Phoenix, Arizona (CNN) -- Want a sign of economic hope? Look to a place where the housing collapse began: Phoenix, Arizona.
"We're talking about (home) prices being 3 to 4% higher than last year, which most people don't believe because they're used to bad news," said Mike Orr, director of Arizona State University's Center of Real Estate Theory and Practice.
Orr's new report on the Phoenix market shows a direct reverse of the situation that sparked a massive housing bubble. Monthly foreclosure starts have fallen 49% since a year ago. Home sales are up 8%. The result? What had been a market with far more housing supply than demand has now become a place where buyers have to act fast and beat out heavy competition.
"It's no longer difficult to sell your house here," Orr told CNN Radio. "If you price it at market, it well sell quickly. The supply situation is unusually low."
Supply is down some 42%, Orr estimates, from September 2008.
That is a dramatic turnaround for an area that once had a massive supply glut. According to Orr's predecessor at ASU, Jay Butler, during the recession foreclosures hit an eye-popping 12% of the homes in Maricopa County, which includes Phoenix.
But now Orr's report indicates that supply has been soaked up and Phoenix is again becoming a seller's market where buyers must stand in line and move fast.
"(The listing) came out on the market on a Friday morning. We looked at it Friday afternoon and put a bid on it Friday night," said homeowner Tim Woodward of his new house. He and his fiancé, Susan Rust, are combining their two families, which includes five teenage girls who will all live at home.
"So we need space," Rust said. She and Woodward had already lost bids on other homes and decided to put in a contract on what would become their home while sitting in the driveway after their walk-through.
"According to the neighbors, there were 11 other couples who went through this house," Rust said. "So you have to be quick."
Rust and Woodward got their five-bedroom, three-bath house in Tempe for $290,000, 40% less than the asking price a few years ago. But neither the homeowners nor the experts think buyers are getting bargains anymore. They believe prices have already passed their low point, hit their natural floor and are rising again.
This is not the housing market of a year, or even eight months ago.
"It's getting very, very tough to find a real bargain nowadays," said Mark Stapp, a Phoenix real estate developer who also teaches at the Center for Real Estate Theory and Practice at ASU's Carey School of Business.
The classic bargains, foreclosures and bank-owned properties, are drying up. According to Orr's new report, the number of homes reverting to lenders in the Phoenix area is down 62% since January 2011. Trustee sales of foreclosed properties are down 42%.
"The market has tightened up substantially," Stapp said. "In fact, I know of investors coming to town and leaving very disappointed because they thought they'd find huge bargains and they can't find them."
The question is, will this trend last?
Orr, a self-professed data addict, says the numbers indicate a fundamental shift in the market.
"If there is a major economic crisis that we haven't foreseen, things can go back to square one," he said. "But this is not just a slight trend. This is something I see as being very significant. And it's starting to accelerate."
Follow on Twitter: @LisaDCNN
CNN's Susanna Capeluto and Dan Szematowicz contributed to this story.