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Builders constructed 2 million housing units nationwide in 2005, the year the boom peaked. So far this year, housing starts have fallen to an annual rate of 1.2 million units through September, and economists expect the number to drop to an annual rate of 1 million by mid-2008.

Developers are reeling from sharp increases in loan defaults, which cause lenders to be far more cautious about new mortgages. The result: sinking home prices, surpluses of unsold homes and an increase in canceled orders.

This month, credit rating agency Standard & Poor's downgraded three of the four largest home builders by market value -- D.R. Horton, Pulte and Lennar -- to noninvestment grade, or junk status.

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Residential property values alone rose an average of 24 percent.

next spring would have to approve a 2008-09 tax rate of 69.28 cents per $100 to keep total real property tax revenue from increasing.

owners of the county's 97,000 taxable commercial, industrial and residential properties.

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Durham residents pay about $1.95 per 1,000 gallons of indoor water use, but it's roughly double that for outdoor use.

The lowest rate for Orange Water and Sewer Authority customers is $1.98 for 1,000 gallons, though rates go up the more a customer uses.

In Raleigh, the basic water rate is about $2.13 per 1,000 gallons.

Durham also has a problem with cracked pipes causing leaks. Durham loses about 3.3 million gallons per day somewhere between the raw water going into plants for treatment and the water used by customers.

That's about 13 percent of the daily supply, higher than the 3 percent, 4 percent and 11 percent lost by Raleigh, Cary and the Orange Water and Sewer Authority respectively.

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The office market in and around Research Triangle Park softened during the third quarter as demand failed to keep up with new supply.

The RTP submarket's office vacancy rate was 21.2 percent at the end of September, up from 14.3 percent a year earlier, according to Karnes Research of Raleigh.

Average rents rose 4 percent to $18.83 per square foot during the period.

There were 365,000 square feet of offices added, growing the submarket 4 percent to 9.1 million square feet during the quarter, according to Karnes.

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The practice is creating a shadow market that masks the true inventory of unsold homes, which in the year that ended Sept. 30 climbed 22 percent to a four-year high of 17,929. When the wobbly housing market begins to stabilize, experts say, these homes could be the first to flash "for sale" signs.

The new business comes from sellers who "got disgusted with the soft sales market" and independent builders who have given up on selling some homes, turning to the rental market to soften the blow

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For the third straight year -- and the sixth time in seven years -- North Carolina tops a list of states with the best business climate.

"Corporate executives know North Carolina is listening to them and we understand what they need to succeed," Gov. Mike Easley said in a statement.

the site-location decision-makers say their highest priority is the availability of workers with the right skills. Second is the ease of permitting and third is the level of state and local taxes. Other priorities include the availability of land and buildings at good prices and the quality of higher education

North Carolina excels in all of those areas

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The first: Rail or bus in the "linchpin" corridor. Second: The overall scope of the plan. And third: How to pay for it.

Bus service could be launched in segments and would be cheaper to run initially;

put together a long-term regional transit "vision"

the exact shape of a tax recommendation will probably not be made until January.

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an urban "center" could be established where the greenway system crosses the rail line near Atlantic Boulevard

the site of the old Devereaux Meadows baseball stadium, where the minor league Raleigh Capitals played.

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City leaders are intent on changing development patterns from strictly suburban to newly urban—and on designating specific transit corridors where it's possible to create the dense, but also walkable, bikeable places that appeal to young folks and empty nesters, too.

"Placemaking is not just the act of building or fixing up a space, but a whole process that fosters the creation of vital public destinations: the kind of places where people feel a strong stake in their communities," according to PPS. "Simply put, placemaking capitalizes on a local community's assets, inspiration and potential."

Such public involvement will be even more critical, she adds, as Raleigh moves from the old single-use model of development to mixed-use and greater densities in core areas. "Any time you have to mix up your life with something or somebody else that's different, it's a lot more complicated," Franklin says, laughing.

they should "work like a necklace of pearls

looking for lively places to live

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Auction Direct USA of Victor, N.Y., plans to open in December at a former Hertz car sales outpost in northwest Raleigh

The Raleigh dealership is Auction Direct's first in North Carolina and fourth nationally.

