Investors wielding cash are reviving sales volume in the housing market — but at a price.

As the National Association of Realtors noted last week, all-cash sales accounted for 31% of December existing-home purchases. All that bargain hunting drove sales of existing homes up 5% for the month, NAR says.

A steady pace of sales is critical to the housing market's recovery, of course, because we need to clear all those foreclosures and short sales off the books so that prices can stabilize and even start rising.

But there is a downside to those all-cash purchases. The cash buyers — the bulk of which are investors, says the NAR — put downward pressure on home prices even beyond what the natural forces of supply and demand would do, according to Campbell/Inside Mortgage Finance's latest HousingPulse Tracking Survey. "Cash buyers are able to bid significantly lower on many properties because they offer a shorter and more reliable closing timeline," the report says. That's music to the ears of mortgage servicers, who are anxious to get their distressed real estate off their books.

This gives investors a bigger impact on the overall market than their numbers might suggest. Real estate agents told HousingPulse that investors generally offer 10%-20% below listing price on properties up to $250,000. First-time buyers as well as current homeowners are more likely to offer closer to list price. Investors want to close in 30 days or less. Other buyers, generally because of financing issues, take more like six to eight weeks.

This market needs investors, who often end up doing deals that other homebuyers can't. Good investors take on homes in poorer shape than typical homeowners could stomach and make them livable again. They deserve their discounts, in my opinion. But for all the rest of us, this is just one more factor keeping the price of our own home from bouncing back quickly.

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