I like Rick’s use of hard stats to back up his projections. It’s a much better approach than some of the NRA or RE guru hype that I read elsewhere.

I’ll take a bit of a stab at Rick’s approach here. I’m basing this projection partially on anecdotal data, but I believe it could be researched for better numbers if someone has the inclination to do it.

I spoke to a friend Monday and he indicated that 80 properties were offered at foreclosure auctions in El Cajon and San Diego. None were purchased and hence they all went back to the lenders. He said this scenario is repeating itself several days every week.

Multiply 80 by 100 auctions, which could happen between now and mid summer. That means there will be 8000 additional REO properties for sale towards August. I noticed that current inventory levels are already beginning to rise. Adding in 8000 more units will probably put the peak inventory at over 25,000 units by mid to late summer.

Consequently, it is very unlikely that there will be any escalation in prices in the near future since the supply will probably exceed the demand.