Do you actually think that this is DRIVING UP prices:
I would argue the reverse:
With 70-80% of the Market being Shortsales and REO's,
the Market Value of everything is being depressed; has been for years now.
Someone wanting to sell their "NORMAL" house, has to contend with all the foreclosed houses to determine their Market Value.
We will need a greater mix of NORMAL sales to bring the Market back up.
For those who are holding their breath; STOP IT!