In early 2009, distressed sales — real-estate owned (REO) properties and short sales — comprised over two-thirds of all California home sales. Today that figure is just over 10%, according to data aggregator CoreLogic. California leads the nation in the reduction in its share of distressed sales from the Great Recession-era peak.

CoreLogic also reports that California’s inventory of homes in foreclosure comprises just 0.6% of all mortgaged homes in the state in February 2015 — less than the national rate of 1.4%.

At this rate, CoreLogic estimates the nation’s share of distressed sales will reach a “normal” (that is, pre-Recession) rate of around 2% by 2017. Around that time you can expect foreclosures and the resulting distressed sales to creep back up. By then, increased mortgage interest rates will have reduced purchasing power for long enough to push down home prices, increasing negative equity and thus driving a modest increase in foreclosures.

Distress is always present to some degree in the housing market. What a “normal” distress rate looks like changes with the larger economic picture. Our version of normal in the decade following the Great Recession may just mean a distress rate closer to 10% than 2%.

We’re experiencing a transitional moment with regard to distress in the housing market: moving from a period when REOs, short sales and foreclosures were the dominant feature of the real estate landscape to a period where they comprise but one feature of it. It’s the difference between a traumatized, foundering economy and a resurgent one.

first tuesday estimates this situation will work itself out sometime between 2018-2020. By then, an ongoing jobs recovery, the demographic confluence of retiring Baby Boomers and first-time Generation Y homebuyers, and the steady march of inflation will breathe vigor into the housing market. Those who managed to ride out the foreclosure crisis in properties they purchased at Millennium Boom extremes will have finally reached a lasting positive equity position.

Each successive echo of the bursting bubble will fade in intensity, so the flurry of distressed sales and foreclosures in 2017-2018 won’t make too many waves in an otherwise ongoing housing recovery.