The chart below comes from MLS history. It clearly shows the year over year decline of listings, whether traditional or financially distressed. It is reflective of several things, but they all relate to supply and demand.
Clearly, during the height (or depth) of the recession, property was not selling, many properties stayed on the market a long time with no results. Some of those properties slipped into short sale or foreclosure situations, some of those properties were made available as rentals by their owners, and some of the owners simply took their properties off the market delaying making a change in their lives.
Whatever the cause, the effect will lead to stabilization of prices, and a rise in property values, such is the law of Supply and Demand!