Auction Direct plans to operate 17 dealerships within four years, including one in Charlotte, Guerrein said.

Besides its home-state dealership, the company also has set up shop in Atlanta and Jacksonville, Fla.

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"We think density is important," said Ron Tober, chief executive of the Charlotte Area Transit System. "I've said this many times: 'Without the land-use connection, we shouldn't be doing this.' "

Charlotte's long-term transit plan is similar in many ways to Denver's, but Charlotte has had to more aggressively seek development.

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Economists stress that the price weakness must be viewed in the context of an unprecedented run-up in prices that occurred during a five-year boom in home sales, a period that some economists think reflected a speculative bubble.

"We had a surge in investor demand, an explosion in the availability of credit and builders who became overly optimistic. All these things came together to whip the market into a frenzy, creating a huge bubble that is now bursting," Zandi said.

David Seiders, the home builders' chief economist, said he thinks housing will stabilize in the next year with sales hitting a low point in the first quarter and then starting to move higher, a development that will help clear out record inventories of unsold homes. He said construction will not hit bottom until the spring and housing will remain a drag on the economy through mid-2008.

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Construction spending on office buildings, shopping centers and other private, nonresidential projects jumped 15.2 percent in August, the Commerce Department said last month.

Economic data due out soon is likely to show that September was one of the slowest months in several years for all areas of commercial real estate - from apartment buildings to retail properties, according to Real Capital Analytics.

Projects in Midwestern cities dominated by individual investors have seen prices plateau and capitalization rates rise compared with developments in New York, Washington and San Francisco, where institutional and foreign investments remain stable, said Dan Fasulo, managing director of Real Capital Analytics.

Risk premiums also are up, which means commercial real estate investors can't get sellers to finance as much debt as before.

Speculative deals or developments with marginal profits are "dead,"

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Plans for yet another Hillsborough Street tower are in the works.

southwest of the intersection of Hillsborough and West streets

Last week, the city's planning commission approved a 25-story hotel-condo building proposed by father-son development duo Ted and David Reynolds.

The week before, Campbell University said it will move its law school to Hillsborough Place, a 105,000-square-foot office building at 225 Hillsborough.

TME Investments has discussed building hundreds of condos or apartments at the southwest corner of Hillsborough Street and Glenwood Avenue. That project could rise 20 stories.

Winston Hospitality plans an 80-room Aloft hotel, a 120-room Hampton Inn and possibly up to 250 condominiums, which could push the tower 25 stories high.

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The Triangle's office vacancy rate rose for the first time in a year,

The vacancy rate rose to 12.4 percent in the third quarter -- the highest level this year -- from 12.1 percent in the second quarter.

The region's labor pool grew 1.5 percent during the 12 months that ended in August

About 830,000 square feet are to open by the end of the year. Only 20 percent of it is pre-leased.

The amount of available sublease space rose 26 percent to at least 750,000 square feet in the third quarter,

If we have sublease space and speculative space hitting at the same time, we could see a train wreck

"There's the fear that there's going to be a slowdown because that's what's happening around the country," said Jeff Sheehan, a Duke senior vice president. "But we still have lots of expanding tenants."

"Can we continue at a torrid pace forever? No," Dye said. "Everything has ups and downs. We remain bullish."

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"Markets like ... Raleigh have been outperforming lately and will continue to do well next year," said NAR senior economist Lawrence Yun.

Locally, a combination of available land and stiff builder competition has kept appreciation steady -- if unremarkable -- while helping the Triangle avoid problems being felt elsewhere where speculators drove up prices.

In the Triangle, existing home sales were down 1.9 percent through August compared with a year ago, according to the Triangle Multiple Listing Service. The median, second-quarter home price of $225,100 was 8.4 percent higher than in the same period a year ago, Yun said.

