Are the 88 notices of foreclosure in the first quarter of this year in Napa — nearly twice as many as a year ago — a time for doom and gloom in the Napa real estate market?

People in the local real estate business say no. Instead, local industry sources view this as a period of correction in the housing market.

Coldwell Banker's Doug Fowler, said the 88 foreclosure notices is not a major issue — except for those homeowners impacted by the experience. He estimated no more than five to eight would end in foreclosure sales on the courthouse steps.

These notices of default are the first steps in the foreclose process, Fowler said.

He added that many of the default notices are often due to extenuating circumstances such as health issues or financial reasons involving homeowners who need better financing. Homeowners can work through this if they contact their real estate agent or lender.

Despite the higher-than-normal foreclosure notice rate, Fowler is optimistic about the local real estate forecast.

"For the most part there are still buyers out there. Prices are soft, but holding. We are optimistic, but recognize the challenges," he said.

John Mourraille, a mortgage broker/owner in St. Helena, said any foreclosure in any neighborhood affects values of surrounding homes.

If a homeowner wants to refinance and when an appraisal is done, they have to use comparable values to homes in that area. If there is a foreclosure nearby it is going be noted and bring down the values of the other homes in the area, according to Mourraille.

Therefore a foreclosure hurts values for everyone else in the neighborhood and makes it more difficult to get better market prices, Mourraille sail.

Mourraille predicts things will get worse before getting better.

"In the past five years everything was going up in value in the 20 percent plus range — nothing like it in real estate history and now that's over. We have to pay the price for the great gains," Mourraille said.

This resulted in low rate short-term mortgages and now homeowners are refinancing and seeing payments going up and some of them can't afford the increased costs.

Fowler pointed out that interest rates remain low. "That is very positive. We are lucky," he said, compared to the mid-1980s when interest rates for home loans were around 18 percent.

Fowler said what people are losing with the subprime loan is the flexibility of a brand new buyer to get 100 percent financing with less favorable credit scores.

"Lenders are buckling down. Maybe it has been too easy Š now the market is correcting itself and tightening up a bit. Money is less available than it was a year ago," Fowler said.

Meanwhile, Mourraille predicts foreclosures will increase and certain homeowners who have to refinance are going to find it more difficult because their home will have a lower value than what they think.

"The next seven years will be a time of correction. … We are just beginning the cycle. Real estate pretty much runs in a seven-year cycle," Mourraille said.

This whole housing correction could take 12-48 months before it bottoms out, Mourraille predicted.

"And the correction will be across the board — including the multi-million dollar estates," Mourraille said. "How severe depends on who you are. If your not taking all the equity out (of your home) and stay in the home and don't care you will be OK."

In Napa, properties are selling, but some homeowner in trouble may not have enough equity to pay off the closing costs.

Mourraille said he believes Napa Valley is a little more insulated from the foreclosure issue because it is a small market. Fowler agrees, saying the limited space for new housing and that the Napa Valley is a desirable place to live are two biggies.

"Romanticism of the wine business and vineyards … is so interesting to so many people," said Fowler.