It was while I was standing in the living room of a beach bungalow located about a mile from the Pacific Ocean in Los Angeles' Venice Beach neighborhood, that I heard the phrase "It's just like 2006" uttered twice in a 10-minute span of time by two separate people.

There was no irony intended.

Bubble, bubble …

The real estate market in southern California, like in many parts of the United States, is once again as hot as it was back in the last decade, when Robert Kiyosaki told everyone it was okay to buy multiple properties with little money down, and when Suze Orman advised purchasing a piece of property to live in since real estate would be the best investment just about every middle class family could ever make.

We all know what happened next. But the housing crash – well, in the living room of this human dollhouse in Venice Beach, that's so 2009 or 2010.

The two-bedroom, one bath, under-900-square-foot house was listed for sale at a price of $899,000. At an open house held on July 21, more than one hundred people showed up over the space of three hours. At another, two days later, several dozen. There is a young woman with her mother and broker, frantically measuring walls to see if her furniture will fit in the space. One shopper points to the windows, asking rhetorically why they haven't been replaced with newer, more pristine frames. Still another woman walks in and tells Jerry Jaffe, the real estate broker listing the home, about all the homes she's bid on.

"We lost Penmar," the would-be homeowner says sadly, referencing a recent house sale located a few blocks away.

"We only need one good buyer," Jaffe responds encouragingly.

The Venice bungalow will, by 5pm the next day, have seven.

Two of the offers for this tiny home are all cash, and a number of others promise a 50% down payment. Several are what Jaffe calls "way over" asking, though he legally can't share the final price.

Not bad for a property that last sold in a short sale a little more than two years ago for $600,000.

As for the previous owners? They had had paid $870,000 in March of 2007.

It's back.

Such home sales are taking place all over the Los Angeles basin in recent months. Prices are climbing and they are climbing fast. The Case-Schiller Home Price Index reports that in April, the last month for which they have data, prices increased 3.4% in a month. DataQuick, which also collects information on Southern California home sales, claims home prices in the region increased by 28% year over year, the greatest amount they've ever recorded since they began keeping records in 1988.

Breaking a home price record set in 1988 is the sort of statistic that should give would-be home purchasers owners pause. The housing market in Los Angeles crashed after hitting a high in the late 1980s.

But it's not keeping buyers away, either in Los Angeles or other cities like Phoenix and Las Vegas, which are also seeing price surges. Nationally, home prices are up by 13.5% from June of last year.

Here in Los Angeles, wannabe homeowners tell tales of being shut out of the market because they can't make all cash offers (nationally, just under one third of homes sold for all cash in June), or afford to give up mortgage contingencies.

Carrie Kangro, a producer and mother of two toddlers, tells me she's lost out on several Venice and Santa Monica area homes over the past year, including one where the realtor or owner would not even allow her husband to view the property until she had put in an offer. Another – the most recent house she was not able to purchase, listed at $879,000 and ultimately sold to someone who offered $935,000.

Compounding the frenzy: many of these eager homeowners are not individuals at all, but investors. Some, especially in areas like the lower middle class inland empire areas like Riverside County, are Wall Street firms like the Blackstone Group entering the landlord business.

Others, like Los Angeles area based Dossier Capital or ReInhabit, make cosmetic or structural fixes on rundown homes they scoop up in hipster communities like Venice or Silver Lake, adding new windows, floors and, sometimes, square footage by building a second story or other additions, and put them back on the market about a year later and flipping them for significantly more money.

So how long can this last? Well, as John Maynard Keynes once famously observed about the stock market, it can stay irrational a lot longer than you can stay solvent.

On one hand, interest rates on a 30-year fixed mortgage are averaging 4.58%, according to the Mortgage Bankers Association, up more than a full point from the beginning of May. That impacts would-be homeowners monthly bills, and makes it likely that some of them will need to look to less expensive properties – or not buy anything at all. According to the National Association of Realtors, pending home sales fell by .4% in June.

On the other hand, the federal regulators are considering reducing the amount of mortgage securities banks must keep on the books. If it goes through, more buyers – who previously could not get mortgages – are likely to enter the housing market, giving it a further boost.

There is, as I wrote in my book Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, something about homes that makes us see them as safer investments than stocks even when we should know better. Because we can we can touch them, live in them, hear them creak and moan at night when heat causes hardwood floors to expand and contract, we view our houses as things that can never betray us financially. That the price of real estate can swing just as widely as a stock never occurs to us till it is too late.

As a result, we relive history again and again and again.