"SOMEONE NEEDS TO MAKE HOUSE FILPPING ILLEGAL OR AT LEAST LIMIT THE AMOUNT OF PROFIT A FLIP CAN BE SOLD FOR !!!!!!!!!!!!!!!!!!!!" I'm not a house flipper. I live in the same home I bought in the early Nineties, and I principally invest in the stock and bond markets. That said, the idea of having "someone" make house flipping illegal scares me far more than inflated housing prices. Where does it end? How much power are you willing to give the government? I bought five-hundred shares of Goldman Sachs at 180 less than a month ago and sold it Thursday at 205. Did I make "too much money?" Uncle Sam won't think so when he takes his third. Who do you think is going to fund all these free-lunch give-away programs Clinton, Edwards, and Obama are dreaming up, if not investors? The open, free market determines the price of everything via the law of supply and demand, and that includes real estate. Ask too much for a house and see if it sells. It won't. So in your example, unless you are aware of collusion between the seller, appraiser, and mortgage provider, the folks didn't pay $195k for a house that was worth $135k. They paid $195k because that house was worth $195k TO THEM AND TO THE BANK WHO ACCEPTED IT AS COLLATERAL. Supply and demand.....it's a wonderful thing.