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According to panelist Christopher Thornberg, founder and principal of Beacon Economics,last year, a lot of the good returns were based on a rebound effect. “The fear of the double-dip has faded and these returns reflect that investors are more confident in where things are heading,” he said. “Fundamentals are getting back to a more normal level, but the one area of the market that that is probably not true is in the owner-occupied space.”

Michael Cohen, director of advisory services at PPR Global Research,says that equity markets, particularly in the US are at an all-time high. “The takeaway here is that all the capital spigots are open.” Cohen pointed to a bigger risk appetite and improved business confidence being a few of the signs pointing to a continued positive momentum.

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KC Conway,executive managing director of Real Estate Analytics at Colliers International, agreed that capital is plentiful, which is helping the recovery. “We are in an era where we are seeing paper money migrate into anything tangible. The combination of capital is helping drive this recovery, but my worry is about 2014. Our fiscal issues will come home to roust…so 2013 will be good, 2014 will be questionable. There will be some cut back and some inflation.”

According to Cohen, the economy is improving and there are tremendous headwinds, but like Conway, he also expects to see some speed bumps when the fed pulls back in 2014.

Thornberg pointed out that he is currently not seeing any drivers of inflation. “Until the banks start to lend at a very rapid pace—then you should be worried.” For Eric Paulsen, president of the commercial division at Auction.com, the confidence out there is overrated. “I think people are being sick and tired of being sick and tired.”

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Farb pointed out that giant institutional investors such as Blackstone, which purchased 20,000 homes since early last year, are buying $100 million a week and have spent $3.5 billion. Colony has spent over $1 billlion on more than 8,000 homes in seven states, and Oaktree and Apollo have raised between $6 billion and $9 billion to buy single-family homes. And in Southern California, he said, the median home price has jumped 21% over last year, with more than one-third of the buyers paying cash.

He added that the government and financial institutions have not yet begun to sell off their foreclosure homes in large portfolios as expected last year when Fannie Mae conducted a pilot sales experiment. Farb's question to panelists was how long this investment strategy remain viable given the fact that these funds require high-teens to low-20s returns, how all this investor activity is impacting the housing and residential rental markets and what happens when and if it stops.

Cohen was first to chime in, noting that the housing bust is what is really driving the trend. The fundamentals in the apartment market are as tight as they have ever been, he says, and given the fact that the homeownership rate has dropped, it has equated to millions of additional renter households. “We have yet to see really strong sustained job growth among young folks,” he adds. If the economy gets stronger, and as there is stronger job growth, he predicts younger housing formations.

Thornberg said those statistics are really interesting for the people who own apartments, and the big question is what those big investors to do with the product in four years.

Auction.com's Paulson says that banks have been hesitant to pull the trigger. “There is a lot of demand out there, but lots of that demand is the investors. And supply has been constrained a bit because of the government,” he said, adding that he predicts an increased supply to come on in the coming year. “If you are an apartment guy chasing yield, it is time to go find another product.”

Keep checking back with GlobeSt.com for more coverage from the RealShare L.A. conference.