The chart below recently released by the Minneapolis Area Association of REALTORS dramatically illustrates how closely home prices are tied to foreclosure activity.
As foreclosures spiked up in 2007-2008, sales prices spiked down. As foreclosures dropped this year, prices improved, also helped by the short supply of inventory. In August 2013, 82.2% of new listings were traditional sales (not foreclosures or short sales). Read the full report.