California Bay Area New-home sales dive 1/3 in June

Even the Bay Area of California, supposedly erosion proof, is getting a clue.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/17/BUC3RK0EM.DTL
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New-home sales dive 1/3 in June
Economist says price drop will bring back demand
Kelly Zito, Chronicle Staff Writer
Friday, August 17, 2007

"Prices went way ahead of themselves relative to the incomes of the consumer, and price increases could only be maintained with exotic financing," Krueger said. "Once that went away, you had a significant erosion of demand."
Statewide, the picture is similar.

Ultimately, though, steeper price reductions may be the answer.

"How does demand come back? When prices come down," Krueger said. "For the consumer, that potentially could be good - it could alleviate some of the affordability problems we suffer from so much in the Bay Area."