There is no doubt a buying frenzy going on around Temecula. The monthly sale volume has more than doubled (any almost tripled) from the end of last year low. It is undoubtfully justified by one market fundamental: affordability. Between earlier this year till now, I believe at least 15%-20% more household there now qualify for median housing price. So it is unsurprising to see a sale volume equals to just 1% of the total household each month.
But going forward, REO has been increasing at an astonishing rate of 15% per month lately (a number 50% higher than the current high monthly sale volume). Based on stats from foreclosure radar, it will climb from this level for a while. With tightening lending standard, it is hard to see the buyers continuously be able to swallow the incoming REO inventory. However, if the government or the banking industry keeps on giving easy money out, it is hard to say that we might not see RE price bottom soon in Temecula.
To sum it up, we have buying frenzy in Temecula but we also have a selling frenzy (primarily REO) in Temecula as well. We know for certain that the selling frenzy will not ease for months ahead, but the buying side is a lot more uncertain. I think the worst case is the price will be sideline or increase a little bit due to the continuous buying frenzy. My money however would be betting on some cooling from buyers coming this fall.
