Foreclosures in Maricopa County jumped 171 percent last year compared with 2007.

That's according to a new report by Default Research, which provides foreclosure information on the Valley and Tucson. The number of foreclosures in Maricopa County increased from 22,426 in 2007 to 60,860 last year.

"Prices were really inflated compared to the incomes people were receiving, and their only options to buy were using creative financing," said Serdar Bankaci, Default Research founder. "When the prices stopped going up, people weren't able to refinance to get money out of their homes to cover their loans, and then there was the resetting of mortgage interest rates. The drop in prices has led to a large inventory of homes, plus you have the foreclosure homes in that pool."

About 4 percent of households in the county are in foreclosure.

Among the 10 states that Default Research monitors, Arizona was on the high end in terms of homes in foreclosure in 2007 and early 2008, Bankaci said. It is now behind California and Florida in the severity of the foreclosure crisis, he said.

The market should improve by the third quarter, Bankaci said.

"In your area, we might start to see a decline (in foreclosures) by the end of the year," he said. "You're looking at probably 2.5 percent of households in foreclosure, which is a historical average."