LAS VEGAS — New father Alon Natanel, a 32-year-old mortgage loan officer, recently got rid of his convertible BMW for a more affordable sport utility vehicle. It was better to transport an infant, he said, and suited what the slumping housing market has done to his income — which fell from six figures to four.

"You cannot put a baby in a convertible," Natanel said. "Especially when you cannot afford the payments."

Nevada's nation-leading foreclosure rate has dumped a flood of bank-repossessed homes on the market, depressing prices and turning a hot market with tight supply into ice-cold and saturated. Real estate agents are struggling to find work, auto sales financed by home equity loans have plummeted and would-be buyers are sitting on the sidelines.

The economy might seem depressed if it weren't for the steady stream of inbound planes laden with tourists, and the billions of dollars of new construction on the Las Vegas Strip.

"It's going to turn around," Natanel said. "It's just a matter of time."

One think tank already is predicting a housing shortage by late 2009, as workers are expected to flock to the state to fill jobs created by the megaresort building boom.

"We're merely at the bottom of one cycle and heading back up on another one," said Jeremy Aguero, a principal at Applied Analysis.

He points to the megaresorts planned to go up over the next few years, from Las Vegas Sands Corp.'s $1.8 billion Palazzo, opening in January, to Boyd Gaming Corp.'s $4.8 billion Echelon in 2010. In all, the surge is expected to add more than 40,000 hotel rooms by 2012 and create about 100,000 direct and indirect jobs, according to Wall Street firm Deutsche Bank.

Similar booms followed the construction of Luxor, MGM Grand and Treasure Island hotel-casinos in the mid-1990s; the Monte Carlo, New York-New York and Stratosphere a few years later; Bellagio, Mandalay Bay, The Venetian and Paris Las Vegas in the late 1990s; and Wynn Las Vegas and Red Rock in recent years.

Big resorts open, people come to fill jobs, and home builders struggle to keep pace with the influx.

"Typically, people read the papers," said economist Jim Shabi of Nevada's employment department. "They know when Vegas is building casinos and they come to town to find jobs."

That doesn't make the current slowdown any less serious, but constant construction on the Strip has eased job losses.

COMMERCIAL BUILDING

According to Shabi, specialty trade contractors employing such workers as roofers and siders shed nearly 14,000 jobs in Nevada's residential construction sector in the second quarter from a year earlier. But commercial sector trade jobs rose by 5,600, fueled largely by construction on the Las Vegas Strip.

Benito Del Toro is an example. The 28-year-old concrete finisher foreman arrived from Mexico 10 years ago to work in the busy home-building industry.

When his hours slipped below 30 a week this summer, Del Toro joined the Operative Plasterers and Cement Masons International Association, which put him to work on a new casino tower. His hours and pay more than doubled.

"More hours, more job, more benefits. It's better," said the husband and father of a 2-year-old. "Why would I go back?"

In the wider economy, the housing slowdown has hurt.

For the first time since after the Sept. 11, 2001, terrorist attacks, Nevada is facing a major downturn in its retail sales tax collections, prompted by falling sales of autos, furniture, durable goods and home-building materials.

The projected $440 million tax shortfall from all sources over the two-year budget period to mid-2009 pushed Gov. Jim Gibbons to plan for a 4.5 percent across-the-board budget cut.

Home sales in the Las Vegas area were down 37 percent in November from a year ago, with median prices down 11 percent, according to the Greater Las Vegas Association of Realtors.

Meanwhile the supply of single-family homes and condominiums rose nearly 19 percent to 29,484, as foreclosed homes seeped back onto the market.

RealtyTrac Inc. counted 6,694 foreclosure filings in Nevada in November, up 167 percent from a year ago.

Roughly half of all foreclosures in Las Vegas are on homes that were bought by out-of-state investors, Aguero said. While that eases some of the localized pain, the ensuing glut has devastated the housing market, and put most buyers in wait-and-see mode, worsening the slowdown.

"As investors try to divest themselves of this property, it puts a huge downward pressure on prices," he said. "Every 1 percent drop in housing prices costs Nevada families roughly $1 billion."

At the Sedona Style furniture shop in Las Vegas' Safari Business Park, four furniture stores within a block have closed in the past year, according to owner Ted Duke. He said his $50,000 to $75,000 in monthly sales is "half what it should be."

"Six months ago all the forecasters were predicting the downturn in housing would be over in '08. Yesterday they were saying late '09," Duke said. "Everybody's worried."

LeaseTrader.com, the Web site that allowed mortgage loan officer Natanel to ditch his $1,200-a-month lease and find a vehicle for $500 a month, said Las Vegans are downsizing to cheaper leases on cars to ride out the market trough.

"I think what you're seeing in Las Vegas, you're seeing all over the U.S., especially the bigger cities in south Florida, like Miami, the Fort Lauderdale area, as well as on the West Coast," said the site's founder and chief executive, Sergio Stiberman.

The company expects to handle 35,000 lease transfers this year, up from 20,000 last year. In Las Vegas, 20 percent more people than a year ago are swapping high-cost leases for lower ones.

"People are saying, 'Let me just cut down on expenses, let me take it easy for a little bit, and when things get better, I know I'll be able to go back and get another vehicle,' " Stiberman said.

Some real estate agents haven't been able to ride it out. After doubling in number from 2003 to 2007, membership in the Greater Las Vegas Association of Realtors was down to 15,825 at the end of November, from the peak of 17,557 in September 2006.

HOPING FOR NEXT BOOM

Ben Correa, a 35-year-old Realtor, figures he got into the business at the wrong time. He quit a job as a television reporter three years ago after hearing stories of a surging market. After working full time six days a week, he's managed to cut 10 deals this year — enough to pay the bills.

"I missed the wave pretty much, but I'm waiting for that other one, which I believe is around the corner once we get through these foreclosures," he said.

Mick Galatio, president of Desert Wind Homes Inc., is getting ready. This year, instead of building 20 to 40 homes at a time, his company is building four to eight. And he's ready to offer cut-rate deals to any serious buyer, slicing margins to the bone.

But he's read Applied Analysis' report of an expected shortage and he has seen how quickly a boom on the Strip translates into a housing recovery since he founded his Las Vegas-only company in 1994.

"We need to be ready to get our houses on line and get back to the marketplace," he said. "My expectations are after the first of the year, I'm going to be out there looking at who's got land for sale."

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