Interest rate increases by the Fed leading to suppressed home prices, lower volume? 

Next you have 5 year arms, which is mostly commercial.If it's a 30 year, nothing is likely going to happen, those some people could have a 2nd with a HELOC, so that could affect them in real time, thus suppressing their spending power, or forcing them to sell or be foreclosed on.You also have 5y arms, as they come due they will have to pay it off.

I think lenders look for hard numbers on a deal to determine if it will satisfy the appetite of the institution.  1.

As for the pros and cons of buying outright in cash, it depends on your appetite for risk.

So, housing demand is suppressed artificially - latent demand, if uncorked, would send home prices into inter-stellar space.

I lost a prior deal when I tried to hold out for a larger wholesale margin, when I could have made a marginal profit...so I'm afraid to not drop the price quickly but don't know if I should do many small incremental drops or just do some large drops to get it into an investor appetite range.       

Keep their appetites wet.  

There are few factors you need to consider while thinking about the new purchase: 1) your income 2) amount you have for down payment 3) your equity 4) your appetite = what is you max budget for the purchase.

Have a ravenous appetite for learning everything possible.

With that said, much of the market here seems frothy, but there still a strong appetite for multi-families.