Dear old and tired,
Yeah, well you're buying real estate primarily as an investment. Folks are just buying homes as places to live.
Anyone around here (and I mean the entire Washington, DC region, not just my neighborhood, community, or county) has to be afraid they're buying near the top of the market.
But heck, I was worried about that when I built my house four years and 70% appreciation ago.
You still gotta live somewhere, and if your work is in the Washington metro region, that's where you gotta live.
Lots of folks want a nice neighborhood, decent schools, a house in good shape, because they don't want to take on the burden of trying to fix the neighborhood, the local schools, or the house. They don't mind not making out with a deal on a fixer-upper, because they have a nice house in a decent neighborhood that is mostly problem-free (or at least, problem-reduced).
Folks often consciously, explicitly want a house with "curb appeal" because, heck, they might live in the house a very long time, and it's nice to live somewhere that's attractive.
Also, often, the places that go really quickly around here ARE the fixer-uppers, because a lot of folks are finding it tough to afford the middle of the market around here. The last fixer-upper in my neighborhood sold before a For Sale sign actually made it up. The Internet MLS listing wound up getting in the system after a contract was put on it. So, even if you want a fixer-upper, you need to work with Realtors.
sitetest
I understand your point. And certainly, buying a property for rental income versus a primary residence are completely different things. However, since we always sent our kids to parochial or private schools, the only factors we ever really looked for in a potential home were safety, convenience, and a reasonably maintained neighborhood. Today I live in one of those ridiculous neighborhoods where homes sell before they're really even on the market. We would never buy here today.