Here is an undeniably positive development in the housing recovery.

Creative Commons 2.0: respres, http://commons.wikimedia.org/wiki/File:Sign_of_the_Times-Foreclosure.jpg

Distressed home sales – such as the one in our photo above – were the most visible result of the housing downturn, a true sign of the unfortunate times.

But that was then. Now, after a couple solid years of investor purchases and economic recovery, distressed home sales are a shadow of their former glory, and are quickly approaching nonexistence.

The Rapid Decline of Distressed Home Sales

Indeed, the data is hard to ignore – according to numbers from the National Association of Realtors, distressed sales made up just 9 percent of all existing-home sales, with foreclosures making up 6 percent and short sales 3 percent.

There are two especially encouraging developments at work:

• First, distressed home sales have now fallen from 49 percent of the market in March 2009 to just 9 percent.
• Second, in four of the last five months, the market share for distressed sales has been in the single digits, and the one odd month represented just a 10-percent share.

Of course, there were still be distressed sales for quite some time – as we’ve reported, in judicial states especially, long foreclosure timelines guarantee a steady steam of distressed activity into the future – but they will no longer dominate the marketplace.

See our graph below for a better idea on just how radical the improvement has been: