DALLAS -- Imagine trying to sell all the residential property in Arlington and Alexandria -- roughly 100,000 houses, apartments and condominiums -- all at once during a recession.

That's the size of the task facing real estate sellers in Houston, where nearly 200,000 homes are vacant, about twice the average for most cities of comparable size.

The sudden appearance of an extra 100,000 homes in three years results from record foreclosures in the wake of fallen energy prices and a Texas-size building spree that turned sour.

The stockpile of repossessed property here has grown so big it has created a chain reaction, fueling the recession that bred most of the vacancies in the first place.

The cycle is being played out in many other areas of the country, from Denver to Peoria to Miami. But nowhere is the problem more acute than in Dallas, Houston, Austin, San Antonio and other Texas cities. They are burdened with the biggest real estate glut since the Depression of 1929. Texas homes that sold for $48 a square foot three years ago now go for $25 a square foot.

"It's very serious, very severe and unlike anything I've seen in my 25 years in the housing finance industry," said Michael A. Smilow, a vice president of the Federal National Mortgage Association -- Fannie Mae -- a government-chartered, privately run company that buys home loans and sells securities.

No one disputes the severity of the problem. No one disputes that an economic upswing is the long-term remedy, even though predictions of recovery rise and fall with oil prices.

What is disputed -- hotly disputed -- is how the U.S. government should sell the growing surplus of property it has inherited from debtors and from failed banks and savings and loans. The list includes hundreds of thousands of repossessed homes, condominiums, shopping centers and business complexes -- no one knows the exact number because no one in government has added them up.

The harder the government pushes to dispose of this inventory, the lower the prices will go and the less the original lenders will recover. Investors from around the country who poured money into the state during its go-go years in the early and mid-1980s are watching anxiously, knowing the size of their losses depends on the outcome of the debate and its effect on the Texas economy.

"There's a dumping problem -- there's all that property. You can't sell it all at the same time. If you do, the price gets close to zero," said Jay Janis, a California S&L executive and former chairman of the Federal Home Loan Bank Board, the federal agency that regulates S&Ls.

Said Sandra Flanigan, vice president and bank analyst at PaineWebber Inc. in Houston, "You cannot say it's just a Texas problem. Texas is not an isolated market. We're talking global markets. It's something that needs to be more directly addressed by Washington than it has been."

She added, "We don't think the real estate markets have bottomed. The question is, what does one do? The market's not strong enough to withstand a dumping."

Record foreclosures have turned half a dozen federal agencies into landlords, each with a separate, sometimes conflicting, policy for selling off or renting tens of thousands of properties. A joke in Houston has it that the Federal Home Loan Bank Board ought to vote on the city council because the agency has become the city's biggest landlord.

Scores of S&Ls, banks and mortgage lenders across the country also have become landlords. To them, the government's policy -- or lack of policy -- is no joke. They claim the sales strategy of the government is an uncoordinated free-for-all that is destroying real estate prices and undermining the efforts of private companies to dig themselves out.

William Isaac, a banking lawyer and former chairman of the Federal Deposit Insurance Corp., the federal agency that insures deposits at banks, warns that "banks around the country are going to end up paying for those problems if they're not handled properly."

Stuart A. McFarland, chief executive of SKL Holdings Corp. in Falls Church, couldn't agree more. SKL is the company that emerged when a tax shelter company called Equity Programs Investment Corp. was reorganized in 1985 under Chapter 11 of the U.S. bankruptcy code. It owns 17,000 repossessed homes, about 9,000 in Texas, and claims to be the largest manager of foreclosed properties in the United States.

"There will be a time as this death spiral continues that local municipalities will have trouble providing basic services as their tax base erodes," he said, explaining that as home values fall, so does the tax cities collect on them. That perpetuates the creation of what he calls "neutron bomb neighborhoods," or modern-day ghost towns.

"The whole problem should be privatized because the government has no idea how to manage property, how to stabilize property or how to sell to tenants so sales are paced out over time," he said.

Several Washington area institutions are creditors of SKL and stand to be big winners or losers, depending on how Texas home prices move. Among them are Dominion Federal Savings and Loan in McLean, Washington Federal Savings & Loan in D.C. and Baltimore Federal Financial.

So much new foreclosed property is coming to these institutions that they hope to keep SKL alive as a jointly owned subsidiary after the bankruptcy plan is complete and earn a profit managing troubled real estate for themselves and others.

But that depends on the success of SKL, which in turn hangs on how far government policy pushes down prices.

"Our government system by its nature works against itself in trying to solve problems of this size because each agency in effect is its own little fiefdom," said Joseph E. Robert, who owns one of the largest companies in the country that manages troubled real estate.

