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For the last several years, real estate has been in a pricing bubble. Prices have been substantially higher than historical relationships to incomes and rents would justify. While prices have started to decline, they are still abnormally high compared to these core fundamentals. This website is focused on analyzing the housing bubble, its aftermath, and real estate in general as it pertains to the Greater Boston Area.
 
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Boston-Specific Info

  • Boston Futures: For Greater Boston real estate prices from 1987 through the present and looking several years into the future, see the latest S&P/Case-Shiller Boston snapshot with futures (both before and after inflation). The futures markets are probably the most unbiased predictor of where housing prices are headed.
  • Price/Income: For a gauge of how overpriced the market is, see the latest report on the Greater Boston price to income ratio.
  • Inflation Adjusted: See the latest report on Massachusetts single family home prices for prices as typically reported by the local media but adjusted for inflation.
  • Price/Rent: Comparing prices to rents can help illuminate an overpriced market since many hypothetical justifications for higher home prices should raise rents as well. See the latest report on the Boston MSA price to rent ratio.
  • The population of the Greater Boston Area was declining as the housing market posted its most exceptional gains during the bubble. One of the fallacious arguments which was used to contest the existence of a housing bubble was that a growing population was pushing up the natural price of property. While that argument is flawed in general, it is especially wrong when the population is declining. [Boston Globe] [Boston Bubble]
  • The Wall Street Journal has identified Boston as one of the metropolitan areas in the US where it is cheaper to rent than to buy. Their data goes from 2001, when it was already cheaper to rent, to 2004 when the difference was even more pronounced. The Economist also published an article showing that renting is cheaper, and although it does not focus on Boston, it is very thorough about including various expenses and tax benefits that the Wall Street Journal left out. [Wall Street Journal] [The Economist]
  • Consumer Reports has rated real estate in the Boston market as "Overpriced" and pegged it at 24% over the affordable price as of Q4 2004. [Consumer Reports]
  • The number of homes sold in Massachusetts has been plummeting. For the third quarter of 2006 (the most recently reported quarter as of this writing), home sales have fallen 23% compared with the same quarter one year earlier. This despite the fact that home sales were already on the decline in 2005. [Worcester Telegram] [WCVB] [Milford Daily News]
  • Foreclosures are rising sharply in Greater Boston and Massachusetts. There were more foreclosures in the first nine months of 2006 than in all of 2005, and as of this writing (in November 2006), Massachusetts is on track to break the all time record in 2006. [Boston Globe] [Lowell Sun]
  • Boston and Massachusetts are the typical exceptions that people use to qualify their statements when they say that real estate prices don't fall. Boston and Massachusetts prices have fallen in the past, even in nominal terms (when adjusted for inflation, the fall is even more pronounced). Bear in mind that even if prices decline merely by the same percent that they have in the past, the leverage (a.k.a., margin or mortgage) used to purchase the homes must be taken into consideration - the substantially higher number of zero down and negative amortization loans will leave a lot of people with heavy losses and negative equity. [BusinessWeek] [Wall Street Journal (sub)]
  • To compensate for property that fails to sell, real estate agents in Boston are falling back on the deceptive practice of canceling the listing in MLS and then creating a new listing so that the property appears as new to the market. There were 10,606 MLS cancellations in the first six months of 2005, up from 9,722 cancellations in the first six months of 2004 and 3,736 in 2001. "The number of canceled listings in Massachusetts has nearly tripled since 2001... In a recent spot check of houses for sale on MLS in Middlesex County, Barry Nystedt, president of the Massachusetts Association of Buyer Agents, said one in four listings canceled between May 25 and June 25 was recreated by the same firm with a new MLS number." [Boston Globe]
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National (US) Info

  • Visit Patrick Killelea's housing crash blog. It is a fantastic resource providing ample quantitative background into the housing bubble.
  • Visit the Wikipedia article on the United States housing bubble for another excellent overview of the bubble on a national scale.
  • It is actually now cheaper to rent than to buy in many areas even after you factor in accumulated equity and tax savings. [The Economist]
  • Yale professor Robert J. Shiller released the first edition of his prophetic book warning of a stock market bubble weeks before the stock market began its epic crash in 2000. He recently released an updated second edition in late February, 2005 with similar warnings of froth in the real estate market. This book is very highly recommended and is quite readable despite the complexity of the subject. [Irrational Exuberance] [Amazon.com]
  • The current nationwide housing boom has been fueled in large part by historically low interest rates and an increase in the use of risky mortgages. Buyers may find that their monthly payments will skyrocket once the introductory period of their mortgage ends and the adjustable rate kicks in. In 2005, only $83 billion, or 1 percent, of mortgage debt will switch to an adjustable rate. In 2007, this number will leap to $1 trillion, or about 12 percent. [Herald Tribune]
>>> Discuss the national and worldwide housing bubbles now!
 

