A leading observer of Bakersfield's housing market has begun expressing concerns about an investor-driven bubble.

In a note accompanying his preliminary February market report, Bakersfield home appraiser Gary Crabtree wrote that one in three homes sold for cash -- a sign of investor activity -- and that two of every three foreclosures is going to investors.

"This trend will eventually reach a point of diminishing returns as previously foreclosed families and the 'strategic defaulters' exit the rental market and return to the home buying market," he wrote.

"This could create an oversupply and a softening of prices if and when it occurs."

In Bakersfield's pre-2007 housing boom, many investors purchased homes, fixed them up and sold them at a profit. But in the current surge, investors are buying homes for rent, often to people who lost their homes during the post-2006 housing bust.

Crabtree's report suggests the Bakersfield market remained in "recovery mode" last month as the number of single-family homes for sale declined slightly and prices rose as part of a continuing trend.

His data indicate the number of homes on the market slid from January totals by only three, or about a third of 1 percent, to 1,030. The city's single-family supply is down nearly 35 percent since February 2012

Median home prices, meanwhile, increased by 2.4 percent from January's median to $168,500, according to Crabtree's data. That's a nearly 40 percent increase year over year.

Crabtree also stated that Bakersfield's "distressed" home market, made up of properties whose previous owners walked away from or otherwise lost their homes, is "firming up." The median price paid for such homes increased by about 3 percent to $144,000 in February, he reported.

"The increasing distressed prices were brought about by a combination of competitive bidding and lenders increasing their 'counter offers' knowing that there is a shortage of supply," Crabtree wrote.

The number of home foreclosures in Bakersfield dropped by 28 percent in February to 166. That's just less than half as many foreclosures as took place in February 2012, according to Crabtree's data.