PHOENIX (Fortune) -- Did you happen to see the latest home-price stats from S&P/Case-Shiller, or did you avert your eyes? Here's what struck me: As of March 2009, every metro area in Case-Shiller's 20-city index, without exception, has fallen double digits from its peak. Ten are down more than 30%. Eight have dropped more than 40%. Las Vegas is down 50%. Phoenix? It doesn't get any worse than Phoenix. According to Case-Shiller, between June 2006 and March 2009 the average house in Phoenix lost a staggering 53% of its value. Possibly during the Great Depression, but almost certainly at no time since then, have house prices in a major metropolitan area fallen by more than half. It's almost unbelievable. Brother, tell me you didn't buy a house during the boom in Phoenix!

I've been to Phoenix twice in the past six months to look at real estate. The first time, in November, I squeezed into a crowded white stretch limo and rode around town all day looking at foreclosures on a tour led by an energetic realtor who wore Chanel sunglasses. Time to buy, she assured us, and who could argue? Prices had come way down. When I went back in May, however, prices were still going down. And while the pace of home sales had picked up, nobody I talked to was ready to call a bottom - not with any conviction anyway. "I think if we reach our toe down, we can kind of feel the bottom," real estate investment adviser Robin Reed, president of ProEquity Management in Scottsdale, told me over lunch at a strip-mall bistro on my first day in town, "but we can't rest solidly on it yet."

My focus on this trip was a little different. I was looking at places where retired people live. I wondered about the specific impact of the bust in those places: How have homeowners fared during the downturn? What are the prospects for newcomers who might want to buy now? To be blunt, are there screaming bargains to be had?

Here are the short answers: Retirement communities in and around Phoenix got smacked ("same as other places," says Reed; "it's real estate") but, in a surprising twist, not as violently as the broader market; the price drops were less dramatic and there haven't been nearly as many foreclosures. Is it a good time to buy? Yes. Will you find a screaming bargain? You might, if you're patient and alert to the peculiar inefficiencies of the retirement market (more on that later), but not as easily as you could elsewhere in Phoenix. That's okay, by the way. Too many bargains implies a market defined, historically, by too much volatility and pain. You don't need that when you retire.

Phoenix is where the seemingly oxymoronic concept of an active retirement was born nearly half a century ago. Today it's famous for its many acres of planned, age-restricted communities built around golf courses, swimming pools, and artificial lakes, where property taxes are low because there aren't any schools (there aren't any kids), yard work is a breeze (yards are all gravel), and street-legal golf carts serve as second cars.

The granddaddy of Arizona retirement meccas and the first development of its kind anywhere in the country, Sun City, turns 50 next year. It was built by the legendary Del Webb, a hard-drinking, nonsmoking former owner of the New York Yankees who made his fortune building military bases (and a Japanese internment camp) in the Southwest during World War II, and later Minutemen missile silos in Kansas and Montana, a 30,000-acre housing development for NASA workers in Houston, the Beverly Hilton, and several Las Vegas casinos. Bob Hope, Bing Crosby, and Howard Hughes were among his pals.

Sun City was a big hit from the day it opened, Friday, Jan. 1, 1960. In its first weekend, according to an account in Time, Webb sold 272 of the "neat and gay pastel houses" at prices ranging from $8,750 for two bedrooms to $11,600 for three bedrooms and two baths. Phase one was completed in the '60s, phase two in the '70s, phase three in the '80s, block after block of new construction displacing irrigated fields of grapes and cotton, gaily marching north up the valley. In the '90s came Sun City West, Sun City Grand, Corte Bella (that one's gated), and just in the past couple of years, Sun City Festival, which sits 10 miles beyond the western limits of developed greater Phoenix in a dusty, whistling wasteland at the base of the White Tank Mountains.

