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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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2006-03-31
Info/Broken? - Boston real estate data based on LINK at end of March 2006 compared to end of March 2005: new listings up 226%, price reductions up 395%, properties under agreement down 40%
Boston real estate data based on LINK at end of March 2006 compared to end of March 2005: new listings up 226%, price reductions up 395%, properties under agreement down 40%
2006-03-31
Info/Broken? - Upcoming lecture on April 25th at MIT on how various asset classes, including real estate, are richly priced, have little upside potential, and may suffer major declines
Upcoming lecture on April 25th at MIT on how various asset classes, including real estate, are richly priced, have little upside potential, and may suffer major declines
2006-03-31
Info/Broken? - Only 24% of Boston area homes are affordable by families earning a median income for the area
Only 24% of Boston area homes are affordable by families earning a median income for the area
2006-03-31
Info/Broken? - An overview of the current outlook for Boston and Massachusetts - the market is running on fumes
An overview of the current outlook for Boston and Massachusetts - the market is running on fumes
2006-03-31
Info/Broken? - In Boston and Beyond, 'For Sale' Signs Rise, Home Sellers Cut Prices as Fed Tightens
In Boston and Beyond, 'For Sale' Signs Rise, Home Sellers Cut Prices as Fed Tightens
2006-03-30
Info/Broken? - A "Spring Shake-Out" In The Northeast
A "Spring Shake-Out" In The Northeast
2006-03-29
Info/Broken? - Housing boom cools: Brockton house prices fall $12,000; condos plummet $40,000
Housing boom cools: Brockton house prices fall $12,000; condos plummet $40,000
2006-03-28
Info/Broken? - Fed boosts key interest rate for 15th consecutive time
Fed boosts key interest rate for 15th consecutive time
2006-03-27
Info/Broken? - Price change and inventory predictions for Massachusetts in 2006 based on past trends
Price change and inventory predictions for Massachusetts in 2006 based on past trends
2006-03-27
Info/Broken? - Housing Market Declining Rapidly
Discuss - Housing Market Declining Rapidly
Housing Market Declining Rapidly
2006-03-24
Info/Broken? - Boston Bubble Report: What's Really Going on in Massachusetts.  Real prices have fallen 11.44% from their peak 8 months ago and year over year prices have been declining for the last 6 months straight.
Discuss - Boston Bubble Report: What's Really Going on in Massachusetts.  Real prices have fallen 11.44% from their peak 8 months ago and year over year prices have been declining for the last 6 months straight.
Boston Bubble Report: What's Really Going on in Massachusetts. Real prices have fallen 11.44% from their peak 8 months ago and year over year prices have been declining for the last 6 months straight.
2006-03-24
Info/Broken? - Mass. home prices continue slide
Mass. home prices continue slide
2006-03-24
Info/Broken? - Pay no attention to that 9.5% decline in median prices
Pay no attention to that 9.5% decline in median prices
2006-03-23
Info/Broken? - MAR February 2006 report has corrected data for January.  Nominal YOY prices rose in January, though real prices still fell.  Both real and nominal YOY prices fell in February.
MAR February 2006 report has corrected data for January. Nominal YOY prices rose in January, though real prices still fell. Both real and nominal YOY prices fell in February.
2006-03-23
Info/Broken? - February 2006 MAR data is in.  Sales fell for 5th consecutive month and were 1.7% below February 2005.  Inventory is up from a year ago by 40.5%.  Nominal year over year prices fell for 2nd month in a row.
February 2006 MAR data is in. Sales fell for 5th consecutive month and were 1.7% below February 2005. Inventory is up from a year ago by 40.5%. Nominal year over year prices fell for 2nd month in a row.
2006-03-22
Info/Broken? - Boston "Bubble Hour" to discuss February housing statistics, Thursday March 23, 2006
Boston "Bubble Hour" to discuss February housing statistics, Thursday March 23, 2006
2006-03-22
Info/Broken? - Massachusetts foreclosures increased 538% in February.  National foreclosures increased 13%.
Massachusetts foreclosures increased 538% in February. National foreclosures increased 13%.
2006-03-22
Info/Broken? - KPMG rates Boston as the second most expensive city for businesses in the US and Canada
KPMG rates Boston as the second most expensive city for businesses in the US and Canada
2006-03-21
Info/Broken? - More than one-quarter of Boston's mortgage-holders are stretched thin financially, spending at least half their income on housing - only Miami is worse
More than one-quarter of Boston's mortgage-holders are stretched thin financially, spending at least half their income on housing - only Miami is worse
2006-03-20
Info/Broken? - Boston population is declining because jobs are (still) declining
Boston population is declining because jobs are (still) declining
2006-03-18
Info/Broken? - Fed won't act to preserve high home prices
Fed won't act to preserve high home prices
2006-03-18
Info/Broken? - Statewide surveys predict lukewarm job growth for Central Massachusetts.  Data shows real estate has softened and predictions are that softening will continue for at least the rest of 2006.
