We're ending 2008 on a somber note. I'd like to tell you things will miraculously change for the better at 12:01 a.m. Thursday, but I'd be lying.

Although things in the Philadelphia area's real estate market still aren't as bad as they seem to be elsewhere, what's happening everywhere else is getting harder to escape. We thought we could, then everything changed.

"Until six weeks to two months ago," veteran developer Chip Vaughan said recently, "we were selling well. Then October came, and it pushed everyone to the sidelines."

Vaughan, who builds on the Main Line, said he had seen slow times in new housing before, but nothing like this. The 1990s downturn affected the sale of existing homes here more than new, and Vaughan recalls that it lasted no more than 10 months for him.

Though he predicts this one will last into 2010, Vaughan plans to hang in, and told his 13 employees not to worry. "We're in good shape," he said. "Even if we have to remodel kitchens to do it, we'll be back when the market comes back."

Not everyone is as upbeat. Sellers and buyers continue to butt heads over just about everything. Prices here aren't dropping as quickly or as deeply as in most other places, so buyers are making what sellers consider unreasonable demands for concessions.

A couple of prospective buyers so frustrated Patricia Mellon that she wondered if there were a "watch list" for them like the one for terrorists.

She and her husband had to relocate to the New York area and were able to buy a house quickly because "we treated the sellers as we would want to be treated as sellers."

But the buyers they dealt with came to see their Malvern house six times and spent two hours measuring it on one of the visits. They offered 15 percent below asking price, but agreed to 8.5 percent less, almost 14 percent lower than the neighborhood comparables.

The relocation company the Mellons were using sent its inspector through the house before listing it, and the couple took care of all the recommended repairs. They were confident the buyers' inspector would find nothing, but aware that these folks had pulled out of other deals, the Mellons set a $5,000 limit on the results and asked for a larger deposit.

The inspector spent five hours at their house, finding reverse polarity in a couple of outlets, a slow-draining bathtub, and two small white patches on the aluminum-backed insulation in a crawl space.

The inspector said that it might be mold and that the insulation should be replaced. The Mellons' agent recommended testing; instead, the buyers came in with a contractor who made all sorts of recommendations. Then the buyers demanded a further $37,000 price drop, reducing it to their original offer. When the Mellons said no, the buyers walked away.

There are thousands of horror stories like this: buyers being stonewalled by sellers; sellers dealing with buyers who want it all for nothing.

Area real estate sales are down almost a third from 2007. It isn't hard to understand why.

"On the House" appears Sundays in The Inquirer. Contact Alan J. Heavens at 215- 854-2472 or aheavens@phillynews.com.