From Bill McBride

Sales in 2011 were at record levels, more than during the bubble, and it looks like 2012 will be an even stronger year – even with some new rules that slow the foreclosure process.

So 71.3% of the sales were distressed, and over half were purchased with cash.

One of the keys is the decline in inventory. Note that the GLVAR reports both total inventory, and inventory excluding "contingent" listings (usually short sales). Total single family inventory was down 15.4% from a year ago, and excluding contingent listings, inventory was down 45.6%!

At this point this is still only the preliminary movers. Until prices stabilize credit financed investors will not be able to move.

However, the more cash investors come in the faster prices will stabilize and once the most credit worthy credit-financed investors start to move in, prices declines should rapidly slow, allowing even more credit-financed investors to move.

Indeed, I suspect it is only the length of the foreclosure process and the grittiness of housing that has let things go this far. Warren Buffet already mentioned that if it were practical he would buy thousands of homes.

There are probably lots of other cash or collateral heavy investors who are thinking the same thing but there is just no practical way to do due diligence on 300,000 home purchases.

This is why capital flows are so dependent on using the home itself as collateral which in turn means the rate at which land prices are rising or falling has huge credit and investment effects.