When does the thinning of the investor herd begin?

[Jay Phillips]

As MLS deals are harder and harder to find, more and more investors join the ranks (basing it on new investors on BP), many doing direct mail, declining numbers of underwater sellers and otherwise distressed sellers, it would seem that there just won't be enough deals to support the weight of all of these investors. Will there be a major shakeout and when? REI still seems like the gold rush to lots of people. Thoughts?