Triangle employment, which increased 4.6 percent in 2006, is expected to increase 2.7 percent this year and only 1.6 percent next year

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All told, the project, Park West Village, would include 2.8 million square feet of space, which is about 2 percent more than the Empire State Building in New York.

"It's an interesting project from the perspective of the evolution of the community," said Benjamin G. Hitchings, the town's planning director. "Now we're beginning to see major redevelopment.

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Residents of big cities like New York and London must accept that they are under constant watch by video cameras

In this day and age, if you think that cameras aren't watching you all the time, you are very naive

We live in a dangerous world, and people want to have security cameras.

the country is becoming a "surveillance state."

the ring of steel for lower Manhattan, featuring surveillance cameras as well as barriers that could automatically block streets.

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With 80 percent of its water and sewer rights tied up -- mostly in developments that haven't been built yet -- Franklin has stopped allowing new residential developments from connecting to its water and sewer utility network. Franklin County commissioners took the action Monday, leaving new subdivisions to rely on wells for water and septic tanks for sewer.

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Lenders wary of deepening woes in housing are reacting by raising the cost of financing deals for hotels, offices and other uses.

They're resetting terms for projects with higher interest rates and more stringent requirements. In some cases, they're walking away from deals altogether, leaving borrowers with void commitment letters and unrefunded deposits.

First are so-called portfolio lenders. These are often insurance companies that buy and hold real estate debt for long periods. They're increasingly leery of commercial real estate exposure and are backing away.

Then there are "conduit lenders," who buy commercial real estate loans and repackage them for sale as debt securities on secondary markets. These resellers are seeing a drop in demand from bond investors to whom they are unable to pass on their debt.

Origination of commercial real estate loans for resale on secondary markets should fall about 75 percent during the second half of this year.

Yes there's a liquidity crunch

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About 6.7 percent of the Triangle's rentable retail space was empty at the end of June -- the most in a decade, up from 6.4 percent a year ago, according to data from Karnes Research.

And during the first half of 2007, developers completed just 289,000 square feet of rentable retail space in Durham, Orange and Wake counties -- the smallest six-month total in at least five years.

And while there are still people moving to the area -- be they renters or buyers -- they're spending less. During the first five months of 2007, taxable sales in Durham, Orange and Wake counties reached $7 billion. That's 10 percent less than the average of the same five-month period between 2002 and 2006 -- when the population grew 20 percent, according to state revenue data.

At the end of June, 6.1 million square feet of new shops were planned throughout the region -- 22 percent more than a year ago, and almost twice the total proposed in June 2005.

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RALEIGH -
LNR Property on Wednesday paid the state $4 million for 4.7 acres north of the Governor's Mansion -- the first in a series of deals expected to spawn hundreds of homes over six downtown blocks.

The 21-acre project, called Blount Street Commons, has been in the works since 2005

Once the entire project is complete in 2010, it could include up to 495 condominiums, townhouses and single-family homes, up to 110,000 square feet of shops and 25 renovated homes, some of them historic.

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High demand doesn't necessarily impede affordability either.

Examine the difference between
Boston and
Raleigh,
N.C.
; since 2000, Boston has experienced steady emigration, while
Raleigh,
has welcomed new residents.

But during that time,
Boston home prices increased by 16.7%, and median income-earning households can afford about
half of what they could seven years ago. In
Raleigh, home prices have grown by 37%, but the share of median income
earners who can afford homes has only dropped by 3%, all while the city underwent a population boom.

What gives? A high increase in new-home construction and growth policies not overburdened by regulation acted as
price reliefs in
Raleigh.
Boston doesn't have such policies and hasn't seen a great deal of new-home construction.

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"The more you increase lot sizes, the more you increase sprawl," Commissioner Mike Cross said.

But commissioners Chairman Carl Thompson is concerned that larger lots could outprice some homebuyers.