Today more than 100,000 people live in the combined Sun Cities, on curvy, desert-landscaped streets, interlaced with close-cropped fairways and dotted with lakes and bustling rec centers (supported by a modest annual assessment) where residents, when they're not golfing, can swim, bowl, play shuffleboard, and make pottery and stained-glass trinkets. You (or your roommate) must be at least 55 years old to live here. Children under 19 can visit, but they can't stay longer than three months. The newer the development, the nicer the homes, the classier the amenities, the more you'll pay. (Every house gets garbage pickup twice a week; not all come with fancy granite countertops.) If you're prepared to spend nearly $1 million, you can have two bedrooms, a patio suitable for a presidential fundraiser, and a stunning fairway vista in Sun City Grand. Farther south in phase one, meanwhile, just over $100,000 buys a cozy cottage on 107th Avenue that's walking distance from the Sun Bowl amphitheater, which hosts free outdoor concerts in the spring and fall.

Reed had warned me at lunch that given the economic downturn, the mood in Sun City might be grim. "It's one thing to be 40 or 50 and know that you've got 10 years for the thing to turn back around, and that in the meantime you can go out into the job market, you can do something," he said. "People in their sixties and seventies really can't do that. They're feeling a despair right on the heels of what previously had been kind of a wisdom - 'We've been here before, we know how to batten down the hatches.' For them it was never about consumption. But they did expect their savings to be savings and their investments to be investments and their pensions to be pensions. It went from wisdom to concern and then, in some cases, outright fear."

That may be true for retirees in general, but inside the walls that surround places like Sun City the impact of the downturn is muted. At the Sun City Visitors Center on the corner of 99th and Bell, I meet volunteer greeter Bill Burt, 76. He isn't grim at all. Red-faced and barrel-chested, with a shock of salt-white hair sprinkled with pepper, Burt grew up driving a cotton picker in fields not far from where he now lives. He was a "blood banker" when he still worked, he says, building and managing blood donation centers all around the country. Ten years ago he came home. Burt and his wife bought a duplex condominium in an older section of Sun City. Two years later, in 2001, they sold at a small loss and traded up to a nearby duplex on a lake for $161,000. Then came the boom.

By 2005, if we can believe Zillow.com, the Burts' house was worth more than $300,000. And today? Zillow says $173,000, or 40% below its peak. Burt just grins and shrugs. It was only a paper gain; now it's a paper loss from that high. Meaningless, in other words, unless he decides to sell, which he has no intention of doing. He's happy, his wife's happy. His only regret is that he didn't move to Sun City 10 years earlier. "When people leave here, they usually go out in a box," Burt says. "Or they've been cremated, you know. They go out in a bottle."

According to the latest MLS data, Sun City, while definitely hurting, is a lot better off than its neighbors. The median sales price in April for a single-family dwelling in surrounding Maricopa County (Arizona's populous region that includes Phoenix, Mesa, and Scottsdale) was $125,000, down from $230,000 a year ago. That's 46% in 12 months. Ouch. In Sun City during the same period, home prices fell just 24%. What's killing Maricopa County is foreclosures. Even as home sales rise, cheap, bank-owned properties are flooding the market: 1,042 in April alone, plus 8,396 new pre-foreclosures, where the borrower has stopped paying and the eviction process is underway. Foreclosures during the same month in Sun City? Six, representing an infinitesimal one-hundredth of 1% of Sun City's single-family homes. Fewer foreclosures equals greater stability.

It's a pattern that seems to play out nationally. While there's been little research on how retirement markets have fared specifically, experts say that the same profile - minimal foreclosures, less severe price drops - is true of retirement communities across the country (for more examples, see our gallery of deals across the nation). Says Bill Ness, founder of the retirement website 55places.com: "It is a common understanding among most agents that real estate values have held up better in active adult communities than in other non-age-restricted communities."

There could be a simple explanation for this: Old people aren't as stupid and greedy as young people are. Or maybe they're just not as stupid and greedy as they were when they themselves were younger. "By the time you're retired," says Phil Andrews, 85, a Vietnam vet and 10-year resident of Sun City West, "you've got a little bit of sense about buying a house. You're not going to buy one you can't pay for."

It's true. Ask the local realtors about the exotic variable-rate mortgages that suckered so many younger homebuyers into borrowing more than they could ever hope to repay, and they just shake their heads; not in Sun City. In fact an astonishing 61% of Sun City residents have no mortgage at all. Bob Bleasdell, for example. He's a 73-year-old retired obstetrician who lives in Sun City Grand. The night before the full moon in May, Bleasdell and I sit talking for an hour on his patio at dusk while he smokes a $5 cigar. "I retired in 1995 at 61," Bleasdell says. "If you're going to retire early, you can't have a lot of wives you're paying, you sure as hell can't have kids in college, and you can't have a lot of debt. You gotta get your debt down, get your bills paid, pay for your car. And then when hard times come, you don't participate. My IRA's down 40%; I don't sell it."

