Housing Market - Starting to Harden?

Although I would not be the farm on it, I am starting to see signs the housing market (in Connecticut) is starting to harden. Currently, I work with two new employees looking to buy homes. According to them, the supply is now limited to the "dregs." From what they see, the only people who are willing to sell at the depressed prices are the people who have no choice. Everyone else is holding on to their houses.

Since Connecticut did not have the massive housing developments of California and Florida, one would expect us to be "leaders" in the recovery due our limited supply of housing.