Here are the yearly totals from Foreclosure.com for Pre Forclosures and REO's. You can see a trend of more and more Pre-Forclosures turning into REO's (especially in Riverside). I fully expect this trend to continue as more and more people find it impossible to sell, refinance or come up with the money to make their loans current.
The amazing thing about this chart is if you look at how many REO's there are each month and compare that to the monthly sales you can see that they are getting closer. Soon banks will be taking more homes back per month than there are sales.