Foreclosed Homes at Two Year Low

Carpe Diem has been collecting data on the number of foreclosed homes for sale in states hit hardest by the housing bubble's collapse. I've copied the California numbers below, but all the charts they post show the same pattern. Foreclosed homes for sale peak in December, and have been falling sharply since.

This doesn't mean that the recession is over, that the housing market is booming, or that people aren't still having a hard time paying their mortgages. It shows a market correcting itself. As foreclosed homes drive down housing prices, potential home owners are buying again, injecting needed capital into the system and helping the market rebound. There are other possible explanations. Maybe banks pulled foreclosed homes from the market until prices rebound. Maybe foreclosures themselves have dropped.

Carpe Diem also posts the foreclosed home data for Countrywide:

This is just one company - although Countrywide was (or still is) the largest mortgage company in the U.S. and financed 20% of home mortgages in 2006 - but doesn't this suggest that the real estate markets are slowly healing and recovering, and gradually returning to normal as the foreclosed properties are sold?

Maybe. Maybe not. But we can be pretty sure that whatever's happening started well before the so-called Stimulus Package passed into law.