The Kingman Daily Miner reports from Arizona. "Headlines around the country are portraying the housing market as 'gloomy,' 'hopeless' and, for those non-sensationalists, 'slow.' If the market continues to stagger, which is the assumption given the abnormally stellar market of the past two years, construction of new developments, homes and subdivisions aren't likely to increase."

"If fewer people are buying homes, fewer new homes will be built and the mass influx of developers who've migrated to Kingman will leave. Some Kingmanites predict that the hordes of realtors and builders who inundated the growing city to earn an extra buck will filter out as the housing market continues to slow."

"By year's end, John Kirby, sales manager at Angle Homes Inc., is expecting a 20 percent decrease in the number of new homes the company builds. And right now, he said, because the market is flooded with builders, his outlook on 2007 isn't positive."

"'It'll be interesting to see who's standing when the dust settles. It's just who was smart with managing their resources when the market was good,' he added."

"Exactly how much the market has slowed has been a controversial topic as homeowners and constituents increasingly fret over plummeting home values. To claim, as many realtors and market analysts have on the national level, that buying a home right now is a bad idea isn't necessarily the same perspective held by local Realtors."

"National statistics are far worse than numbers the Southwest region is putting up, one realtor said. Bob Bass said, 'Kingman is still doing pretty well compared to everybody else.' Prices are falling, and interest rates are respectable. 'Its an excellent time to buy a house right now,' he said."

"For those residents worried about home value, the message Realtors are sending is that the heavenly market of the last few years was abnormal. 'We definitely saw in the last couple of years a fluke in the market, as far as how it took off,' said Bass. 'The type of buying and selling that was happening, the increase in price, that wasn't normal at all,' he added."

"The average price of a single-family home on the market in Kingman this year is $249,843 and falling, according to data collected by Todd Tarson, president of the Kingman/Golden Valley Association of Realtors. Drop $13,000 from that for the October average. September's average asking price fell below October by nearly $11,000."

"The big difference was realized in the selling price, which on average was $40,000 below the yearly asking price, according to Tarson, whose data includes Valle Vista, Kingman, the Hualapai areas and Golden Valley. Between September and October, the selling price fell $20,000 to $201,250 for the average home."

"'Everybody's sitting here ready to hit the panic button,' Kirby said. But Kirby's not going to be the one to push it. Angle Homes hasn't had to slash prices, although it has lost some employees."

"Angle Homes, which has been in Kingman since 1996, kept everything in-house during the last few years of a bustling market. To hope for anything to continue like that would only postpone, and likely worsen, a future market crash."

"The question all Realtors have come to abhor is, how long will this downward trend last? There have been some analysts who've made predictions about when the market will recover, but Realtors in Kingman have mostly kept quiet."

"To make such a prediction, given the large number of factors...would be idealistic at best. And one factor, the number of quality jobs, is another significant determinant of how many people are out buying homes. Without adequate paying jobs, people aren't going to buy."

The Arizona Republic. "Since coming to Phoenix 1976, I have been fascinated (strictly as an observer and not at all as an investor) by housing price trends."

"For the past year, newspapers, including the Republic, have run repeated articles that make two points: the housing inventory (supply) has seen a dramatic rise (from 3,000 units to over 35,000 units in Phoenix) while median housing prices have not fallen or even have continued to rise."

"Yet, with a couple of minor exceptions, there has been scant attempt to explain this apparent contradiction of the law of supply and demand. This shrugging of shoulders is particularly curious because the explanation is not a difficult one."

"It is the lumping together of all houses into 'one inventory' that misleadingly hides that housing prices are falling, and perhaps by a substantial amount (and not by the mere 3.5% most recently reported)."

"By way of illustration, assume that: (i) in 2004, 100 houses sold and the median price was $250,000, meaning half sold above that amount and half below; and (ii) then in 2005, again 100 houses sold and the median price was 10% higher or $275,000–does that mean housing prices went up? Absolutely not."

"Here’s why: If in 2004, 50 houses sold for $249K and 50 sold for $2 million, the median would be $250K; and then if in 2005, there were 49 houses that sold for $220K, one for $274K, and the other 50 for $1 million, and, assuming the 100 houses in 2004 were comparable in every way to the 100 houses in 2005, the overall median housing prices would rise 10% from $250K to $275K while, in reality, the price of all but one house would have fallen dramatically."

"Another way to state it is this: As the ratio of expensive homes to lower-priced houses sold increases, median prices over the entirety of the housing stock will rise even if prices on all individual houses are falling."

"The bottom-line is that misleading metrics should be avoided, and it is wrong to use median house sale prices to reach any conclusion about price trends in housing values. The bad news: Median housing prices likely are understating the severity of the housing slump. The good news: The Fed likely is not looking at median housing prices in assessing the severity of the housing slump."