Property values in Temecula, CA have increased 7.3% over the past year with the trend continuing to the present. Property values have increased 1.8% over the past 90 days when comparing them to the previous 90 days. The demand/supply trend is in balance, though nearing shortage, indicated by 1.6 months of current inventory. The marketing time trend is less than 90 days, indicated by an average of 65 days over the past 90 days.
In my opinion, the property value increases are not due to actual property value increases, but are due to a reduction in the number of bank sales, which tend to sell for under-market values, and price-influential loan programs such as 98%+ mortgages through FHA and VA. For example, during the month of May 2010 23% of all sales were bank sales. During the Month of May 2009 53% of all sales were bank sales. At test of similar properties over the past year does not indicate a consistent and significant increase in home values.
Foreclosure activity remains high and future declines due to foreclosure related transactions are possible. In the zip code 92592 there are currently 446 bank owned homes, 591 homes that are in foreclosure with auction dates set, and 448 homes with mortgages 60 or more days late, but that are not in foreclosure.
There is evidence that banks are holding inventory off of the market and I speculate that the banks are doing so with the intention of promoting market stabilization. Evidence of this exists in the MLS where there are currently 45 bank owned home listings while there are 446 in inventory. This indicates that the banks are not releasing 90% of the inventory onto the active market. Should the entire bank owned inventory be released on the active market, property values could decline rapidly.
