LAS VEGAS -- If you want to know why this city was the epicenter of America's housing boom and bust, visit the Mountain's Edge community at the southern end of Clark County.
Plunked down in the middle of the desert, the hundreds of Spanish-style homes in Mountain's Edge sprang up at an astonishing pace from 2004 to 2006, selling at constantly escalating prices ranging from $400,000 to $800,000.
Today, even though some streets are still undeveloped, the planned community is already riddled with homes that are up for sale or available for rent. Seven out of every 10 homes on the market there are foreclosures or short sales.
A foreclosure means the bank has taken over the house after the owners defaulted. A short sale means the owner is being allowed to try to sell the house for less than what he owes on it.
Either way, the asking prices have plummeted with skydiver speed. At 9537 Bella Di Mora, a two-story, four-bedroom home, the price has dropped from $726,990 to $429,900; 7671 Windy Meadow Ave. has fallen from $519,975 to $213,400 in five years.
And over at 9280 Moose Country Place, Jim Tierney is asking $214,000 in a short sale for the five-bedroom home he bought for $425,000 in October 2007.
On a sizzling day in late September, his home was filled with boxes as he and his girlfriend prepared to move to a rented house in another subdivision, where her three children would be closer to their school district.
Like many Las Vegas residents whose homes are "underwater," meaning they owe far more on them than they are now worth, Mr. Tierney has a good job, working as a computer engineer for IGT, the world's largest slot machine manufacturer. His girlfriend works there, too, and there is no question that they technically could afford to keep making their monthly payments.
"If we were only $50,000 underwater on our mortgage, we might have stayed," he said, "but $200,000 underwater? We just can't do it. Even if the economy turns around, people are spooked.
"Homes never should have been appraised at this value, and people shouldn't have been buying them at those prices -- heck, we shouldn't have bought at those prices."
And so Mr. Tierney is hoping that he can find a buyer at the reduced price, and that his lender, Bank of America, will accept that as his ticket for walking away, and forgive the rest of what he owes.
Linda Rheinberger, who was the Greater Las Vegas Association of Realtors president during the height of the boom in 2006 and who started her working life in the Pittsburgh area, said home prices in southern Nevada have dropped 65 percent in the past four years.
That has created some tremendous values, she said, but it has come at the same time that credit standards have tightened up fiercely.
"It's a far cry from three or four years ago, where they would say, 'Can your buyer fog a mirror? OK, we'll give them a house.'
"This all started with a president I liked, George Bush, and he felt people should be homeowners, and we learned a lesson -- not everyone should have that responsibility, right?"
"When we started looking," Mr. Tierney recalled, "the market had already started to go down a little, and I had discussions with my girlfriend where I said, 'Are you sure you want to buy?' but she had owned for a long time and she wanted equity; she didn't want to rent.
"We originally were looking at $600,000 homes, but that was really a stretch, and I talked her into looking at this, which seemed more reasonable."
Once housing values sank, he did what many other fully employed Las Vegas residents have done: He deliberately stopped making payments to get the bank to talk to him about modifying the loan.
Although a short sale implies the lender will release the borrower from his obligations if he gets an acceptable offer, there is no guarantee of that.
Several weeks ago, a potential buyer offered $195,000 for the home, about $20,000 less than the asking price. Mr. Tierney is now waiting for Bank of America to tell him whether it will permit that sale and release him from the rest of his obligation.
If the bank doesn't agree to that, he may be facing foreclosure, Mr. Tierney said.
Like Jim Tierney, Ryan Henderson had the misfortune to go house-hunting in the middle of the real estate boom in Las Vegas.
Ryan, his wife, Mical, and their four children, who range from age 10 to 4, eventually found a house, an attractive four-bedroom home at the end of a cul-de-sac west of The Strip.
They bought it for $300,000 in 2004, with a $285,000 loan that a mortgage company gave to Mr. Henderson despite the fact he was unemployed at the time.
Today, the house is worth an estimated $138,000, and unless something changes, the Hendersons are trapped there by seemingly endless negotiations to avoid foreclosure.
In many ways, the Hendersons' story mirrors what happened to the economy in Las Vegas.
