So these people with boatloads of cash probably represent 1% of the population.

AND most of them already own a house and probably won’t want to buy another one once the prices start to drop and they get scared.

IMO, there are quite a lot of people out there with cash, waiting to buy. However, I think the number is small enough that it won’t have a big impact. Perhaps in some areas, it might – 800K+ homes (current pricing) near the coast perhaps. But those people with the cash just aren’t going to move into a starter home in Mira Mesa once they come down to 300-350K!