Remember how real estate prices got crazy in the mid- to late- 2000’s and then crashed? Remember how there was some nasty fallout from that and we all learned a good lesson and figured that the next real estate bubble would be a generation or two from now after enough people had forgotten about this one?

Well, nuts to all that! The housing bubble is back. Check out what’s happening in California, where “a witches’ brew of market forces is making this spring one of the toughest times in memory to purchase a home”:

Many homes that would be purchased in a normal market by average buyers are ending up in the hands of cash-paying absentee owners, typically investors, according to the real estate information company DataQuick. That’s especially true of foreclosures and lower-priced homes and condos.

David Yang, 36, who works in solar power, is moving into a home in South San Jose — the 10th one he bid on in five months of looking. “Every house in a good neighborhood probably will receive 20 to 30 offers,” he said. “It’s really crazy.”

His agent, Sharmila Banerjee, said that “cash is coming from China, India, Russia, but there can be difficulties transferring money from outside the country.” When one such deal fell through, another one of her clients had his offer accepted, she said.

In February, 1,044 houses and condos — 28 percent of the sales — in the counties of Santa Clara, San Mateo, Alameda and Contra Costa were bought by absentee buyers. That is the highest percentage since DataQuick began tracking them in 2000. In Contra Costa County, absentee buyers were 35 percent of the sales.

Almost a third of all buyers paid cash in those four counties in February, the peak percentage since 1988, the company said.

You might be asking yourself: how much would a mold- and rat-infested heavily-damaged fixer-upper go for?

Real estate agent Melissa Haugh said everyone in her office was stunned at the price, paid in cash, for a Santa Clara fixer-upper.

“The house had a rat infestation, there were holes in the walls, windows that leaked, mold around windows, water damage to floors. It needed $100,000 in work,” she said.

Haugh, of Keller Williams Realty, said she priced the house based on recently sold homes in the neighborhood, including one that was a version of the same home that had been completely remodeled and landscaped. The fixer-upper, listed at $419,000, sold in a week for $629,500.

“We ended with 69 offers, all but five for cash,” she said. “It’s mostly foreign investors. I’ve never seen this much cash, ever.” The home went to a couple buying the home for their daughter.

Here’s the above article in graphic form:

It’s not just California. Check out Las Vegas:

The once-beleaguered Las Vegas housing market has been on fire since investment firms led by Blackstone Group LP, Colony Capital and American Homes 4 Rent began buying homes here some eight months ago, backed by $8 billion in investor cash to spend nationally.

These big investors and a handful of others have bought at least 55,000 single-family homes across the U.S. in the past year.

It’s very weird what’s happening in Vegas. One the one hand,

… home prices in this metropolitan area of 2 million people are up 30 percent over a year ago, far more than the national average of 10 percent. Permits for new home construction are up 50 percent, twice the national average.

But on the other hand,

Las Vegas would seem a highly unlikely locale for a new housing bubble. There are at least 20,000 homes in some stage of foreclosure, and the jobless rate hovers near 10 percent, some two points above the U.S. average.

…Cracks are showing in Vegas and beyond. Here, rents on single-family homes were down an average of 1.9 percent in March from a year ago. In other regions targeted by institutional buyers, such as Phoenix, Southern California, Atlanta and Florida, rents are either falling or flat, according to online real estate service Trulia.

And check this out:

The combination of rising acquisition costs, prolonged rental lead times and declining rental income is disrupting the spread-sheet analysis behind Wall Street’s bet. That could pose problems for what once seemed like a slam dunk. It could also give pause to stock-market investors as some players list their shares. American Homes 4 Rent, based in Malibu, Calif., has said it expects to file soon for an initial public offering.

If that IPO ever sees the light of day, please stay far away from it. Whoever invests in that will get screwed.

So to recap: rents are falling, unemployment is high, there is an abundance of homes in foreclosure, and new construction permits are up 50%. It’s completely insane–until Reuters helpfully points out,

The central bank is pumping the economy full of cash by buying assets such as U.S. government bonds and mortgage securities. Added demand for those assets is pushing their prices up, and hence their yields down. That’s encouraging people to put cheap credit to work at riskier activities that can spur growth – for instance, buying shares in new companies, investing in oil wells or renovating houses.

In other words, we’re creating massive asset bubbles deliberately. The turmoil that will undoubtedly ensue is a matter of policy. Make sense?

(H/T: ZeroHedge)