1st off, I must state that houses are way overvalued.
The average house costs = what the average person can afford each month -> which equates to how much they can finance. And this has gone up and up and up because banks lowered interest rates and extended terms and lowered down payments.
But, to talk about what to do if you have cash.
Foreclosures, or people who are about to be foreclosed upon are hot sellers, but you basically need to have cash.
You can buy houses at auction. Again you need to have cash to pay for it that day.
You can buy houses for the property taxes. (I hate this one, but you can basically end up owning someone's house because you paid their property taxes.)
And once you own the house, swapping your house for another house when you want to move is actually a lot easier (less paperwork) than financing a new one.