Home prices in many nondistressed markets are already and unexpectedly on the rise, analysts at Bank of America (BAC) said.

Within those nondistressed markets, Miami experienced the most rapid price growth in 2011 at 7%, according ot Corelogic (CLGX). Following Miami was Dallas with 3% growth in prices last year and Boston with 2%.

"In our view, this is a sign of the early stages of recovery in housing, where nondistressed market segments lead the way forward," BofA analysts said. "Overall, we think these developments are supportive of our view that national home price indices could bounce relatively sharply in 2014."

However, the saturation of REO sales and overhang of distressed properties casts doubtful shadows on that prediction.

Increased sales of REO properties in led to double-digit home price declines in 2011 in certain markets, according to Clear Capital. Those with price appreciations relieved their saturation.

Rising saturation of real estate-owned property sales in the fourth quarter caused home prices in the Midwest to lead the nation in depreciation.

Miami's 7% price appreciation is less impressive when considering foreclosures and short sales in the equation. Including distressed properties, prices remained unchanged in Miami and Dallas, while falling 4% in Boston.

Also, home prices fell 4.7% in 2011 compared to the year before, marking the fifth consecutive year-end decrease in the CoreLogic home price index. Excluding distressed sales, home prices decreased 0.9% last year, which CoreLogic said gives an indication of the impact of distressed sales on home prices.

National home price trends are expected to reflect the distress over the next year.

BofA analysts said homes won't bottom out until the first quarter of 2013, but improvements on the non-distressed side are why they think the nation is drawing closer to that bottom and why the remaining aggregate price declines will be relatively small.

"The worst of the housing correction has passed, in our opinion, although there is one last significant hurdle: clearing the excess inventory of distressed properties," they said.

For example, in Miami-Dade County, sales of existing, single-family homes and condos increased to 5,839 sales for the three months ended Dec. 31, up from 4,722 a year earlier. The median sales price for a single-family home hit $176,200 in South Florida during the fourth quarter, a 1% drop from the prior year, reflecting the downward pressure distressed sales continue to have on property values.

Recovery, or at least stability, in higher-quality market segments, whether it is in real estate or bonds, is a necessary precursor to recovery in the broader markets. Similarly, there are some segments of the distressed space in both markets that are virtually “beyond repair,” analysts said.

The following tables show the Core Logic MSA-level home price returns over the past four years. Table 2 represents just nondistressed sales and Table 3 represents all sales, including distressed.