I have seen this from two sides because of my location and my profession.
#1: I live in a college town, and big companies are building large fancy student housing near campus very quickly over the past two years. Landlords and others have said they have overbuilt student rental units in here. My boss is a landlord as well and tells me this year was the most difficult in his history to get renters.
#2: I work for an institutional investor. We have been getting many cold calls from startup real estate investment funds investing in single family housing rentals. They are buying homes in depressed markets, renting them, and waiting for equity appreciation. This has been over the past two years.
My opinion: Investors with cash are moving to real estate for a few reasons:
-low expected equity returns, for seemingly high risk (struggling economy)
-low yields in safe investments (bonds), and expectation for rising interest rates
-depressed real estate prices, and increase in rental demand
On it's own real estate would not be as attractive to investors, but compared to other investment options, it is a better choice.