The San Francisco Chronicle reports from California. "Sales of new homes in the Bay Area plunged 35 percent in June, the latest sign the once-strong real estate market continues to stagger. A trifecta of cooling prices, rising foreclosures and tightened credit have forced many builders to slash prices. In addition, some are putting up homes for auction."

"'Many of the foreclosed homes are dumped on the marketplace, and it's skewing values,' said Robert Rivinius, the building group's CEO. 'A lot of builders are already selling homes at the bottom of their price structure ... and so it creates a lot of uncertainty in the marketplace.'"

"'How does demand come back? When prices come down,' said G.U. Krueger, chief economist with IHP Capital, said the deflated new home market is simply one more indication that the market had run amok and is now returning to some equilibrium. 'Prices went way ahead of themselves relative to the incomes of the consumer, and price increases could only be maintained with exotic financing.'"

The Press Democrat. "Peggy and Charlie Della Maggiora have Oregon on their mind, building a retirement home on five acres by a creek near Grants Pass. But they remain tethered to their Rohnert Park home, now languishing on the glutted, glacier-slow Sonoma County housing market."

"'Here we are, kind of stuck,' Peggy Della Maggiora said, with a for-sale sign planted in front of their four-bedroom home. 'We’d love to be up there.'"

"As inventory piles up and anxious sellers whittle down their prices, buyers — now in the driver’s seat — comb the ample offerings and, in many cases, sit on their hands, anticipating even better deals to come."

"'It’s not a bad market, just a little slower,' said Greg Wilde, who is relocating from Windsor to a new job in Orem, Utah and faces the unappetizing prospect of carrying mortgages on two homes."

"He’s cut $20,000 from his initial price of $559,900, tacked on a $5,000 'seller contribution' and offered a $1,000 finder’s fee. 'We’ve had plenty of lookers but no offers,' said Wilde."

The Santa Cruz Sentinel. "Gary Gangnes of Real Options Realty, calculated the unsold inventory index for Salinas, where the bulk of Monterey County's foreclosure sales are taking place, as 26.7 months. Watsonville: 203 listings and an average of six sales a month."

"At Vista del Mar, a condo complex completed last year near Auto Center Drive, developers have sold only half of the 102 units, with another 20 in escrow. They are cutting prices up to $50,000 and offering a lease-to-purchase option to generate sales."

"'The buyers are out there, they're just waiting for the prices [to drop],' said Aldina Maciel, a real estate agent in Watsonville."

From Sanluisobispo.com. "'We are seeing many programs disappearing, which is making it very challenging for some borrowers to get the kind of financing that would have been available to them a month or two ago,' said Kevin Hauber, a loan officer in San Luis Obispo. 'The availability of jumbo loans, particularly for specialty situations like stated income, stated assets or anything to do with an unusual property, has been impacted pretty significantly in the last few weeks.'"

"The hardest-hit segment in terms of price is new homes. The median price of new homes is down more than $100,000 year over year — or 17.5 percent. The median fell to $480,000 last month from $581,500 in July 2006."

The Fresno Bee. "Housing construction continues to struggle in parts of the central San Joaquin Valley as builders contend with stiff competition and an abundance of homes for sale."

"'The market is terrible,' said Mitch Covington, president of the Building Industry Association of the San Joaquin Valley. 'We have inventory, a little bit of traffic and can't convince [buyers] that it is a great time to buy.'"

"Many established builders, faced with more competition from other developers that flocked to the region during the real estate boom, and with a glut of used houses on the market, have been cutting prices and offering free swimming pools and appliances to boost sales."

"'Maintaining profitability is a challenge for some builders given the demand for incentives and lower prices in this down market. But because of it, many builders are willing to offer very good deals,' said Stan Smiley, senior managing director for Hanley Wood Market Intelligence."

The Press Enterprise. "Property tax reductions for more than 11,000 homes that have seen a drop in value were announced Wednesday by San Bernardino County Assessor Bill Postmus. The reductions come as home sales have slowed and foreclosures are on the rise in the Inland region."

"The new assessments represent a drop of more than $238 million in value in San Bernardino County and $610 million in Riverside. Officials are keeping a close eye on the value of property and said they expect to see even more value reductions. 'We are in the process countywide of going into a major devaluing of home values,' Postmus said in an interview."

"Areas of Temecula, such as the Wolf Creek community, as well as French Valley, Murrieta, Hemet, San Jacinto, Indio and Eastvale were hit, Swain said. 'A whole lot of quick expansion and tracts were going up quickly,' said Frit Swain, an assistant assessor for valuation. The office reduced assessments on 31,333 properties."

"'You are going to see this as a pittance compared to what this year's numbers are going to be,' Postmus said."

"June sales at Inland new-home communities were down 23.1 percent from a year ago, reflecting a statewide drop of 26.2 percent amid a slump that began in early 2007, the California Building Industry Association reported Thursday."

"'In some neighborhoods, the builders are putting more into the newer houses and selling them at the same price as the older ones,' said Frank Williams, CEO of the Building Industry Association's Baldy View Chapter. 'You don't want to devalue a neighborhood.'"

From USA Today. "It's not just cash-strapped and newbie buyers who are getting rejected. The credit-tightening is also cutting off prime buyers in high-cost cities who often need to borrow more than $417,000."

"'We had a buyer, a doctor with an 800 (point) credit score, a down payment of more than 20%, and the (lender) backed out at the last minute,' says Lisa Gregory, an agent in San Diego, who represents the seller. 'We were stunned.'"

"The qualification hurdles are so bad in California, where the median single-family home costs about $595,000, that a record number of sellers are offering to lend money to their buyers in the form of second mortgages. From April to June, almost 5% of home sales in the state had seller mortgages on them. Three years ago, less than 1% of sales had seller 'carry back' financing, according to DataQuick."

"Larry Underhill, an agent in Stockton, Calif., says he's seeing homes go under contract two or three times. Each time, he says, the deal craters, because 'Buyers can't qualify, or buyers are understandably cautious. They see property values sliding and are saying, 'Why am I doing this?'"

The Union Tribune. "As the nationwide credit crunch continued to shake Wall Street and the lending industry yesterday, the California Association of Mortgage Brokers urged Congress to give a financial break to the state's home buyers."

"Leaders of the trade group asked federal lawmakers to declare California a 'high-cost' state and raise the limit on the size of loans that can be purchased or guaranteed by Fannie Mae and Freddie Mac."

"Ed Smith Jr., the group's vice president of governmental affairs and industry relations, said consumers should 'knock down the doors of their (federal) legislators to get the limit increased.'"

"Critics say raising the limit could prevent inflated housing markets from correcting."

"'We should be worrying about the soundness of the mortgage financing system and ways to root out some of the abusive practices we've had,' said Lloyd Irland, a Maine-based economist. 'Now we are being asked to adopt policies that will ratify these inflated housing prices.'"