DataQuick released data on October Southern California home sales Tuesday, and while the news looks superficially good — sales are up, prices are rising, foreclosures are down — the market remains distorted.

Three factors should make prospective homebuyers wary:

• There's a shortage of housing supply in Southern California, creating a bubble, with demand outstripping existing inventory and pushing up prices.  Few new houses have been built in the region the past four years.
• Money is cheap. Mortgage interest rates are at historic lows. Combined with prices that were depressed by the bursting of the big housing bubble four years ago, this is drawing buyers into the market and convincing sellers that now is the right time to put homes on the market.
• Investors are major players in the market.