Spokane is the 7th best market out of 292 major markets followed by a national, independent research firm. We have not suffered as bad as the North Idaho panhandle. I do not know where the Puyallup agent is getting his information; but every reasearch and statistical analysis and tracking shows that we entered the slump after Idaho and the rest of the nation and will probably recover sooner.
As to the home you inquired about. I do not know the particular house, but it is in a convientent south hill area. Banks generally just want to "off" their inventory. The wisest choice is to have a home inspection. A few $$ now could save a lot in the future and give you a good, true picture of the home. Then you can continue with the purchase or rescind the purchase offer if there are too any negatives. There are some great buys out there and only you with the assistance of your own realtor can decide what is best for you. As to the increased property taxes--your realtor can access tax information on nearby properties to perhaps explain that or you can go to http://www.Spokanecounty.org
and see what neighboring homes have done. Good luck with your home search.