MIAMI — For sale: one newly constructed three-bedroom, four-bathroom home near the University of Miami, with South African wood in the kitchen, marble from India, Egypt and Spain, and a $4,500 top-of-the-line garage door.

Listing price two years ago: $979,000. Listing price now: $599,000.

“I always figured the market trend wouldn’t catch me,” said Rafael Diaz, the owner and builder. He turned down $770,000 more than a year ago, he said, and has come to accept that he will never get the $700,000 he said he needed to break even. “By the end of the year,” he said, “I might just turn it over to the bank.”

Homeowners are struggling nationwide. But here in South Florida, the reversal of fortune has been especially severe, scrambling the psychology of a community that has historically treated real estate as a game of how-rich-can-you-get.

Overdeveloped and still building, this remains a place where conversations about the market are sugared with a rush of dreams and speculation. Now, though, people start with “if only I had sold when,” rather than “I should have bought.”

Home values in the Miami area rose reliably for 86 consecutive quarters, or 21 years, according to the Office of Federal Housing Enterprise Oversight. Then last fall, they started dropping.

The declines have been significant. The widely respected Case-Shiller index reported last week that prices of previously owned single-family homes in Miami fell by 28.3 percent over the last year, second only to Las Vegas, where home prices dropped 28.6 percent.

Analysts said it could take another year before the local market stabilizes.

“It flew the highest and the farthest during the boom days, and now it is falling the hardest,” said Michael D. Larson, a real estate analyst with Weiss Research, an investing research firm in Jupiter, Fla.

Much of the downward pressure has come from banks trying to offload distressed properties. Foreclosures have received the most attention, but Florida real estate agents also recently added a field in their listings database for “short sales” — properties with an asking price below the amount due on a mortgage, in which the lender often forgives the remaining debt to complete the sale.

As of last week, 24 percent of the roughly 34,000 single-family homes for sale in Miami-Dade and Broward Counties — and 20 percent of the 47,000 condominiums — were listed as potential short sales.

Homeowners trying to compete say they often feel flabbergasted by the competition. Alexandra Swanberg said she reduced the price of her 1,482-square-foot town house to $245,000, from $287,000 last year, to keep up with the dozens of for-sale signs sprouting throughout her middle-class South Miami neighborhood.

“Everyone has been in a panic,” Ms. Swanberg said. “The Realtors are crazy; they want you to drop the price really low.”

Ms. Swanberg, 52, acknowledged that she could afford it. Like many homeowners, the losses of the last few months have not erased the gains of two decades. She said she bought the house 19 years ago for $60,000, and she plans to move to the Orlando area simply because she feels it is time to move on. But when a real estate agent recently told her to cut the price to $225,000, she angrily refused.

“It’s a large unit, three huge bedrooms, large windows,” she said. “This is not something you want to give away.”

For many sellers, the culture of constantly rising real estate prices has been hard to shake, and now a new condition has appeared: seller’s regret, or flashbacks to offers past.

Ms. Swanberg, who works in public relations, has spent a lot of time recalling early offers of around $270,000 that she rejected.

Mr. Diaz still thinks longingly of his first potential buyer, whose offer of $770,000 he turned down near the end of 2006.

“I should have taken it,” Mr. Diaz said, his voice echoing inside the empty home he visits every few days to clean. “I guess I was a little cocky, or stupid.”

Just across the street stood another sign of his self-described “craziness,” a two-bedroom bungalow he had planned to tear down to make room for another new home. He had been renting the house for $1,300 a month, but it has been empty since May.

“There is just too much on the market,” he said.