Six months or so ago the supply was more like 10-11 weeks. For all practical purposes the Housing Bubble here has burst after the home prices rose 100% over a period of 27-30 months. These days, price reductions and withdrawals of listings are as common as sale of a home. One source of the bursting of the bubble is a large supply of new tract homes being built by large Hopebuilders, including KB Homes.

Sensing the bursting of the bubble in home prices the retail speculators have switched to speculation in lots. According to informed sources the prices for lots that are within two miles of populated areas have gone up 100% in 4-6 months, 150% in 9-12 months and 300-500% in 15-24 months. Some the latest buyers are from Silly.con Valley, according to my realtor, as they see land prices here as bargains. When land is plentiful, as you will soon see, bargains are not hard to have!

One of the speculators in lots is a self-described genius whom I have had the pleasure of making acquaintance. “Genius is rising prices,” as Prof.

Galbraith has noted, has never been more true than in the case of our resident genius (RG). One consequence of being a genius is that our RG was not able to keep any job. As a result, approximately three years ago he decided to build a home for himself and his wife in our little town so that he and his wife don’t have to live in a dingy little townhouse in L.A. area.

That was his full-time job for two years. While building the home our RG noticed that the price of the dingy townhouse that they owned had gone up a lot and he estimated that the price of the new home he was building had gone up even more. A genius was confirmed.

A year ago our RG decided to turn into a full-time real estate speculator.

He borrowed money on his dingy townhouse and bought a lot in our town with the intention of building a castle, after he has finished the home, and sell it at a huge profit to some sucker from La La Land, or Silly.con Valley. Six months ago the home was finished enough to move in and our RG put his dingy townhouse for sale and sold it very quickly at the asking price. Now, our RG came into some more money and what better place to put one’s money than to buy more lots, which can only go up in price as predicated by the Limited-Supply-of-Land Theory. Our RG bought two more lots from the money that was burning hole.

Yesterday, our RG took me for a tour of the three lots that he owned, one of which he has decided to sell on my advice. Two of the lots are in areas that are only 1-2% built and one is in an area that seems 10-20% built. And most of the homes built in these areas have been built over the past three years during the current boom. What I am trying to say is that there is land enough to build homes for several more housing booms without the change in the zoning laws (one home per 2+ acres in these areas, I think, as all the lots were approximately 2.5 acres). These lots are not very far from the schools and shopping.

BTW, he is already eying a commercial lot even if he has to borrow money because the demand for many services can only go up as more homes are built.

The mere presence of our RG is proof positive that our little town is a very desirable place to live. Hence, what could be better investment than land for people, for animals, and for businesses? The rise in number of empty homes is no deterrence for our RG. If you build, they will come! What could be more American belief than that?

The only genius in our RG that I have noticed in that he married a woman who has a high paying job (she commutes more than 100 miles each way two days a week and works at home the rest of the time) and who is very good at keeping the job. I wonder if the marriage will survive the bust in real estate that seems certain, as all their savings are in real estate and our RG would have not much to do after the bust.