The Union reports from California. "Grass Valley's median home price fell to $350,000 in December, down 20 percent from $439,000 a year earlier. The local market is in a normal downward side of the latest upward cycle, said Skip Lusk, executive director of the Nevada County Board of Realtors."

"'The bubble doesn't burst,' Lusk said. 'It just kind of deflates gradually.'"

"Medians in neighboring counties are dropping more steeply. The Placer County median dropped nearly 16 percent to $430,000 from $510,250 the year before. Sacramento County's median dropped 9 percent to $352,168 from $387,000 a year before, DataQuick reported."

"'It's my opinion that, probably, our median price is not going to go down significantly,' said Joan Lehman, broker in Grass Valley. 'Our area is different from other areas down there. They have so many new homes, and when they don't sell, builders give all kinds of incentives.'"

From CBS 5. "The ripple from a slow housing market consumes a different victim almost daily. In the Belavida subdivision in Elk Grove, brand new homes sit for months. Desperate to avoid still more losses, home builder Standard Pacific sent upgraded model homes to auction last Saturday with a bargain price tage."

"'These homes are priced well below anything in Elk Grove,' said Keith McLane of West Coast Home Auctions. 'The seller is looking to sell 6-homes very quickly.'"

"They sold alright: a 4 bedroom home went for $440,000, a good $150,000 less than it sold for 18 months ago."

"Manuel Dizon and his neighbors are now worried about their property values. 'It hurts because if you bought it for 580 (thousand dollars); what are you going to do in 2-years?,' Dizon said. 'If you have a 2-year fixed on your house and you to refinance your house and you don't have value in the house.'"

"With so many homes on the market, it's almost impossible to sell your way out of a crisis like that. Consequently a record number of homeowners are going into foreclosure."

"Appraiser Amy Perkins says that ripple has left major banks and mortgage lenders with staggering losses. 'There weren't any short sales, very few for the last 3 years in a row,' Perkins said. 'And within a 20 mile radius I've been seeing 300 or more.'"

The Contra Costa Times. "The East Bay's employment market remains the Bay Area's star performer, but the relentless erosion of the housing market could tarnish the region's economic luster and darken the job outlook, a new report warns."

"Economist Ryan Ratcliff of the Anderson Forecast suggested real estate will impede the East Bay economy this year. 'We've only seen the beginning of the East Bay real estate slowdown,' Ratcliff wrote in his report."

"'Like many other regions in California, real estate has gone from pulling the economy forward to actually holding it back, it's just taken longer to happen in the East Bay than in most other parts of the state,' Ratcliff wrote in his study."

"'Since Contra Costa County has been the center of gravity for the building boom, this suggests that we've only seen the beginning of the East Bay real estate slowdown,' Ratcliff warned."

"Still, some economists such as Sean Snaith, a consultant with the Stockton-based Business Forecasting Center at University of the Pacific, say the fallout from the housing slump, as well as the slump's extent, has been overplayed by economists such as those with the Anderson Forecast."

"'It was not a housing bubble, but a housing soufflé,' Snaith said. 'If some of the key ingredients in the soufflé were missing, it would go flat. But it was not a bubble.'"

The Press Democrat. "By next year, the Third Street Cinema theaters in the heart of downtown Santa Rosa may give way to a 14-story condominium called the Comstock. Sales prices for the 116 units will run from the 'high 300s to $1 million for some of the penthouse suites,' said Mike Marovich, a spokesman for West Bay Builders."

"Marovich said the Comstock will house about 200 people in one- to three-bedroom units ranging from 600 to 2,000 square feet. He said there is trepidation about spending upward of $60 million in a city with an untested high-rise market."

"'Our gut and intuition, however, tells us there is a there, there,' Marovich said."

"California's housing slump resulted in part from conflicting expectations of buyers holding out for better deals and sellers still seeking a premium for their homes, a state Realtors group concluded."

"Association President Colleen Badagliacco said the role of real estate agents during that period was to try to educate sellers that the market had changed. But it took from two to six months for that message to sink in."

"'They remember that their neighbor sold their house, just to pick a number, for $800,000 four months ago,' Badagliacco said. 'In their mind then, the house is worth $800,000. The agent has to be the voice of reason.'"