Kitsap County house prices will drop about 3 percent in the upcoming year, according to early predictions from the county assessor’s office.

That’s the most optimistic prediction for the local housing market from that office since 2007.

The Assessor’s Office predicted, fairly accurately, that local housing prices would fall by 4 percent in 2008, 10 percent in 2009 and 6 percent in 2010.

“The big thing that’s dragged the market down are the foreclosures,” said Kitsap Assessor Jim Avery. “Once the properties are foreclosed on by the banks, they’ll go to auction where they’re aggressively priced and sold at deep discounts.”

But there’s hope.

“Many of these loan-modification programs have kicked in,” he said. “Hopefully that will slow down the foreclosure rate and there won’t be as many of them coming onto the market.”

The Assessor’s Office compiled the preliminary statistics to help fire districts begin writing their budgets for the upcoming year.

Some fire districts, including South Kitsap Fire and Rescue, are funded through property taxes.

And since they can’t raise the tax, their budgets are at the mercy of the housing market.

Local house values have fluctuated throughout the past year, but the most recent statistics from the assessor’s office, for February, were positive.

The median price for a South Kitsap house was up by $5,000 to $230,000 this February, compared with $225,000 last February.

The trend was similar throughout Kitsap County, and the median house price, countywide, went up by $500 from $248,500 to $249,000.

Avery expects that, the housing market will level out in 2012 and 2013.

But people should remember, he said, that predictions of the future are somewhat uncertain, and his office plans to adjust accordingly.