America's House Party

John Williams, a disc jockey from Long Beach, Calif., is available for weddings and birthday parties. He also does real estate closings. Williams, 40, recently decided to hitch his fortunes to the Southern California home market, buying houses, fixing them up and--in the parlance of our times--flipping them for a quick profit. "I saw so many friends and colleagues getting rich," he says. "I wanted to get rich too."

Williams has made some money--he flipped his first two properties for a combined gain of $27,000--and quickly discovered that he's not alone. "I went to look at some homes in Palmdale- Lancaster [an area of Los Angeles County]," he says, "and the woman showing me and a group of other investors around was a hairdresser who works for Century 21 on the side. We went into Taco Bell for lunch. The girl at the register heard us talking, and she told us she just got her mortgage broker's license."

Ah, the blistering real estate market, where dreams of big bucks come wrapped in aluminum siding, and you can get a three-bedroom ranch house with your hair extensions and a mortgage with your Grilled Stuft Burrito. The stock market may be dragging, but home prices are soaring, fueling a national obsession with real estate. Your house is now your piggy bank, ATM and 401(k). House gawking is a hobby; remodeling, both entertainment and an investment. Folks brag about having bought their home in the '90s the way they used to brag about having bought Microsoft in the '80s. Even if you're not contemplating buying or selling anytime soon, the amazing lift in home values is changing the way we think about the roofs over our heads. Real estate isn't so much about nesting today as it is about nest feathering.

The house has always reflected its occupants' place in society. But now it also determines their place in society. The boom has divided haves from have-nots-- owners from renters, hot markets from cold. The median U.S. home price jumped in April to $206,000, up a stunning 15% over the past year and 55% over the past five years, according to the National Association of Realtors. The fact that houses are bought for pennies on the dollar magnifies the windfall. Say you put down 20% on a $150,000 house five years ago. At the average gain of 55%, that's an $82,500 gain on a $30,000 outlay, or a 275% return. In your face, S&P 500!

The biggest markets are much, much hotter. Prices of single-family homes in the Los Angeles area have gone up 135% in five years. Down the coast in San Diego, the figure is 132%. In Las Vegas, 117%. Miami, Washington, San Francisco--128%, 108%, 65%. Fortunes are being made, jealousies are being kindled and the claws are coming out--literally. In Manhattan, where the average apartment costs more than $1 million, the housing market is so cutthroat that a real estate agent attacked a seller--who had committed the sin of not hiring a broker--at his open house.