Statewide surveys predict lukewarm job growth for Central Massachusetts. Data shows real estate has softened and predictions are that softening will continue for at least the rest of 2006.
2006-03-17
Info/Broken? - West Roxbury and Roslindale prices take a dip.  Decline of 10% predicted for first half of 2006 alone.
West Roxbury and Roslindale prices take a dip. Decline of 10% predicted for first half of 2006 alone.
2006-03-16
Info/Broken? - Realty check: $1M will buy you a fixer-upper in Boston suburbs
Realty check: $1M will buy you a fixer-upper in Boston suburbs
2006-03-15
Info/Broken? - Middlesex North Registry of Deeds provides hard evidence of a major shift in the real estate market
Middlesex North Registry of Deeds provides hard evidence of a major shift in the real estate market
2006-03-15
Info/Broken? - Boston once again ranked as one of the most vulnerable areas for serious market corrections
Boston once again ranked as one of the most vulnerable areas for serious market corrections
2006-03-15
Info/Broken? - Ingo Winzer, president of Local Market Monitor, says Boston is 33% overvalued and expected to decline
Ingo Winzer, president of Local Market Monitor, says Boston is 33% overvalued and expected to decline
2006-03-14
Info/Broken? - Price decline of 49.4% predicted for Boston by former Goldman Sachs investment banker John Talbott
Price decline of 49.4% predicted for Boston by former Goldman Sachs investment banker John Talbott
2006-03-13
Info/Broken? - ForeclosuresMass report shows 2006 Massachusetts foreclosure filings continuing at an "explosive rate"
ForeclosuresMass report shows 2006 Massachusetts foreclosure filings continuing at an "explosive rate"
2006-03-11
Info/Broken? - A "soft landing" isn't safe - homebuyers can lose money even if house prices do not fall
A "soft landing" isn't safe - homebuyers can lose money even if house prices do not fall
2006-03-11
Info/Broken? - Rents in Hub still lower than in 2001
Rents in Hub still lower than in 2001
2006-03-10
Info/Broken? - Massachusetts may lose a seat in Congress due to shrinking population
Massachusetts may lose a seat in Congress due to shrinking population
2006-03-10
Info/Broken? - 30-year mortgage rates jump to highest level in 3 1/2 years
30-year mortgage rates jump to highest level in 3 1/2 years
2006-03-09
Info/Broken? - Sales in Tewksbury fell 12% in 2005.  Brokers urge owners to disregard chilling market and keep selling.
Sales in Tewksbury fell 12% in 2005. Brokers urge owners to disregard chilling market and keep selling.
2006-03-08
Info/Broken? - Goldman Sachs Chief U.S. Economist Jan Hatzius pegs Boston real estate at 27% overvalued
Goldman Sachs Chief U.S. Economist Jan Hatzius pegs Boston real estate at 27% overvalued
2006-03-07
Info/Broken? - Cambridge, Somerville, Newton and Boston were 4 of the 5 cities that saw highest price increases in entire US in previous two decades.  Harvard economist cites unreasonable regulations as main cause.
Cambridge, Somerville, Newton and Boston were 4 of the 5 cities that saw highest price increases in entire US in previous two decades. Harvard economist cites unreasonable regulations as main cause.
2006-03-06
Info/Broken? - Boston condo most expense in New England, even pricier than any in New York (per square foot)
Boston condo most expense in New England, even pricier than any in New York (per square foot)
2006-03-02
Info/Broken? - An analysis of the turning tide in MA - note that January saw a YOY decline in prices both in nominal (-0.1%) and real (-4.0%) terms
An analysis of the turning tide in MA - note that January saw a YOY decline in prices both in nominal (-0.1%) and real (-4.0%) terms
2006-03-01
Info/Broken? - Ailing housing market reported by the Globe and the Sun corroborated by the Lowell Registry of Deeds
Ailing housing market reported by the Globe and the Sun corroborated by the Lowell Registry of Deeds
2006-03-01
Info/Broken? - Roof collapses on Massachusetts housing boom - sales plummet, prices drop
Roof collapses on Massachusetts housing boom - sales plummet, prices drop

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