Foreclosures in Spokane County shot up 84 percent in the last year, but economic analysts here say that increase isn't too alarming yet, compared with the soaring foreclosure activity in other parts of the country.

The county auditor reported 560 foreclosures in 2008, up from 304 foreclosures in 2007 and 269 in 2006, when foreclosures bottomed out after declining for four years.

Phil Kuharski, a longtime observer of the Spokane-area economy, says the numbers are part of a cycle that doesn't appear as though it's going to dip as far here as it did during the last economic downturn, when foreclosures in the county peaked at 1,152 in 2002.

"When talking about housing stock and incidence of foreclosure in Spokane County, 500 to 600 foreclosures is a troublesome number, but it's reflective of a period of adjustment," Kuharski says. "It's not panicky."

He says 350 to 400 foreclosures would be about normal for Spokane County, although he predicts a higher number of foreclosures—between 500 and 900—in 2009.

Nationally, the number of properties that were subject to some form of foreclosure notice in 2008 was up 81 percent from 2007 and 225 percent from 2006, according to RealtyTrac, an Irvine, Calif., company that compiles a database of foreclosure properties. That's more than twice the rate of increase that occurred in Spokane County in the same two-year period.

Randy Barcus, chief economist for Spokane-based Avista Corp., says foreclosure numbers here still were about 25 percent lower in 2008 than at a comparable period in the last recession, and he predicts that foreclosure numbers will peak this year or next.

"I see it peaking at substantially less than 1,152 foreclosures," he says, referring to Spokane County's 2002 foreclosure total.

He says real estate values have held up here better than in most of the country.

The median sales price for homes sold in the Spokane area in 2008 was $184,000, down 0.8 percent from the previous year, the Spokane Multiple Listing Service reported.

By comparison, home prices declined 10.6 percent in 2008 nationwide, according to a preliminary estimate issued by First American Core Logic, a Santa Ana, Calif.-based provider of real estate information.

Even though home values here may have leveled off, they still are 53 percent higher than five years ago, Barcus says, adding that most people have owned their homes for more than five years.

"There wouldn't be a lot of people upside down in their mortgages," he says.

In previous years, the foreclosure rate in Spokane County has been held down in part by strong employment growth, so the rising unemployment rate could mean foreclosure numbers will remain elevated for a while, Kuharski says.

Spokane County's unemployment rate climbed to 7.6 percent in December, up 2.5 percentage points from a year earlier. Yet the county's overall job picture for 2008 "was actually pretty good," says Doug Tweedy, Spokane-based regional economist for the Washington state Department of Employment Security.

The recession that started in December 2007 "hadn't caught up with us until the fourth quarter of 2008, and we're still faring much better than the rest of the country," Tweedy says.

Spokane County gained 1,500 jobs in the first three quarters of last year, before losing 1,000 jobs in the fourth quarter, ending the year with 218,000 nonfarm payroll jobs, for a net gain of 500 jobs, Tweedy says.

He says he expects some good news on the employment front in 2009 or 2010. "If a stimulus package is passed, it will give us a surge in construction employment," he says.

Rob Higgins, executive vice president of the Spokane Association of Realtors, says foreclosure numbers aren't high enough here to lead to a significant drop in real estate prices.

Less than 5 percent of homes listed for sale in the Spokane area are bank-owned, unlike in the Bakersfield, Calif., market, for example, where more than half of the real estate inventory is bank-owned, and home values dropped 29 percent last year, he says.