The San Francisco Chronicle reports from California. "During the recent boom, new housing got an even bigger price bump than existing ones because people often wanted the best, and, with a Icarian faith in the market's eternal flight, buyers were willing to pay more and more to get the best. Now, with the downturn in the market, developers have scrambled to respond. The result? Some experts say that the price of a new house is now cheaper than an equivalent existing house."

"'I think that's true,' says Joseph Perkins, president and chief executive officer of the Home Builders Association of Northern California. 'New housing is a better deal for prospective home buyers because builders are responsive to the marketplace, whereas some sellers still haven't responded to the marketplace and they're trying to sell their homes for prices from two years ago. But home builders need to move inventory and get on to the next project.'"

"Cheryl O'Connor, VP of Warmington Homes, which has built 300 homes in the Bay Area and Sacramento, agrees. 'In the Bay Area, historically, new homes were priced above resale (existing homes) — but in the past couple of years, new home builders have had to be more aggressive.'"

"The result, she says, is that the price of new homes is about 10 percent less than that of existing homes with the same square footage. 'I've been in the business 30 years, and I've never seen that before.'"

The Sacramento Bee. "Statistics released today by the Gregory Group show builders closed 2007 with just 1,320 fourth-quarter sales in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. It was the lowest quarterly tally since the Gregory Group began counting sales in the fourth quarter of 1999. Sales for the full year were the lowest in a decade."

"Average sales prices also fell 10 percent during 2007, adding to anxiety about a new year in which credit remains tight and recession is considered possible. The region's fourth-quarter average sales price was $426,710. It was $474,482 the same time last year."

"Builders reported 4,495 sales the first half of 2007. But sales fell to 2,913 in the second as tighter credit blocked many buyers, while others with good credit took deals from banks shedding newly foreclosed properties."

"More simply waited, fearing a new home might lose value the minute they received the keys."

"'The thought of actually saving up a down payment, qualifying for a 30-year fixed loan I can actually afford and then buying a house that loses value is one of the scariest visions I can drum up,' said Chad Stellmacher, a Sacramento renter."

The Modesto Bee. "Thousands of Central Valley families are losing homes to foreclosure because: a) They lied about their incomes to secure unrealistic loans. b) Unethical loan officers took advantage of families by signing them up for risky loans they could not afford. c) Their adjustable rate mortgages are resetting, resulting in much higher mortgage bills."

"But all of those factors might be overcome if not for plummeting property values, the experts said. 'Foreclosure is the freight train that runs over the homeowner,' said Jeff Schrager of the No Homeowner Left Behind nonprofit organization based in Fresno. 'I submit that we have a local disaster here. People are losing their homes on a daily basis.'"

"Event organizers had no idea that the foreclosure crisis would become a significant theme when they began planning Thursday's housing symposium a couple of years ago. Back then, the real estate market still was riding a wave of record property value increases. Groans rose from Thursday's audience of several hundred when presenters spoke of stated-income loans, called by some 'liar loans.'"

"'Which side of the table was lying?' asked John Olson of the Federal Reserve Bank of San Francisco, rhetorically. 'Maybe both were. Some people inflated their incomes. Some borrowers were defrauded, with brokers writing in the incomes they wanted.'"

"Foreclosure sales throughout California reached an all-time high this week with a tenfold increase in properties sold at public auction, compared to a year ago."

"Many economists in recent months have predicted a deepening disaster because of the 1.8 million subprime mortgages expected to reset in coming months. But Olson said the blame is shifting. 'We're finding that it's not resets, but it has much more to do with declining home prices that prevent people from refinancing or selling,' he said."

The Daily Press. "Nearly 50 percent of the High Desert homes sold in December were owned by banks, according to new figures released Thursday."

"'The realty of it is that we have so many bank-owned properties, that’s what is selling because they are the least expensive,' said Larry Trombley of Century 21 Rose Realty, who compiled the data."

"There are many more homes than buyers, said broker Caroll Yule. Banks are now adjusting their prices in accordance with this reality."

"'What we’ll see in the next few months of continued adjustment is the sellers that have a strong desire to sell their homes are going to continue to price aggressively, and those will be the homes that sell,' Yule said."

"The median home price has been dropping by about 4 percent monthly, she said. December home prices dropped about 7 percent from November, and about 27 percent from December 2006, according to the data."

The Record Bee. "A wave of home foreclosures has rippled across the U.S., and Lake County is not untouched. In the third quarter last year, notices of default for home owners in Lake County numbered 129, up 20 over the previous quarter."

"That number is 92.5 percent higher than the same time last year, in which there were 67 notices, according to DataQuick."

"According to real estate agents and industry experts, the current quandary is the result of appealing 'teaser' rates that led to a sharp increase in lending in 2004 and 2005. The rates reset much higher in 2006 and 2007."

"'The sub-prime rates, those are the key ones,' said Middletown real estate agent Cynthia Smith. 'People didn't read the little writing that said in three to five years, instead of paying $2,000 per month, it's going to be $5,000.'"

"Suddenly, buyers who would not have qualified for mortgages at the reset rates found themselves with a home they are unable to pay for or to sell, Smith said."

"'These are record foreclosures. If someone's house was worth $500,000, and now it's only worth $395,000, people aren't going to be able to pay the $500,000 the banks are owed. The banks are putting the price on the court house steps, they're not selling, and that means the banks are getting them back,' Smith said."

"While the situation is the worst she's seen in her 10 year real estate career, Smith thinks it will pick up soon. 'It's one of those up and down things, we just have to ride the roller coaster.'"

The Union Tribune. "According to a DataQuick...66 ZIP code areas surveyed in the county, based on a three-month rolling average of median single-family resale home prices, have dropped from their peaks, which occurred at different times over the last four years."

"The steepest drop has been in South County, which is down 22.3 percent. Central San Diego has fallen the least, down 6.6 percent."

"(In) DataQuick's worst-performing neighborhood, San Diego's 92103 ZIP code that includes Hillcrest, Mission Hills, Bankers Hill, Park West and Middletown...prices peaked at $961,583 last February. By November, prices were down 41 percent to $567,500."

"Area real estate agents said this is not evidence that values have collapsed in this storied collection of walkable neighborhoods but that buyers had changed their expectations. People who couldn't afford a $1 million home simply found something more modest at a lower price."

"In Spring Valley (ZIP code 91977), another factor may have been at work to explain its 28.2 percent price drop off the peak to $352,700."

"Robynne Hanus of Keller Williams said a raft of investors scooped up dozens of properties during the boom, and many are now are facing defaults and foreclosures. There are nearly 300 bank-owned properties on the market, according to RealtyTrac."

"'There are lots of non-owner-occupied properties down there,' Hanus said, 'and investors are going, 'Oh, man, I can't get tenants for this property based on the amount I owe on the mortgage.'"

"Hanus is representing one Riverside County investor who bought a 1,580-square-foot home on San Miguel Avenue for $534,000 in late 2006 and, facing default, is hoping to arrange a short-sale at $350,000."

"Lori Staehling, incoming president of the San Diego Association of Realtors, said the current market is filled with buyers sitting on the fence. 'So much is driven by people's thinking,' she said. 'Everybody wants to buy at the bottom of the market. But you never know what the bottom is until you've gone past it.'"