Mr. Henderson is a concrete mason, and for many years, he made good money installing slabs and doing other work in the casino and resort industry.
When they began house hunting in 2004, Mr. Henderson had quit work temporarily to finish getting his bachelor's degree in accounting.
From the beginning, their problem wasn't getting financing, but finding a home they could afford -- any home.
They would have liked to buy a new home, but developments were sprouting so fast that builders would offer newly finished houses for sale in batches of 10 or 12, and the Hendersons would camp out overnight with other prospective buyers to bid on them.
"The homes in a group might be $200,000," he recalled, "and if you didn't win a bid on one, the average price for the exact same home in the next group would be $260,000."
"Because homes we're going so fast and getting so expensive, we just thought, we need to get into a house before we're priced out of the market." When they learned through friends at church that their present house might be going up for sale, "we jumped on it. It never hit the market."
Even though Mr. Henderson was still going to school when they purchased the house, he wasn't worried, because he was able to go back to work as a mason after he got his degree. He also took out a second mortgage of $55,000 to help finance renovation work on the house that he did himself.
And then, in 2008, both of the major casino jobs he was working on, the Echelon Resort and a new tower at Caesars Palace, halted construction because of the economy, and he was out of steady work.
He began to fall behind on his house payments, making one every six or seven weeks. By this time, his loan was owned by Wells Fargo, one of the biggest home lenders in the nation, and he knew that the bank officials normally wouldn't even talk to homeowners about modifying their loans unless they stopped making payments. So he did, and in 2009, he got a foreclosure notice.
He quickly filed for mediation under a new Nevada law. So far, it hasn't been a pleasant process.
Mr. Henderson has been through three mediation meetings last year and this year, and he and his attorney, David Crosby, said bank representatives have not been willing to negotiate, despite the fact that the law requires banks to do so.
"My vision of mediation was we were going to sit across from each other and we were going to come to some kind of middle ground," Mr. Henderson said. "We would give, they would give, we'd get it settled, and we'd move on."
Instead, he said, bank officials at the mediations would keep repeating, "Give us your financial information and we'll plug it into our system and see whether you qualify for a modification. We argued for hours and that's all we got."
Mr. Crosby, his attorney, agreed.
"Think about it. The banks said 'You can have a loan because you have a good credit score -- we don't care that you don't have any income.' And now, that very same bank, when we go down to try to fix this in mediation, says, 'I'm sorry but we've got very strict federal guidelines' that he doesn't qualify for -- bull----, where were your federal guidelines when you approved this guy? You didn't care then, but now you care? Come on, let's fix the loan."
Tom Goyda, a Wells Fargo spokesman, said the bank did negotiate with Mr. Henderson, "but unfortunately, we were not able to come up with a satisfactory option for them to stay in the home."
After months of little movement, Mr. Crosby says he has found fraudulent signatures on some of the bank's loan documents, and is arguing in state courts that the foreclosure should be set aside and the bank should be sanctioned.
Wells Fargo believes that "as far as the documentation requests go, we have complied with all requirements of the state foreclosure law," Mr. Goyda said.
In the meantime, Mr. Henderson wishes he knew seven years ago what he knows now.
"At the time," he said, "everybody said prices will keep going up, and eventually they'll plateau, but they'll never come down -- that's what everybody said."
The Hendersons' story shows that many caught in the housing collapse in Las Vegas were not avaricious or dishonest.
Barbara Buckley, executive director of the Legal Aid Center of Southern Nevada and former Nevada speaker of the House, said that in some stories about her city, "it's portrayed like, 'Oh, these greedy homeowners are looking for an excuse to take advantage of the situation,' and I don't see that.
"I see the face of a person who says 'I've been a plumber for 36 years in this town, I've never been out of work, and first I lost my job, and then I lost the boat, and then I lost the vacation home and then I lost my wife, and now I have lost my home and I'm being sued by a credit card company and I don't know what the hell I'm going to do' -- that's what we see here.
"And so when I see the political pundits or even the banks speak with such callousness about how this is all people not wanting to fulfill their obligations and I look at the wreck that is our economy, I'm not very sympathetic."
Mark Roth: firstname.lastname@example.org or 412-263-1130. First Published December 4, 2011 5:00 AM