I’ve wondered the same thing myself. I think there are a few categories of buyers up here in Temecula:
1) People that cashed out of houses in SD and put a huge down payment on a McMansion. Their loan payments probably aren’t that bad but their commute is a nightmare and their property taxes are pretty darn high – these two things were rationalized away.
2) People that just think real estate never goes down and do anything they have to do to buy a McMansion. I suspect many of them got teaser rate loans and they will end up in foreclosure once the interest rate resets. This includes owner-occupants and investors.
3) Realtors. They seem to be drinking their own Kool-Aid up here and many of them are in trouble trying to unload “investment” properties. Good luck with that!
4) Stonewood aka mortgage scam.
5) I don’t think 1-4 account for anywhere near all of the houses sold in the last few years and I can’t imagine anyone in their right mind paying those prices to live in Temecula. I think more revelations are still to come out as the housing bubble deflates – these will shed more light on what was going on.
