Las Vegas residents have seen pretty much everything, and have learned to take a lot in stride living in America’s gambling and entertainment capital – including an almost decade-long battle with negative equity that shows few signs of easing.

With more than a quarter of mortgaged homeowners underwater, owing more on their home than it’s worth on the open market, Las Vegas has the highest negative equity rate among large cities nationwide. Such high rates of negative equity could reasonably be expected to grind similar markets to a standstill by constricting inventory, contributing to local home price volatility and keeping foreclosure rates high.

But not Las Vegas. Instead, local homeowners, buyers, lenders, developers and real estate professionals have learned to live with negative equity, to work around it where necessary and to move forward and accept its presence as part of the “new normal” in a city constantly looking forward.

Zillow visited Las Vegas as part of our Housing Roadmap to 2016 series of events, focused on discussing key housing and economic issues in the cities most impacted by them. In partnership with the Lied Institute for Real Estate Studies at the University of Nevada, Las Vegas, we dove deep into the many challenges negative equity presents for a city like Vegas. We came away surprised and impressed by the level of optimism in Las Vegas, and by the non-traditional, but highly practical, solutions the real estate community has embraced to help counter its effects.

“I’m optimistic,” said Congresswoman Dina Titus in her welcoming remarks. “Signs are good. People say Las Vegas is coming back, and I agree. Our unemployment rate has been cut in half. We’ve had more conferences and conventions this year than we’ve ever had. The [Bureau of Land Management] is starting to auction off land, and developers are getting back into business. These are good times for Southern Nevada.”

It’s said what happens in Vegas, stays in Vegas. But when it comes to dealing with negative equity, Vegas has plenty of lessons to share.

“We Can’t Give it Away”

While some distressed homeowners in Las Vegas may be seeking that next program or bit of funding that will save them from their plight, many are also simply trying to move on with their lives – negative equity be damned.

“Underwater homeowners are, I think, hitting a certain level of apathy,” said Tom Ernsperger, senior vice president of loan administration at One Nevada Credit Union. “When the problem was really at its height a few years ago, we couldn’t move fast enough to keep up with demand from people looking for help, applying for aid and asking questions about their options. Now, it’s almost like we can’t give money or help away. Most underwater borrowers we talk to today are making their payments, like their home and want to stay in it, and don’t want the feeling that they’re being ‘sold’ something. They just want to live their lives.”

Negative equity is also not the dominant issue in the market impacting the majority of homeowners and prospective buyers. Different groups are grappling with different problems, rather than everyone grappling with one problem, an indicator of more balance in the market, according to local experts.

“How you feel about the Las Vegas market today depends on where you are in your life,” said Michelle Johnson, president and CEO of the Financial Guidance Center. “First-time buyers are excited and optimistic, but need help with down payments. Middle-aged homeowners are struggling with loan modifications that might be resetting. Older homeowners are grappling with reverse mortgages. We have so many different populations with different views, struggling with different problems.”

Even in Vegas, There’s Such a Thing as Too Much

Las Vegas is known as a city of excess. But a seemingly never-ending series of local, state and federal rules and programs aimed at improving the lot of local homeowners may be starting to have the opposite effect on the local housing market.

“Las Vegas needs less policy,” said Tisha Black-Chernine, a partner at local law firm Black and Lobello. “All these new policies and programs coming through encourage a kind of ‘wait and see’ attitude for distressed and underwater homeowners hoping they can hold out and wait for the next program to help them. But the market needs to move forward now.”

The multitude of local regulations put in place impact more than just homeowners’ attitudes, too. Many of these laws were enacted for good reason – intended to prevent so-called automated “robo-signing” of important paperwork, for example. But the constantly changing regulatory environment also made it overly difficult for many lenders to foreclose on homes during and after the worst of the recession, particularly larger, non-local lenders trying to triage national portfolios of distressed homes. In turn, many distressed homeowners lived for years in their homes without making payments, contributing to the local market’s instability.

Rules and policies aimed at keeping responsible homeowners in their homes are admirable. But at some point, foreclosure has to also be a viable option for banks when homeowners stop making payments on their mortgage.

The New Normal

The extraordinary is fairly ordinary in Las Vegas’ housing market. As a result, local real estate professionals and residents alike have adapted to the new normal.

“The mess of the housing market? We’re just used to it now,” said Chernine-Black. “Everything isn’t brand new anymore.”

Indeed, in just a few short years, Ernsperger said, the incredibly rare has become incredibly routine.

“Prior to the meltdown, we hadn’t done a foreclosure in maybe 20 years,” Ernsperger said. “Now, we’ve adjusted to the fact that there’s just a constant drip of problems. We identify them, address them and move on.”

Homeowners, too – even the most troubled – understand that their plight is serious, but not insurmountable, and that life will go on. Much like it doesn’t make sense to dwell on a bad beat at the blackjack table, Las Vegas residents have learned to face their problems head-on and to weigh their options with clear eyes, Chernine-Black said.

“Compared to a few years ago, I’m going through a lot less tissues in my office now,” Chernine-Black said, referring to distressed homeowners that used to burst into tears when told of their limited options. “In just a few years, attitudes have changed. We’re used to it now.”