O'Brien attributes the sales fall-off to the disappearance ofspeculative and investment buyers, many of whom were funding theirpurchases through refinancing their homes. The remaining marketconsists almost exclusively of owner-users. But many of them havebeen sitting on the fence to see what happens in the credit market."Most of these buyers are financed through SBA programs, and whilerates have come down on those, they're watching to see if they dropeven more," says the Guthrie exec.

Richard Eggemeyer, president of Eggemeyer Commercial Real Estatein Bellingham, WA, says a condo project his company completed lastyear, the first in his market, did very well, but projectscurrently in construction are selling very slowly. "We probablyhave a 12-month inventory with what's standing and what's comingout of the ground," he says. "We're getting quite a bit of priceresistance. There's a disparity between construction costs and whatthe consumer is expecting."

Eggemeyer pegs asking prices in the Bellingham market at $100 to$110 a sf, with $20 a sf in tenant improvements. He says buyersexpect to pay $80 a sf tops. "Most people do not understand howenergy costs have impacted construction costs. Costs are up about30% to 40%. We still have a disconnect," he tells GlobeSt.com.