‘This market is crazy … ‘

The Las Vegas housing market is the current foreclosure capital of the country. Home prices here are down more than 50 percent from their peak in 2006, to a current median of $138,000.

And while all this may be bad news for an existing homeowner obliged to sell, it should be good news to a home-buyer moving here. Right?

Not necessarily. In an Oct. 14 article titled "Lunacy in las Vegas Housing," CNBC real estate reporter Diana Olick recounts the tale of a working Maryland couple -- wife's name is Katie -- with credit scores "right around 800" who are being transferred to Las Vegas.

What's helping hold down prices, it turns out, is that bankers aren't touchy-feely social workers who seek the warm feeling that comes from helping a young couple find a lovely first home, at all. In uncertain times, what bankers prefer turns out to be ... cash.

"This market is crazy and many things are just not going to make any sense," the couple's Las Vegas real estate agent, an old friend, warned.

"I can guarantee you 99.99 percent of the listings e-mailed to you will no longer be available by the time you get here. ... Properties are getting multiple offers within a few days of being on the market ... Forty percent of all transactions are cash purchases, which makes it harder for the buyers who are financing to get their offers accepted. ..."

Despite the warnings, Katie was unprepared for what she found, CNBC reports. In seven days, she saw 50 homes in the $150,000-to-200,000 price range, all but one foreclosures.

The problem wasn't the mortgage rates -- ranging from 4.71 to 5.31 percent, fixed. The problem was that the most recent residents of these houses -- all built in 2005 or later -- had trashed them.

Then came the crazy part.

"We went to a home that had been on the market for one day, and the key was stolen out of the lock box. Our Realtor said immediately, 'You want this home.' She told us another Realtor had stolen the key because they wanted their client to get it. So what did my Realtor do? She broke in. And sure enough this was the home we fell in love with. It was on for $132,000 so we decided to be really aggressive and offered $160,000, plus we had government backing on our loan. Well, our Realtor called that night and said, 'You're not going to get the home. They got 30 offers and half are cash offers, so the bank is not even going to look at you.'"

At the end of their week, Katie and her husband met with a local builder.

Katie's own real estate agent? "She bought her brand new home in 2005 for $240,000," Ms. Olick reports. "She says it's now worth between $90,000 and $110,000. So in January she decided to stop paying her mortgage. No financial hardship, she just figured she was throwing money away. The bank hasn't gotten to her yet, so she's just been living there for free. At some point, she knows, her bank will foreclose, but she's fine with that. She says she'll do far better financially renting for a while."

Late last week, the National Association of Realtors announced that national home resales in September clocked the largest monthly increase in 26 years. The government's tax credit for first-time home buyers was credited with boosting the numbers.

"There's a mini-boom going on in the housing market," Thomas Popik, who conducts a monthly survey of real estate agents for Campbell Communications, told The Associated Press.

Perhaps. But in Las Vegas, clearly, more is out of whack than mere price fluctuations.