest damper on the Palm Beach market, Jack McCabe says, is a 47-month supply of houses based on the current selling rate. 'It's the highest level in our history,' he says."

The New York Times. "Credit counselors are finding that mortgage debt is playing a bigger role in the deteriorating financial health of consumers contemplating bankruptcy." "'Consumers are upside down financially,' said Susan C. Keating, chief executive of the National Foundation for Credit Counseling. 'Those who are considering bankruptcy have unsecured debt well in excess of their annual income.'"

"She said many counselors reported that their clients were delinquent on their mortgages, with some reporting that 100 percent of their clients were delinquent."

"The organization's counselors had reported a brisk increase in the number of clients who are concerned about the rising costs of their adjustable-rate mortgages in particular, she said. Rates have climbed in recent years, leaving borrowers with ARM loans vulnerable to sharply higher monthly mortgage payments."

"'Mortgage debt is coming out as much more significant than we expected,' Keating said. 'Pull this all together with the other unsecured debt people have, and this is really problematic.'"

"'People have literally picked up their house at the foundations and shook it upside down like a piggy bank,' said Ed Smith, CEO of a a mortgage brokerage firm in La Mesa, Calif."

"Since January 1999, according to figures compiled by Alan Greenspan and James Kennedy, a Fed staff economist, more than $2.62 trillion has been extracted by homeowners through refinancing and home equity loans."

"But as rates have gone up, the extraction has continued. In the first six months of this year, even with interest rates rising, more than $511 billion was extracted from homes through cash-out refinancing and home equity loans, and that was more than the amount taken out for all of 2005, a record year for mortgage equity extraction."

"There is another change in the market that could block a homeowner’s desire to borrow against the increased value of the home. 'Lenders are being very cautious today as they do appraisals,' said Patty McGill, president of a mortgage brokerage in Frederick, Md. 'They are scrutinizing appraisals so they are not lending on phantom equity.'"