Christian is right, but sometimes misguided. But i have always said that about him.
I am buying as much as I can. My brother is buying as much as he can. I have foreign and domestic investors now buying. So the folks you are talking about, i am not too much interested in them or their plans. i like 100% profit margins, and the gold like security. So we all buy, rehab, rent and don't plan to sell and I don't look back.
The returns in real estate, at least in Seattle, aren't all that great right now. Putting aside the fact that a six-plex costs over a million dollars, it also has a cap rate around five. So you really have to be an astute manager to make that work for you.
If I buy the right stock I could double or triple my investment, or see it cut 2 or 3 times down from its original size. But if I pay attention to the market every day, or every hour, (only a pro would not me) I could get out before prices tanked to hard. I could put in a loss limit order to get out before I lost more than 5%.
If I buy real estate there is no guarantee that I could sell it in a short time (or ever) . It is about guaranteed it will take a minimum of a month to get my money if I find a buyer on day one. Plus no other (paper based) investment demands I pay taxes on it every year and that those taxes will go up just because I own (IBM, MS, gold bars, etc.) but real estate is guaranteed to take more money from me each and every year I own it. If I do not pay those taxes they take my property. Have you ever heard of someone getting their stock portfolio repossessed because they did not pay taxes on it without redeeming any stocks?
Now people seem to be buying hard assets, gold, silver, steel, oil, all kinds of commodities.
I think a lot of people buy based on fear (reasonable or not) expectations, and knowledge of what is going on in the market now or in the recent past. Gold is seen by many as going up, so is silver. Oil is seen as volatile. Real estate is seen as dropping.
Are those buying that way correct? Who knows, only time will tell. Once burned many will stay away forever from something they tried and lost money in. After the 30's many lost money and never got in the stock market ever again. Maybe some people now are having the same reality. The sad part is, none of the investments above are a guaranteed money maker. Some people will lose money if they buy in them now that those are being noticed by the media.
When we add in the 2.7 million foreclosures now in the pipeline. The 7 million to come from 2010-2012 many people are waiting because they know what is going on.
Look at the 3rd quarter 2009 foreclosure heat map. Notice florida is red hot? Not a smart time to buy, YET.
I want to buy a house with land myself. I never trusted the stock market. When house prices drop to pre-bubble (1997-9) pricing (maybe even including 30% for inflation) I will buy. That may be another 1-3 years.
The other part is obvioulsy access to credit. If lenders were handing money out all the "savy" real estate investors would snap up the properties available. But that would drive up demand and prices.
Also the masses tend to be very shy after a huge hit. Most people are not, by nature, bottom buyers. They buy when they see it really going up or near/at the top. My 2 cents anyway. I bought this year and would love to buy another property, just as soon as the right opportunity is identified.