As has been persistently predicted for more than 18 months, the sky has at last fallen in the Phoenix real estate market. This per the Arizona Republic. The median price for residential housing actually went down by one percentage point in October, the first time this has happened since December of 2003.

Obviously our market is a lot softer than it was six months ago, but this is not quite the calamity so long foretold. Recall, until very recently every other mountebank was seething about a bubble that was doomed to burst at any instant. Instead, we've had a slow progression back to a relatively normal market, with nary a whimper of hardship to be heard.

This is me, in the first of my real estate columns published by the Republic:

When newsmakers make pronouncements about the real-estate market, they are conflating everything with everything else: north Scottsdale with south Phoenix, the stately custom homes of Litchfield Park with the ramshackle trailers of Ellsworth Road in east Mesa. The total supply of available homes is up from where it was a few months ago, but not by much. Among the homes that are most avidly sought and most assiduously marketed, demand is still very high - and price pressure is still very strong.

Real estate is non-fungible. That's the fancy way of saying that no one home can be substituted for another. So, to say that homes in greater Phoenix appreciated by 47 percent from July 1, 2004, to June 30, 2005, is interesting, but it is not hugely revealing. It conflates too many unlike homes and neighborhoods to be valuable.

It's much more useful to note that the 1,603-square-foot Terracina floor plan in Ashton Ranch in Surprise appreciated by 67 percent in that same span of time. The 1,313-square-foot Vail floor plan in Rancho Santa Fe in Avondale was up 56 percent. The 1,273-square-foot Sterling model in Fletcher Heights in Peoria gained 56 percent in value.

Surely there is a net depreciation in values happening somewhere, but it's important to understand where. At the fringes the softness is pronounced--the very low and very high ends, along with niche products and less-prized options like mobile homes, co-ops, condos, etc. Homes and neighborhoods that were egregiously overpriced have given some ground. But in the bread-and-butter neighborhoods, well-kept, well-priced homes still sell in a sprightly fashion.

And then there's this:

But housing analysts don't expect Valley home prices to continue to fall and are calling for double-digit appreciation gains next year.

No one can promise future appreciation, but our fundamentals are very sound. It still snows in the Great Lakes, houses are still extremely expensive in California, and, Chicken Little's lamentations to the contrary, interest rates are still very low.

This article neatly encapsulates the state of the market right now: Buyer's have some leverage for a change:

Metropolitan Phoenix's home-selling frenzy is beginning to calm and beleaguered buyers suddenly have more power in the fight for leverage in house deals.

I'm writing deals with seller-paid closing costs for the first time in 15 months. Builders are offering huge incentives to new home buyers. Open houses abound, and listing agents are are once again routinely calling buyer's agents for feedback on showings.

We're not back to normal yet. There are about 21,500 active listings in the MLS, where a balanced market is about 25,000. And investors are still not welcome at new home subdivisions--as they will be as soon as the builders decide that the float on long-term deposits is worth more than the appreciation value of their inventory.

Chicken Little can rage on, but it's a great time to buy a house. There are plenty of sweet homes to choose from and sellers are ready to negotiate.