Wallace, a wife and mother, died at the scene, and the driver never stopped.
Investigators arrested the driver of the green Honda CRX at around 2:30 p.m. Monday. He has been identified as 25-year-old Ignacio Villasenor of Menifee.
Villasenor has been charged with vehicular manslaughter, felony hit and run, and street racing.
Residents say street racing has been a problem along the busy stretch of Highway 74, where the speed limit goes from 55 miles per hour to 45.
Dwinder Liggins also says pedestrians often cross the four-lane highway to get to the bus stop or local businesses.
"They shouldn't be crossing right here. They should be crossing at the crosswalk, which is what they should be doing, but they're not. They're crossing in the middle," said Liggins. "But still they are a pedestrian. They need to do something to stop the problem that we're having here."
The driver of the other car involved in the street race, believed to be a dark blue Honda, is still outstanding. He is described as a Hispanic male adult, and was last seen driving eastbound on Highway 74.
Villasenor's green Honda CRX has not been located. Police say it has extensive front-end damage and a broken windshield.
Anyone with information regarding the incident or the vehicles involved is asked to call the Perris Police Department Traffic Division at (951) 210-1000.