California might have a high number of investors but this pales in comparison with Arizona and Florida. Some of these markets are driven purely by investors jumping in. This has been going on for a few years now. I really wonder how much longer this can go on.
The assumption of course is that inflation will keep pace as it did from 1982. Or more importantly, wage inflation for home prices. That is the big factor here that is being missed. The recent data has shown stagnant incomes for the last decade. Until we see household wage inflation why would home values rise?