Foreclosures here rise with nation, but economists not alarmed

Foreclosure activity in Spokane and Kootenai counties so far this year is continuing an overall upward trend since defaults bottomed out in 2021.

Economic observers contacted by the Journal say the foreclosure numbers aren’t alarming yet because they are far below the peak of defaults during the housing market collapse that followed the Great Recession over a decade ago.

In the first half of this year, foreclosures on deeds of trust in Spokane County totaled 167, up 56% from 107 compared with the year-earlier period, according to data released by the Spokane County Auditor’s Office.

The recent numbers, however, could be indicating a slowdown in the rate of foreclosure growth compared to overall growth since foreclosures on deeds of trust reached a low of 36 in 2021. For example, full-year foreclosures on deeds of trust recorded in Spokane County totaled 216 in 2024, up 227% from the year earlier total of 66. Spokane County 2024 numbers were up 1,800% over the 2021 total.

Foreclosures on deeds of trust in Spokane County peaked at 1,211 in 2013.

Grant Forsyth, chief economist for Spokane-based Avista Corp., says it isn’t surprising to see an uptick in foreclosures, especially on recently purchased homes, which have mortgages with elevated interest rates and historically high prices.

“Anybody that’s going to go in for a new home is going to be paying a relatively higher rate on a pretty expensive home compared to what we saw a few years ago,” he says.

As of mid-August, the average interest rate for a 30-year mortgage in the U.S. was 6.66%, up from 3.07% five years ago, according Bankrate, an online personal finance marketplace.

Meantime, the median home sales price in Spokane County so far this year is $425,300, up from $300,000 five years ago, according to data compiled by Spokane Realtors.

Housing across the state line in neighboring Kootenai County is even more expensive, Forsyth notes.

The median sales price for a home in Kootenai County so far this year is $545,000, up from $288,400 five years ago, according to data compiled by Coeur d’Alene Regional Realtors.

In Kootenai County, default notices, which mark the beginning of foreclosure actions on all types of property, totaled 57 for the first half of this year, up 56% from the year-earlier period, according to figures supplied by North Idaho Title.

Kootenai County’s foreclosure activities are reported differently and aren’t directly comparable to Spokane County’s foreclosures, because not all of the actions reported in Kootenai County result in foreclosures on deeds of trust.

Similarly to Spokane County, though, the increase in Kootenai County is slower than the overall rate of increase since 2021 when full-year default notices reached a low of 25.

Following the Great Recession, foreclosures begun in Kootenai County peaked at 2,817 in 2010, according to The Real Estate Report, a regional real estate research publication.

Forsyth says a quarterly analysis by the Federal Reserve Bank of New York shows a nationwide rise in the delinquency rate of student loans, which also could play into foreclosure trends.

He says, “The question is: To what extent is the debt burden in one part of the household affecting their ability to pay debts on another part, in this case the mortgage?”

Forsyth adds, however, that he doesn’t see other economic indicators that would point to steep increases in foreclosures in the near future.

“Unless there’s a big shock to the economy that dramatically slows growth, I don’t know that we have the stage set yet for a really big increase in foreclosures like we saw in the housing bubble,” Forsyth says.

Likewise, Karene Loman, president of Spokane Realtors, says she’s not seeing a steep increase in distressed properties on the market such as occurred during the housing market collapse over a decade ago.

“There’s a slight uptick, but its still less than 1% of all of our transactions,” Loman says.

Of 3,200 homes sold through the association’s Multiple Listing Service in the first seven months of this year, only 10 were foreclosure sales, she says.

Other factors that might contribute to foreclosure risk include the rising costs of insurance and property taxes that add to mortgage payments, she says.

“My payment has gone up 500 bucks a month in the last four years just because of increases in homeowners’ insurance and property taxes,” Loman says.

Historically, increases in foreclosure activity have been tied closely to the job market and rises in unemployment. However, Mike McBride, Spokane-based regional labor economist with the Washington state Employment Security Department, says the unemployment rate in the Spokane-Spokane Valley Metropolitan Statistical Area is the lowest in nearly two years.

In June, the unemployment rate for the Spokane area was 4.1%, down from 4.7% a year earlier, according to preliminary data from ESD. By comparison, in the years spanning the Great Recession to the resulting peak in foreclosures, Spokane-area unemployment was consistently over 8%, peaking at 10.3% in February 2010.

The most recent job count in the Spokane area, however, declined by 3% to 261,600 in June from 270,100 a year earlier.

McBride attributes the decrease in total jobs to new retirees leaving the labor force and a slowdown in in-migration.

“We haven’t seen mass layoffs showing up in the numbers,” he adds.

An element of wage differential might come into play as foreclosure numbers rise, he says.

“The real issue might be that wages continue to be difficult to keep up with the cost of living,” McBride says. “Wages haven’t gone up by even close to the same percentage as the median cost of a house in Spokane.”

One employment sector that’s continuing to grow, however, is health care.

ESD data shows the private education and health care sector grew by 4% in the 12-month period ending in June.

“There’s high-credential employment opportunities there that pay high wages that can afford the cost of housing more easily,” he says.

Anthony Carollo, CEO of Spokane-based Vista Title & Escrow LLC, says current Spokane County default numbers are far below the 2013 peak, in part because the vast majority of outstanding mortgages still have interest rates at or below 5%, and homeowners have equity in their homes.

“In this current environment, it seems like if a property goes into foreclosure, generally the owner is able to work out a solution,” he says.

Carollo says he’s monitoring a jump in defaults on debt for commercial properties, especially office buildings.

“Those loans are structured differently,” he says. “They’re often on an adjustable rate after three to five years, and so particularly now, those rates are starting to adjust up.”

Foreclosure numbers here are in line with trending numbers statewide and nationwide, according to data from Irvine, California-based real estate data marketplace Attom Data Solutions.

On a national level, 187,700 properties were subject to foreclosure filings in the first six months of this year, up 5.8% from the year-earlier period and up 188% compared with the first six months of 2021, the company’s latest foreclosure market report shows.

Attom includes properties with default notices, scheduled auctions, or bank repossessions in its calculations.

For the first six months of this year, 1 in 758 U.S. properties were subject to foreclosure filings, the report shows.

In Washington state, 2,500, or about 1 in 1,300 properties, had foreclosure filings in the first six months of this year, up 40% compared with the year-earlier period. In Idaho, 609, also about 1 in 1,300 properties, had foreclosure filings in the first half of the year, up 2.8% compared with the year-earlier period.