Executives at some of the half dozen other major companies that specialize in managing foreclosed property insist they could do a better job than the government. But they say that even if the government turned over to them all the business they could manage, the federal agencies still would be left with more property than they can handle under current policy.

"The size of the problem dwarfs the amount of expertise available in this country to handle it," Robert said.

The sentiment reflects conflicting goals of the private sector and the government. Companies want to hold properties and dispose of them slowly to keep prices as high as possible. The government, in theory, also wants to sell at top dollar, but it also wants as much cash as it can get today and isn't keen to hold property on the chance it might fetch a higher price tomorrow.

With each of a half dozen agencies operating on its own, the take-the-cash philosophy ends up looking like a fire sale to private investors. Government officials insist they must operate in the interest of the government and by the rules Congress sets for them, including an assumption that the government has no business holding property on the gamble that prices might rise.

But the uncoordinated actions of the half-dozen federal agencies involved adds to the turmoil, investors say. The Federal Housing Administration, an agency that guarantees loans and takes over homes when buyers default, held 35 auctions for homes in Texas this year, FHA officials in Texas say.

That was news to FHA officials in Washington, who last week said they did not know how many auctions their field officers were holding. "As far as auctions go, they can do what they want; they can hold them when they want, it's their own thing," said Bill Glavin, an FHA spokesman in D.C. said.

Fannie Mae held 20 auctions of its own, while the bank board held six.

None of the auctions was coordinated.

Policies have become so confusing that agencies sometimes act one way one day, another the next.

For example, the Office of Mangement and Budget -- which sets budget policy for the White House -- in recent years ordered the Veterans Administration to sell its repossessed homes as quickly as possible to help reduce the federal deficit. But OMB in recent months came under pressure from House Speaker Jim Wright (D-Tex.) and Rep. Jack Brooks (D-Tex.), and ordered the VA to cut auctions because of complaints the agency was depressing real estate prices and hurting private companies in the lawmakers' home state.

"So we held no auctions in Texas from October of 1986 to June 1987," said Tom Maher, assistant director of property management at the VA. In the meantime, the FHA, Fannie Mae and other government-affiliated organizations were holding auctions as often as once a week, he said.

"We looked like dummies," Maher said. "We're willing to be part of a coordinated strategy {among the agencies}. But we don't want to be standing in the corner while everyone else is out playing."

The policy of the Federal Deposit Insurance Corp. is to sell its properties, mostly commercial real estate, as quickly as possible. "You have to let the marketplace take its course, even if it looks gruesome," said Steven Seelig, assistant director for FDIC liquidations. "If you hold stuff off the market, the market still knows it's there" and will adjust prices accordingly.

"You can't fool people that way," Seelig said.

Yet another agency, the bank board, is working to come up with a policy by Jan. 1 for selling property in Texas or other depressed regions. In the meantime, sometimes the agency sells property right away, sometimes it holds it, and no one is ever sure which way it will go on any particular parcel.

Real estate experts say Washington has taken much too long to focus the debate away from the cause and onto the pressing problem of what the government will do about the resulting glut of housing that by some estimates will take 10 years to unload.

The government's cache of foreclosed and repossessed real estate has doubled nationwide since 1981, according to available figures, but in Texas during the same period it increased at least tenfold. By some estimates, the U.S. government and a dozen or so private companies now own about 25 percent of the housing stock in some Texas markets.

The government's failure to see the problem and address it early attests to the inability of individual agencies to comprehend the big picture, critics say.

"1986 was the year of great awakening in Washington," said Barton Smith, head of the economics department at the University of Houston. But the crisis began at least four years earlier.

OMB officials, who would not comment publicly, conceded there has been no effort to get the various U.S. agencies or federally chartered companies to coordinate efforts.

Officials at the federal agencies said they would oppose any new agency to handle the government's mounting real estate, but agreed that coordinating policy -- and auctions and sales practices -- might work.

"There's no easy answer," said Jay Janus. "But it's very important to have a coordinated policy so that one agency isn't selling at one price and another is selling at another price. That creates market instability."

One possible remedy discussed by the private sector would be to sell the government's repossessed real estate to the private sector as quickly as possible while allowing the government to keep rights to profits should the private company sell the property for a larger-than-expected sum.

Whatever is done or not done, one trend is certain, officials in government and business say. As the number of homes for sale rises, the price of homes will fall. The farther prices fall, the more worthless loans backed by the homes become. As loans lose value, so do the banks and other lenders holding them. The weaker the lenders become, the greater the likelihood that more real estate will fall to federal agencies.

It's a classic vicious cycle. "You can compare it to a nuclear explosion," said Joe Robert. "There aren't enough doctors to handle the medical casualties."