Las Vegas may be in the middle of a desert, but right now it’s underwater.  Fully two-thirds of the once fast-growing city’s housing stock is underwater,  meaning that the owners owe more on their mortgages than the home is worth.

According to www.zillow.com, borrowers who are underwater totaled 20.4 million at the end of the first quarter of this year, compared with 16.3 million at the end of last year.  This represents 21.9 percent of all homeowners.

The irony in these numbers is that falling prices are making homes more affordable for first-time buyers who previously were shut out of the housing market.  At the same time, the decline in home prices compounds problems for owners who get into financial trouble by making it harder for them to refinance and take advantage of the current low interest rates.

“What’s going on here is that you don’t have any markets that have turned around and you have new markets, like Dallas, that have joined the ranks of communities where home prices have fallen,” noted Stan Humphries, a Zillow.com vice president.

Zillow.com reports that the nation’s top 10 underwater cities are:

• Las Vegas, NV                    67.2 percent
• Stockton, CA                       51.1 percent
• Modesto, CA                       50.8 percent
• Reno, NV                             48.5 percent
• Vallejo Fairfield, CA       46.5 percent
• Merced, CA                         44.4 percent
• Port St. Lucie, FL              43.5 percent
• Riverside, CA                     42.8 percent
• Phoenix, AZ                        41.7 percent
• Orlando, FL                         41.7 percent