Prices rising. Bidding wars. Homes selling over list price.
It's not 2005. It's 2012.
In Compton, California.
This city south of Los Angeles is facing potential bankruptcy, in large part due to plummeting tax revenues. Homes that were selling for $300,000 in the boom are now worth half that.
The median home price in Compton is now $176,000, a price that is inching up.
"Since I started, they're up 25 percent easy, EASY!" said veteran investor Phyllis Rockower. "We were buying in the $80,000 range a few years ago. Now anything in the low $100,000s is a good deal."
Rockower runs the Real Estate Investor's Club LA. We caught up with her helping a student, Jin Sung, rehab and flip his first Compton investment, a dilapidated home once valued at $420,000 according to Zillow. Sung bought it for $110,000 and thinks, with some work, he can sell it for twice that, based on neighborhood comps.
"The condition of the house was more or less a disaster zone," Sung said.
He added that burglars had stripped the house of sinks and wiring. "They pretty much gutted the house for me, so they did me a favor."
Rockower said prices are starting to "scrape up a little bit" as foreign investors have come in seeking better returns, paying cash for distressed homes.
"This area and South Central have really been hot," she added.
Who's buying the rehabbed homes? Couples like Raymond Gaines and Myesha Hampton. The $252,000 home they bought in Compton is their first.
"It was going to be very expensive to rent," Hampton said, "so we figured, why not try to see about buying a house?"
Gaines is a longshoreman who said he used part of his 401k to come up with the down payment for an FHA loan. They had some qualms about moving to Compton.
"We were not too sure," Hampton said. "When I saw this house, that was it. Especially with the yard, it was beautiful, and the neighborhood is really nice."
The couple bought the house after prevailing in a bidding war.
"It was under contract within a week, we had multiple offers," said Brian Coomans, who sold the home for $95,000 more than he paid for it four months earlier.
However, after buying, Coomans says he poured in as much as $50,000 to fix up the place with a brand new kitchen and an extra bathroom. He's done this 30 times in Compton in the last three years through his company GGB Properties.
"The biggest challenge to my business now is absolutely sourcing inventory," Coomans said.
He used to get 20 percent cash on cash returns. That margin is now around 15 percent. "There's intense competition from people doing exactly what I do right in this town."
"I think it's gonna continue to be where we're at," said realtor Monet Castaneda about Compton home prices over the next year. "It's gonna be puttering along in first gear. We can't seem to change gears."
He spoke to CNBC inside a $10 million redevelopment project of attractive homes and townhouses near Compton's city hall. The development's owners tried to sell the homes four years ago in the low $300,000s but couldn't. By then the market was collapsing. Now the community is filled with renters. A lease-option plan is being offered, though Casteneda said the owners have yet to agree on a sales price.
"It was a great idea that didn't quite culminate in the way they wanted," he said.
Some potential buyers are holding back. Renter JoAnne Pearsall is somewhat concerned about the impact a Compton bankruptcy will have on utility prices and city services.
"It really is a good time to buy now, but in the near future, within the next two years, it will be good also," she said.
—By CNBC's Jane Wells