Boston Bubble News & Interesting Links

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2005-12-30
Info/Broken? - Economist Nicholas Perna: hard landing in Massachusetts worse than anywhere else in the country
Economist Nicholas Perna: hard landing in Massachusetts worse than anywhere else in the country
2005-12-30
Info/Broken? - Massachusetts sales of single-family homes drop 9.2% from year ago in 2nd straight plunge
Massachusetts sales of single-family homes drop 9.2% from year ago in 2nd straight plunge
2005-12-27
Info/Broken? - Boston Herald lists start of popping of Massachusetts housing bubble as top local event of 2005
Boston Herald lists start of popping of Massachusetts housing bubble as top local event of 2005
2005-12-23
Info/Broken? - Massachusetts has now lost population for two years straight
Massachusetts has now lost population for two years straight
2005-12-22
Info/Broken? - Local condo flippers may be in too deep
Local condo flippers may be in too deep
2005-12-21
Info/Broken? - Boston-Quincy Metropolitan Statistical Area historical price data (not inflation adjusted)
Boston-Quincy Metropolitan Statistical Area historical price data (not inflation adjusted)
2005-12-21
Info/Broken? - Predictions for Boston housing market in 2006
Predictions for Boston housing market in 2006
2005-12-20
Info/Broken? - Some good reference links on why buying around Boston is risky right now
Some good reference links on why buying around Boston is risky right now
2005-12-19
Info/Broken? - Real estate slump chills Boston area 'flippers'
Real estate slump chills Boston area 'flippers'
2005-12-19
Info/Broken? - Property taxes still on rise in Massachusetts
Property taxes still on rise in Massachusetts
2005-12-13
Info/Broken? - Federal Reserve Boosts Key Interest Rate to Its Highest Level in 4 1/2 Years
Federal Reserve Boosts Key Interest Rate to Its Highest Level in 4 1/2 Years
2005-12-12
Info/Broken? - Boston's population is declining and here's where the people are going
Boston's population is declining and here's where the people are going
2005-12-12
Info/Broken? - Boston area landlords nervously eyeing the home-sales market slowdown
Boston area landlords nervously eyeing the home-sales market slowdown
2005-12-11
Info/Broken? - Sharp price reductions point to hard landing for Boston Housing Market
Sharp price reductions point to hard landing for Boston Housing Market
2005-12-11
Info/Broken? - Cuts of up to 20% are now common in Boston area as analysts see signs of a 'hard landing'
Cuts of up to 20% are now common in Boston area as analysts see signs of a 'hard landing'
2005-12-11
Info/Broken? - Boston housing market has already "cooled noticeably"
Boston housing market has already "cooled noticeably"
2005-12-10
Info/Broken? - Quarter of people in Massachusetts say they would leave if they had the opportunity
Quarter of people in Massachusetts say they would leave if they had the opportunity
2005-12-08
Info/Broken? - House party is over, according to respected UCLA report
House party is over, according to respected UCLA report
2005-12-07
Info/Broken? - "Alarming jump" in foreclosures for Greater Lowell.  Massachusetts foreclosures up over 33% in past year.
"Alarming jump" in foreclosures for Greater Lowell. Massachusetts foreclosures up over 33% in past year.
2005-12-06
Info/Broken? - Housing Bubble Bursts in the Market for U.S. Mortgage Bonds
Housing Bubble Bursts in the Market for U.S. Mortgage Bonds
2005-12-05
Info/Broken? - Equity cash outs in Massachusetts jump from 4% to 14% over three year period
Equity cash outs in Massachusetts jump from 4% to 14% over three year period
2005-12-01
Info/Broken? - Bill Wendel: high inventory and softening prices indicate that more's afoot than just the annual seasonal market downturn
Bill Wendel: high inventory and softening prices indicate that more's afoot than just the annual seasonal market downturn
2005-12-01
Info/Broken? - Boston real estate agent Bill Wendel's blog on the real estate bubble
Boston real estate agent Bill Wendel's blog on the real estate bubble

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