Bleasdell and his wife paid $220,000 for their house in 2003. Two years later they might have been able to sell it for $400,000, but why would they do that? Bleasdell likes it here, enjoys sitting outside in sandals and shorts under a soft blue blanket of sky by a blooming palo verde tree, listening to the quail and the doves, calling out to neighbors as they pass. He plays golf three days a week, with three different foursomes, rotating among four different courses, none of which takes more than five minutes to get to in a golf cart he parks in its own little garage. Bleasdell says he has no idea what his house is worth today, and furthermore, he doesn't care. His kids might care someday, he allows, but that's neither here nor there. "We don't owe 'em anything," he says. "I helped buy a house for my daughter. I take my son on fishing trips up to British Columbia. I've done enough for them. If they get anything out of us, it's just a bonus. Don't count on it."

Next day I'm driving around the nicest parts of Sun City with realtor Renee Chipules, trying to get a feel for what's out there. First-quarter sales were down slightly this year, Chipules says, in stark contrast with the rest of Maricopa County, where sales were up 79%. One reason for that we already know: Sun City doesn't have nearly as many foreclosures, which tempt investors and first-time homebuyers with irresistible discounts and are fueling a sharp rebound in sales in some parts of the country. But there's also the ripple effect. No one has to move to a retirement community; when people can't sell their houses back home, they tend to stay put. "It used to be the case that people would come in, buy the house they liked, and feel confident that when they went home their house would sell within 60 or 90 days," Chipules says. Now they're waiting for their homes to sell before plunking down for another. Chipules and other realtors I spoke to think there's a huge, pent-up demand for retirement homes. Once the market recovers nationally, the argument goes, Sun City and other places like it will get a big bump, especially as the coming wave of baby boomers starts to retire.

Chipules shows me three houses - similar sizes (about 3,000 square feet), similar layouts (two or three bedrooms, all on one floor), similar amenities (marble everywhere, hot tubs, curved-glass showers), all of them situated directly on or within sight of a golf course. But the asking prices are all over the map: $425,000 in Sun City West, $699,000 in Corte Bella, and $949,000 in Sun City Grand. Why the disparity?

Well, for the one in Grand, it could be the fairway view; it truly is spectacular. "What's going to happen with that particular piece of property," says Sun City realtor Norm Brenna, who knows the house, "it's going to be somebody who pays cash, and it's going to be somebody who walks in and says, 'This is me, here's my money.' That's where that's going to sell." Still, if this one sells for anything close to what the current owners are asking, it would be shocking; they paid $895,000 near the peak in April 2007.

The one in Corte Bella? Possibly it's overpriced, even fully furnished. Its owners paid $491,000 in June 2006, so they'd be making money too. Not likely, says Brenna: "Everybody I've been involved with over there wants to list way more than they can currently get." That's why things are slow, he says. "If you watch the listings over there, when they sell, they definitely come down in price." And Sun City West for $425,000? A bargain, Chipules believes. Priced to sell at two-thirds of its peak value in late 2007. But the current owner was there long before the big run-up in prices; she's got other houses, and she just wants her equity. Sure enough, after 12 days on the market, she gets an offer at asking price, sale pending.

All of this, says Chipules, is evidence of a turbulent and inefficient market. No one really knows what anything is worth anymore. Some sellers appear to be kidding themselves, even now, though a patient, sober buyer will indeed find bargains, even screamers. (Here's a tip: Heirs are motivated sellers. Says resident Tom Mays: "The kids, they'll probably accept the first offer that comes, just to get out.")

But don't get too excited. Excitement is over in real estate. On the other hand, if you're thinking about moving soon to Sun City or someplace like it, you're in luck. You won't have any trouble finding a terrific house, and it shouldn't cost you nearly as much as it would have just a couple of years ago. Congratulations.