WASILLA -- It's little consolation to hundreds of Mat-Su families grappling with home foreclosures, but real-estate watchers say the recent spate of foreclosures here pales in comparison to the disaster that slammed the Valley in the late 1980's.

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State officials in 2008 logged 275 foreclosures in the Palmer recording district, which extends from Willow to Sheep Mountain. In 1987, the same area saw a whopping 1,693 foreclosures -- and that was with far fewer homes and people.

Foreclosures weren't the relative exception they represent in today's real-estate market here, industry observers say. They were the market.

"It's probably not an exaggeration to say that if you were to look at the market (in the late 1980s), that 80 percent of the homes on the market were probably foreclosures," said Jerry Moses, an associate broker in Wasilla with Prudential Jack White/Vista Real Estate who started selling real estate in 1983.

During those years, home prices plummeted by as much as 50 percent, he said. Properties that might have sold for $200,000 on a more even-keeled market sold for $80,000.

Uli Johnson, another longtime Valley real-estate agent, remembers the empty subdivisions, scores of failed banks and interest rates doubling from 8 to 16 percent. She and her husband, Robert, owned a construction company. They actually lost money on two three-bedroom houses in Wasilla and had to write the buyers a check.

Johnson handled up to 50 foreclosures in the late 1980s, with more than a dozen other brokers handling foreclosures too. Today she's one of just a few Mat-Su brokers who handle foreclosures and has only about 14 on her plate.

She remains convinced the stress of the times contributed to her husband's 1990 death at 57 from a heart attack.

"You feel like you're a failure," she said. "There is nothing that he did or any of us did. It's just the way the market bounced."

Last year Alaska's home foreclosure rate was the third lowest in the nation, according to a new report from the state labor department. The statewide rate of 1,131 foreclosures in 2008 represents a 15-year high, though far below the record 6,821 reported in 1988.

That's little help to those 275 Mat-Su families who did face home foreclosure last year.

Ivan and Cheree Vasquez joined those ranks in the fall.

Three years ago, with two young sons, the Vasquez family moved up to a three-bedroom home on a spacious lot in the Whispering Woods subdivision behind Lowe's in Wasilla.

Then, Cheree said, she lost her job as an intensive-care technician at Mat-Su Regional Medical Center.

The couple lived off credit cards. To pay off their escalating debt, they took out a second mortgage. That caused higher monthly house payments -- about $1,800.

They couldn't keep up. In October the couple surrendered their home to the bank, Cheree Vasquez said. They filed for Chapter 7 bankruptcy the month before, records show.

"We were drowning," she said. "We were just stressed out all the time."

Today she's getting certified as a medical assistant through Charter College. Her husband works as a full-time Web designer for Matanuska Telephone Association and comes home to spend evenings and weekends on his own Web design business.

The family rents a house off Fairview Loop for $1,100 a month, though recent wintertime utilities added another $600 a month -- making the total about as much as the "enormous" house payments that originally put them under.

The couple believes the Valley could eventually get as bad as the '80s, if things continue down the kind of path they've experienced.

"It's going to be a while before we buy again," Cheree said. "With this economy, who knows what's going to happen?"

The Matanuska-Susitna Borough has seen a rise in foreclosures but not to the point where they influence assessments, said borough assessor Dave Dunivan. That only happens when pockets of foreclosed homes start dragging down property values in the neighborhood.

Realtors and mortgage holders say the Mat-Su's market is leveling off to where it should be after years of rapidly increasing values.

"It's going to affect property values if foreclosures continue," said Cris Skinner, Wasilla branch manager for Preferred Mortgage LLC. "Luckily we haven't seen the developments the Lower 48 has, and hopefully we never will."

Alaska's economy soured in the mid-1980s due to different factors than are occurring around the country and the world now, observers say.

Oil prices crashed as the state was sinking millions into construction projects. The sudden spike in unemployment and frozen state spending combined with high interest rates to create a disastrous home ownership climate.

A number of factors are different now, broker Moses said. For one the federal government is pumping billions of dollars into the national economy.

But the state's economy is more diverse now too, Moses said. Twenty years ago, people who lost oil-industry or state-construction jobs fled the state to find work, turning unsellable homes back to banks that weren't inclined to provide much help with short sales or other devices, as brokers say at least some banks are now.

Moses said he mentions the '80s "all the time" as context for today's troubles.

But that doesn't mean the message is easy to swallow.

"I think it's hard to look at our market and have people go, 'Oh, well, there's a positive viewpoint,' " he said. "We've gone through 14 years of economic growth that was sustained and pretty incredible. To not have that feels different for people who don't know anything else."

Find Zaz Hollander online at adn.com/contact/zhollander or call 352-6711.

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