It is interesting how some positive, however slight, makes the economic press release. In this case excluding distressed properties home prices declined -.01 percent vs. -6.7 percent when including distressed sales.

The concern, of course, is that nationwide "distressed sales" are running at greater than 50% of total sales. And distressed sales are expected to increase as foreclosure volumes resume!

Here an example from California:

"The total share of all distressed property types sold statewide increased in February to 56 percent, up from 54 percent in January and up from 55 percent in February 2010."

california.realestaterama.com/2011/03/22/california-pending-home-sales-distressed-sales-rise-in-february-ID01030.html

And across the country in Jacksonville, Florida, it's nearly the same:

www.lovelyjacksonvillehomes.com/Blog/Jacksonville-Real-Estate-Market-February-2011-Jacksonville-Home-Sales-Show-Distressed-Sales-at-62-of-Sales

Consideration must be given to the collateral (home) value necessary to support the loan value. If banks make further loan writedowns evisceration of wealth and value from the economy is going to continue. This is highly deflationary!

Bernanke and the Fed are getting exactly the opposite of their intended results. Housing is deflating while everything else inflates! Strike one against the Ph.D quants at the Fed!

What the Fed should have hired were Ph.D's in the laws of unintended consequences!