The Dallas Morning News reports from Texas. "North Texas home sales plunged in September. The 19 percent drop in sales of pre-owned homes was the largest such decline in more than seven years. Local real estate agents sold only 6,031 pre-owned homes last month. That's a big fall-off from August's 8,480 sales and the lowest monthly total since February."

"At the end of September, almost 49,000 pre-owned single-family homes were for sale in North Texas - an increase of about 4 percent from a year earlier. The outlook for October sales isn't promising. At the start of the month, the number of pending home sales in the pipeline was down 17 percent."

The American Statesman Statesman. "Richard and Andrea Flinchbaugh are building a bigger home in Round Rock and are trying to sell their home in the Forest Creek subdivision. It has been on the market since May, and they've dropped the price from $525,000 to $450,000. They're getting worried that they'll be saddled with two mortgages, now that their new home is near completion."

"An investor bought a home in January in Northwest Hills and sank a sizable sum into extensive remodeling before putting it on the market in June. It hasn't sold, and he's antsy. He recently cut the price by $45,000 to $930,000 and unfurled a giant banner that declares: 'Owner says: Bring Me an Offer.'"

"Across Central Texas, the number of homes for sale is growing and sales are slowing as national mortgage troubles begin to spread into the region's still-healthy market. In August, 9,819 existing homes were for sale, a four-year high, and sales were down 10 percent, the third monthly drop in a row."

"'This is just the tip of the iceberg. We would be naive to think that if states like California, Nevada, Florida and Michigan have the flu, or maybe worse, that we couldn't also catch the flu,' said Ed Solter, a broker with Presidential Mortgage."

"'The overall negative national news is impacting the (local) buyer's psychology,' said Eldon Rude, Austin director of the real estate research firm Metrostudy. 'It makes people more hesitant to buy now.'"

"The Flinchbaughs thought their home would sell quickly. Their new house, in the Lake Forest subdivision across the street, has five bedrooms and 5,600 square feet and will be ready in two weeks."

"Richard Flinchbaugh said the mortgage situation might be a factor in how long it's taking his home to sell. But there is also a large supply of new homes in the area, he said, making competition tougher for resales."

"'In the last three or four years, people were going nuts with building and buying, and it's just finally slowing down. It had to slow down sometime,' said Flinchbaugh."

"'Everything right now is sitting,' said Michelle Perris, the broker...who has the Mesa Drive listing. 'There's a nervousness in the market. People may get scared when they hear what's going on in California or Florida, even though the economy here is strong. People think that the prices are going to go down, so they are waiting.'"

"The reflection of the national picture is glaring in such subdivisions as Briarcreek in the Manor area. Sales have fallen from 25 to 30 a month to about five, developer Dick Rathgeber said. Rathgeber said 70 lots remain in the development's first phase, which is about a year's supply at the current sales pace. Before the mortgage crisis, 70 lots would have been about a three-month supply, he said. So Rathgeber has put the next section, with 220 lots, on hold."

"'We haven't gone ahead because of the uncertainty in the market,' Rathgeber said. 'All the big builders are hurting.'"

"'Our industry got spoiled with all the 'no money down, no income' thing that consumers, I think, took it for granted, or that down payment and income requirements were a thing of the past,' said David Reed, president of CD Reed Mortgage Bankers in Austin."

"'The foreclosure pace may be slowing in the Austin metro area, but the road is still very long,' said said George Roddy, president of Foreclosure Listing Service Inc."

"He noted that most postings for October were on loans originated in mid-2003. 'So without even considering the subprime factor in this equation, a tremendous amount of financing and refinancing has taken place during the last four years. That's a strong indicator that we will continue to deal with this fallout for at least three to four more years in the Austin area, if not longer.'"

The El Paso Times. "On the first Tuesday of every month, the county auctions foreclosed properties. On this Tuesday, about 40 people have gathered at the courthouse, hoping to bid on the house of their choice."

"Rosa Sanchez is able to score the highest bid on a house on the foreclosure list and up for auction. 'The house is worth $125,000,' she said of the four-bedroom, two-bath house for which she bid $80,000."

"From July 2005 to June 2006, Texas led the nation with 36,362 foreclosures, a study by the Texas Department of Housing and Community Affairs shows. In May 2006, Dallas had the highest number of foreclosures with 6,107, while El Paso had 476 foreclosures, about 8 percent of Dallas' total."

"In 2005-06, El Paso had one foreclosure a month for every 1,861 mortgages in the county, the study found."

"Realtor J.R. Fletcher said one reason foreclosures are up in Texas is that many people took out adjustable-rate mortages, for which payments can increase. He said that one client's mortgage started with a 7 percent interest rate that but after a few years, the rate was 15 percent."

"'So after a few years, people think they're going to have a nice payment of $600 a month. But the adjustable-mortgage rates mature, and guess what happens? Their payments go up from $600 to $1,900 a month,' Fletcher said."

"Fletcher said the financial institutions should have made loans more responsibly. 'Personally, if people barely qualified, they should have never been allowed to have a loan,' he said."

"Lately I've been getting that déjà vu feeling. If you lived in Texas through the savings-and-loan debacle of the late 1980s, you probably have been, too."

"What happened to houses in Texas back then may be the template for what happens across the country as the housing bubble pops today."

"Back then, Texas had been in a long building boom fueled by rising oil prices. Housing prices had risen nicely for years. Many Texans who had started with next to nothing were enjoying a new feeling of wealth as they moved from one appreciating house to another."

"The savings and loans were encouraged by changed accounting rules to make big development loans, booking unearned profit. Texas homebuyers were advised to put as little down as possible because Texas laws prohibited borrowing equity out of your house. As a result, many put only 5 percent down."

"Back then, builders marketed houses by 'buying down' mortgage interest rates for a year or two. After that, the interest rate and monthly payment rose. Back then, construction employment loomed large in Texas. So did employment in finance and banking."

"Houston, the first Texas city to fall in the oil bust, had its home price index peak at 108.5 in 1983. It also bottomed early, hitting 81.5 in 1987. But it was a long bottom – the index didn't recover to its 1983 level until 1997. So recovery from the market top took 14 years."

"San Antonio peaked in 1984 at 109.7, didn't bottom out until it hit 82.5 in 1990 and didn't recover to its old high until 1995, a period of 11 years. Austin peaked in 1986 at 100.1, falling to 72.7 in 1991 and reaching recovery in 1994, about eight years."

"Dallas also peaked in 1986, at 110.1, bottomed at 94.3 in 1989 and regained its old peak in 1997, a period of 11 years."

"That's real history. It's not hyperventilation from the Chicken Little chorus."

"You should also know that big-time housing comedowns aren't unique to Texas. Comedowns also hit other markets. It happened in La-La Land. Los Angeles peaked in 1990, bottomed in 1995 and wasn't fully recovered until 2000. And it happened in Beantown. Boston peaked in 1988, bottomed in 1992 and hit its recovery number in 1997."