Here are two ways to consider the effect of foreclosures on New Hampshire's housing market: Foreclosed homes represent just 1 percent of all owner-occupied properties in the state. But looking solely at houses currently for sale, foreclosures account for more than 25 percent of the market.

"There's no doubt that anytime there's a foreclosure in a neighborhood, it's going to have an impact on home prices in the area," said Jim Knowlton, a Realtor with Keller Williams Realty who has handled many foreclosed properties in the past few years.

According to Realtors, lenders, and others with an eye on the New Hampshire real estate market, foreclosed properties are keeping a lid on prices across the housing spectrum, as the state's economy struggles to rebound. But foreclosures may also offer bargain opportunities for patient buyers who don't mind a bit of risk and some hard work.

"Foreclosures can be bargain-hunter dreams, but many times they need work once you get them," said Jane Law, communications director for the New Hampshire Housing Finance Authority. "They come in a wide variety of conditions once they hit the market, so you have to know what you're getting into."

New Hampshire is better off than many states when it comes to foreclosures and declining home values. While prices rose consistently through the early 2000s, the state's housing market didn't experience the boom seen elsewhere. And foreclosures make up a tiny percent of all owner-occupied homes in the state, according to Peter Francese, a demographer with the New Hampshire Association of Realtors.

"In New Hampshire, you're not driving down the street and seeing whole neighborhoods with one foreclosure sign after another," Francese said.

But the number of Granite Staters losing their homes to foreclosures has risen sharply in the past three years. The trend is driven by a number of factors: loans that were too expensive in the first place and never went through the proper review process, rising interest rates on adjustable mortgages and job losses, among other reasons.

The typical victim of foreclosure is changing, too. Two years ago, the vast majority of foreclosures (63 percent) were on houses with adjustable-rate mortgages, which carry more financial risk for borrowers. Today, houses going through foreclosure are about evenly split between those with fixed-rate loans and those with adjustable-rate loans. Those numbers indicate that many recent foreclosures are due not to extravagant loans but broader economic forces, such as job loss and cuts in wages, said Law of the state Housing Finance Authority.

Many people who've been through several real estate cycles in New Hampshire say the current foreclosure trend is worrying. Leo Lessard, the registrar of deeds for Strafford County, recalled the last wave of foreclosures in the early 1990s, when the state

was reeling from a banking crisis.

"We haven't seen those kinds of numbers yet,"

Lessard said. "But this has been a record for recent years."

New Hampshire foreclosures have stopped the steep increases of the past three years. But the number of foreclosures each month is holding steady, with an average of 300 per month for the past year or so. In the first four months of this year, there were 1,113 foreclosures in the state, compared with 1,084 in the first four months of 2008.

But some warned that a steady decline in foreclosures may not be around the corner. Mortgage finance companies Fannie and Freddie Mac halted foreclosures for two months this winter, as did several private lenders. But now that moratorium has been lifted, lenders may be more likely to pursue foreclosure against borrowers who fall behind on their mortgages.

"I do think we're going to be seeing more (foreclosure) inventory over the next six months," Knowlton said.

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