Already, banks have delayed foreclosures, hoping the new Obama administration will offer aid or work out programs that would benefit bankers' bottom line.
If it doesn't, a wave of new bank-owned listings could overwhelm the real estate market and send it tumbling again.
For now, it seems to be stabilizing here. Since April, monthly sales activity has grown over the previous year in San Joaquin County, according to DataQuick. Sales in September and October were at levels not seen since 2005 – near the height of the bubble frenzy.
New buyers are primarily first-timers and investors. A recent NAR survey found 20 percent of buyers are investors, but Stockton-area real estate agents put the investor share at one-third or more.
Some renters buy their first house
One first-time buyer, Christine Amy, has an offer accepted on a bank-owned home in Lathrop, a town in California's San Joaquin County.
"I'm a single parent with a bunch of kids, working part time going to school, and I'm just, like, there's no way [I could buy a home]. And 12 months ago, there wouldn't have been any way, even though I had three jobs at the time. The market was just too high," says Ms. Amy.
For $166,000, she was able to get a two-story, four-bedroom home in decent shape. Many foreclosed homes Amy looked at were "just completely thrashed." With most of the homes she did like, she lost out to other bidders. Some investors are able to undercut competition by simply offering cash.
Her real estate agent, Jim Muthart, says the type of buyer depends heavily on price. He scrolls down a list of 43 homes he's sold over the past eight months, ranked by price. Investors snatched up the first third of the list – the cheapest homes – to turn into rentals.