That marked the headline on the lead story in the first issue of the year for In Business Las Vegas as it recapped 2005 and looked ahead at 2006. The experts said housing appreciation was expected to be modest and home sales were expected to at least equal 2005.

So much for predictions, which sometimes aren't worth more than the paper on which they are written.

It didn't take long for the wheels to come off the housing market compared to 2004 and 2005. It became the No. 1 real estate and development story in Las Vegas and the rest of the country.

New home closings were up double digits in the first three months before dropping sharply since April. Through October the closings are down only 4 percent, but that number doesn't tell the whole story.

To woo buyers, home builders introduced incentives that were valued at more than $25,000 in some cases. Even pools, trips and cars were offered to lure customers.

Many builders substantially cut back on staffing levels in Las Vegas and the rest of the country. Subcontractors had to trim their workforces as well with new home permits down 24 percent through October. Builders even dropped land options and asked their contractors to cut prices.

In the existing home market, closings were down nearly 23 percent through October while the median home price has increased about $4,000 since December 2005. The prices are actually lower because even homeowners got into the act of offering to pay for closing costs and other incentives.

Inventory jumped from a little over 13,000 in January and surpassed 20,000 for most of the year, a 10-month supply. In a vicious cycle, the inability to sell existing homes prevented many buyers from purchasing a new home.

"It was a surprisingly quick downturn," said John Ritter, chief executive of master-plan developer Focus Property Group, in admitting 2006 was a tough year for the housing industry and prediction business. "The cancellation rate started to increase in the third quarter of 2005 and when it was slow during the holiday, people thought that was a seasonal slowdown, but that masked what was happening. They didn't realize until the middle of the first quarter that buyers weren't coming back. The cancellations continue to rise and the resales started to climb."

The downturn was unusual in that it wasn't caused by high interest rates or massive job losses, Ritter said. Instead, it was prompted by an excess supply prompted by the irrational exuberance of investors and the public. That spurred massive amounts of national television coverage that exacerbated the problem because consumers were worried about buying a home, fearing its price would decline.

"In the last big downturn 15 years ago, we weren't in a world of 500 cable channels and 20 news outlets all trying to scream for attention," Ritter said. "The media latched onto this and when it slowed down, it fed the frenzy. People who were looking to buy a home just froze. They were worried about the bubble bursting."

The one benefit of the slowdown is that it's never been a better time to buy a new home given all the incentives that are available, Ritter said. Those incentives could soon disappear because the new home inventory has about a one-month supply.

"I think it is going to take a few months before we realize we are in a recovery," Ritter said. "Whether we are truly in a recovery now or testing the bottom, I believe we are going to have a recovery in 2007 and by the middle of 2008, we will be in a very strong recovery phase. That will make this downturn a fairly typical one at 24 months."

One issue to watch in early 2007 is the number of homes entering foreclosure, a number that rose sharply in 2006, giving Nevada the second-highest rate in the country. Many homeowners face higher mortgage payments because of exotic loans.

There were many other important real estate, development and retail-related stories in 2006 that also got plenty of attention - some of which will continue to be watched closely in 2007.

The year got off to the bad start when the Related Cos. cancelled its Icon condominium towers even though it had signed contracts for most of the 514 units. In a sign of what was happening in the market, Related said unforeseen higher construction costs wiped out profits and the only options were to break the contracts, resell the units or cancel it altogether.

Analysts sounded a warning early this year about the lack of land for industrial development and how future supply will be constrained because of land and construction prices. There was a blunt prediction that industrial development is on the brink of extinction — a problem that led to UNLV's Lied Institute for Real Estate Studies to hold a roundtable to find solutions. That report is expected in early 2007. The need for the federal government to set aside land for industrial use may be one alternative. There is also a push to create a special improvement district at the Apex Industrial Park for infrastructure that will lure developers.

Without more industrial land, companies will turn to Arizona, Utah and other Western states. That will cost Southern Nevada jobs and result in more goods having to be shipped into the market, thereby increasing their cost.

Among the other headlines: