Default notices sent out by lending institutions were down by 32.9 percent from 2003, which resulted in the lowest default count since the service began compiling statistics in 1992. Default activity was strongest in 1996, when 217,410 homeowners found themselves in the foreclosure process.

"There's always going to be a certain level of financial distress out there. People lose jobs, get divorced or have costly medical emergencies even in the best of times. Right now, though, because of increasing home values, virtually everyone can sell or refinance if they're really in trouble," said Marshall Prentice, DataQuick president.

"We expect foreclosures to go up this year. It's likely that appreciation rates will come down somewhat. And also, a lot of last year's mortgages were higher-risk loans, where default rates will be higher," he said.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

While all counties in California saw a decrease in foreclosure activity, the decline was strongest in Los Angeles and San Bernardino counties. Mortgage loans are least likely to go into default in San Luis Obispo, Orange and Marin counties. The likelihood is highest in Central Valley counties.

Only about 10 percent of the homeowners in the default process actually lose their homes to foreclosure. Most are able to stop the foreclosure process by bringing their mortgage payments current or by selling their home and paying the mortgage off.

While foreclosure properties impacted property values by an almost 10 percent decrease in some areas eight years ago, the effect on today's market is slight. Home prices in the Bay Area and sales are staying at record levels, with prices rising at the fastest pace in the past four years.

"The strength of the market has certainly taken economic forecasters by surprise. Interest rates have been edging up the past month. Generally when that happens, buyers jump to get in before rates increase any further. We can expect a strong March and April, at least," Prentice said.

The median price paid for a Bay Area home set a new record at $549,000, up 20.1 percent from $457,000 for February a year ago and up slightly from the previous month.

Typical monthly mortgage payments in the Bay Area were $2,460 in February, an all-time high. One year ago buyer commitment to mortgage payments was $2,008.

With low foreclosure rates, stable down payment sizes, and a lack of any indicators showing market distress, there are no significant shifts in the market mix.

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to gmeissner@silvar.org.