The Philadelphia Inquirer reports from Pennsylvania. "A few projects may have been canceled or, in the words of some developers, 'repurposed.' But it seems that the condo-sales market in Center City fared better during the 2006 real estate slowdown than markets did in Washington, New York, Boston, Miami and Las Vegas, according to economists, developers and local real estate agents."

"Among the projects canceled last year were Marina View Towers on the Delaware River and a 57-story condo tower at 15th and Chestnut Streets. In December, South Bridge closed its sales office and returned deposits. The developer declined to comment on new plans for the building 'until after zoning,' spokesman Mike Lizun said. Reports are that the gutted building could become luxury rentals."

"Center City condo conversions the last couple of years have taken 1,500 apartments off the market, not including the two Reinhold projects."

"Sales at the Residences at Dockside, which went condo in early 2006, have been slower than anticipated. Still, said Donna Bartynski, COO of Dockside's developer, 'we remain highly confident in our decision to convert Dockside to condominiums.'"

"By one estimate, 42 projects and 15,000 new condo units were proposed for Center City three years ago. The new reality suggests that 1,000 units will be added each year between 2007 and 2012."

"'Fortunately for Philadelphia, we did not start many projects and, therefore, do not have to make the decision to switch to rental,' said Allan Domb, a veteran player in condo sales and development here. 'The benefit of not starting many of our projects will help tighten the market eventually and cause us to probably have the softest landing of many major markets.'"

The Morning Call from Pennsylvania. "Kevin and Jen Graney liked the spacious house on a half-acre in Bethlehem Township, but not the $500,000 asking price. So they offered $30,000 less than the list price, and last month, the seller accepted."

"The Graneys' experience reflects a shift in the housing market in 2006. Home buyers regained a flexibility to negotiate that had been lost in the boom years of 2004 and 2005. The seller gladly accepted the offer of $470,000 because the home had been on the market for more than a year. Other offers, including one for $525,000, had fallen through."

"'People are thinking twice about how much more properties can appreciate in value,' said Stephen Thode, at Lehigh University. 'Rather than committing to that jumbo mortgage on the bigger home, they are saying, 'I think I will stay put for a while.'"

"The slowing pace stemmed partly from the large number of homes offered for sale. New listings outpaced home sales by nearly two to one last year. The local housing stock has swelled, with the construction of dozens of new subdivisions in the last 10 years. The bigger supply of available houses allowed buyers to be more selective, which in some cases depressed prices."

"Real estate agents in the Valley spent much of 2006 trying to convince sellers that the market had shifted in favor of buyers. Many say sellers still wanted to set asking prices that were too high for the market."

"'I worked with quite a few sellers who did not really care that people were saying the market was sliding,' said Ellen Shaughnessy, an agent in Easton. 'They still wanted to price their homes at a premium despite what was starting to happen. Some of those [homes] are still there.'"

"At the same time, real estate agents say many buyers have falsely assumed the market is in free fall, and have submitted offers that grossly undercut asking prices."

"Real estate agent Loren Keim said his Allentown firm put five properties priced at $500,000 on the market at the end of the year. All the properties received offers between $350,000 and $360,000, or 30 percent less than listing prices. Virtually no seller is going to accept an offer so low."

"Typically, homes in the Lehigh Valley appreciate about 5 percent a year. But since 2000, average prices have soared a total of 80 percent."

"New homes have been a big draw for people moving here from New York and New Jersey. The average price of a new home surpassed $400,000 for all but two months last year. 'You will have this natural momentum toward higher-priced homes because there is more of that inventory as a percentage of the total market,' Thode said."

"Real estate agents say, for example, that homes priced at less than $200,000 continued to sell quickly. The same can't be said of the higher-priced homes on the market. 'Over $300,000, it is really slow,' said (broker) Jack Gross in Bethlehem. 'Things are not flying off the shelves.'"

"In the previously hot Palisades school district in Upper Bucks County, home prices fell 12 percent last year to $465,812, and the number of homes sold dropped 25 percent."

"Keim said people are hesitating before buying because they don't want to get caught in a falling market. But he said it's a misconception that the market is falling. 'I don't see a drastic drop-off in the market,' said Keim."