LAS VEGAS -- Las Vegas tops the list of cities when it comes to being upside down on mortgages.

According to zillow.com, more than 67 percent of Las Vegas area homeowners have negative equity in their homes.

Reno is the No. 4 city, with 48 percent of homes upside down.

The real estate pendulum has gone from one extreme to another, but there are signs that things are changing.

These are not great times for people who bought homes over the past five years.

“As much as we were hyper-inflated today, I believe we are hyper-deflated,” said Rick Shelton, of the Greater Las Vegas Association of Realtors.

There are indications that the deflation trend is slowing.

“We're seeing a gradual increase in sales every month and recently, we're seeing a minute but gradual decrease in inventory,” Shelton said.

The latest figures show an 80 percent increase in house sales from April of last year compared to this April, while townhouse and condominium sales are up a whopping 242 percent.

However, because of job losses, the economic meltdown is making it more difficult to get a mortgage.

“The underwriting process is more scrutinized, really hard, and the borrowers have to qualify with higher standards,” said Sanje Sedera, of First United Mortgage. “Credit has to be impeccable. The income has to be within their budget -- and a decent amount of savings.”

There are fewer new listings, and the negative prices appear to be slowing down.

“I would absolutely say we're seeing the light at the end of the tunnel,” Shelton said.

While sales are up and inventory down, house prices today are about 38 percent lower than they were a year ago.

Real Estate Association figures show that the median price of a home in the Valley is now $164,000, while a condo or townhouse is just under $96,000.