Things appear better than a year ago, but the reality is much different, the problems persist

I agree with you especially about inventory being so low.  Where I live in Southern CA, the inventory of houses for sale has dropped by almost 65% in the last 18 months.  It is making it really hard for buyers. 

Michael - While I agree for the most part, I do disagree about flipping.  I am seeing a lot of flipping down here in Los Angeles & Ventura counties.  While it's nice that FHA has waived the 90day seasoning rule, down here, I'm seeing scenarios of investors who are buying properties in bulk, which is greatly reducing the price per property. 

They then drop a little into the properties to make them habitable (minimum amount of work) and then turning around and selling them at market value, which ends up being anywhere from 50% - 100% increase from the last sales price to the current sales price.

I've had two scenarios like this since FHA changed the guideline in February and I've had Realtor friends and fellow MLO's who have had this same scenario happen to them too.  Don't know if it's a trend yet but it is getting more common.