Housing prices dropped this September - nationally by a mere 0.03% (officially), but in certain areas, like Dalian, apparently by as much as 40-50% for new housing. The private real estate agencies have their backs up against the wall - a consortium of them apparently offered to buy out one of the major State-connected agencies for a massive sum, just for its connections. They were borrowing at 25-30% from illegal banks up to quite recently, because the profits were so huge, and now that's all falling apart.
One of my friends had a meeting with the Soho group (big Beijing developers) recently, in which one of them confessed in private that their business model was explicitly "spend as much as possible on design, and as little as possible on materials." The theory being that nobody actually lives there (their residential compounds are 80-90 percent empty, I went to look at renting one two years ago and it was like a ghost town) - they're purely intended as investment vehicles, mostly, apparently, for Taiyuan mining millionaires.
On a related note, the crisis of SMEs in Wenzhou - which received official concern from Wen on October 4, sadly without tears - is heavily tied in with the grey banking sector, which is suffering from the real estate downturn (as well as a bunch of other stuff). A bunch of the most prominent lenders disappeared in late September, leaving massive debts behind them. (Wenzhou's really famous for entrepeneurship, especially the shady variety.)