Here's some numbers to digest

Banks increased their Bank Owned (REO) inventory slightly, by taking back 22.24 percent more properties than the preceding month, while REO resale’s declined. The decline in REO resale’s is not unexpected as REO inventories have declined to a point that is insufficient to meet market demand.

Riverside Co.
Notice of Defaults.........last 120 days...13296.......... in Oct. 3872
N.O.T. sales currently scheduled.........15578.......... in Oct. 4377
Actual Trustee Sales.... last 120 days...6600.............in Oct. 1997

(Of the 1997 Trustee sales about 75% went back to the beni, but nearly 500 were purchased by a 3rd party (mostly flippers/investors probably)

San Bernardino Co.
Notice of Defaults.........last 120 days....10282..........in Oct. 3167
N.O.T. sales currently scheduled...........12618..........in Oct. 3416
Actual Trustee Sale...... last 120 days.....5404..........in Oct. 1633

(of the 1633 about 82% went back to the beni, 300 were purchased by a 3rd party)

You can see that many more homes are being picked up at the trustee sales. A year ago nearly every home went back to the lenders. Now 20% to 25% are being purchased by 3rd parties. Many of those will show up later as flips or as rentals. Foreclosure numbers are finally picking up. However, traditionally banks don't foreclose on homes over the holidays. So, it is very likely to slow down again in December. That takes us out to the time frame I keep hearing, Feb/March before we start seeing a significant increase in the REOs.