Foreclosures Hit Closer To Home

Until recently, my corner of Los Angeles seemed to be isolated from the foreclosure crisis that has swept across the nation and impacted so many communities. But now, a few bank-owned homes have popped up in the local multiple-listings service (MLS).
A search of my local area returned 97 homes, the cheapest of which was a two-bedroom, one-bathroom house listed at $650,000 and the most costly of which was a four-bedroom, four-bathroom house on a very desirable mountain-view street listed at almost $3 million. The median price was approximately $890,000.
At least four of the homes were identified as being bank-owned, foreclosure or REO. But the pain wasn't spread across the wide range of for-sale homes. Instead, all of the foreclosures were priced between $650,000 and $760,500.
Were entry-level buyers more susceptible to bad mortgages and financial woes? Have local Realtors decided that a "bank-owned" or "foreclosure" label might stigmatize a luxury-level home? Or is some other trend at work here?