The number of foreclosures filed in Spokane County last year dropped precipitously, falling below the 500 mark for the first time since 1997.


Randy Barcus, chief economist at Avista Corp., says that with property values rising, most people who have to sell their homes can do so before they default on their mortgages, allowing them to avoid foreclosure. In the current robust real estate market, he expects foreclosure activity to decrease even more this year and again in 2007.


It wouldnt surprise me to see the number of defaults around or under 300 next year, maybe as low as 250 in 2007, Barcus says.


The Spokane County Auditors Office says that 484 foreclosures were filed on deeds of trust last year, down 40 percent from 2004, when 806 defaults were filed, and well under half of the 1,030 foreclosures filed in 2003.


The number of defaults last year was the lowest number since 1997, when 474 defaults were filed.


Barcus says the strong housing market hereand specifically, rising home valuesaccount for the drop in the number of foreclosures.


The Spokane Area Multiple Listing Service reports that the median price for a home sold through the MLS last year was $150,000, up 16 percent from the $129,000 median home price in 2004.


With home appreciation climbing so quickly, fewer homeowners are likely to find themselves upside down on their home loan, meaning its less likely that the amount they owe on a home is greater than its market value, Barcus says. In an environment of such rapidly rising prices, most homeowners who find themselves faced with the need to sell their homes can do so for more than they owe and avoid going into default.


In the current market, he says, most homeowners who have their mortgages foreclosed upon become upside down on their loans because they have taken out second mortgages or home-equity loans for amounts that are greater than the homes value.


The banks are competing heavily for lending activities, and the number of home-equity loans that go up to and exceed a homes value are on the rise, he says. When a homeowner gets upside down on a loan, they often choose the path of least resistance, which is foreclosure.


Because such liberal lending practices are more commonplace now than they were 10 years ago, its doubtful that the number of foreclosures in Spokane County will fall as low during this cycle as it has in the past, Barcus says. In 1993, for example, the number of foreclosures dipped to 70, and in 1978, only 21 foreclosures were filed.