Real Estate Investors Back in the Game

Investors made more than 17 percent of home purchases in January, with 26 percent of all sales transacted in cash.

"We bottomed out in 2008, and in late 2009, prices stabilized and investors have returned," says Mark Fleming, chief economist at research firm First American CoreLogic. "It's a different type of investor going after foreclosed properties and expecting to hold on for longer time frames."

These buyers believe that the only direction housing values can go is up, because it costs more to build than it does to buy. Leonard Baron, a real estate professor at San Diego State University, says. "It's because prices have dropped so much and rents really haven't. The deals were unbelievable."