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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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<< << << Show Recent Links
2006-04-28
Info/Broken? - Boston Bubble Report: The Real Story for MA - Mar 2006.  Year over year change sets record low of -4.85%.  Prices 10.75% below peak with year over year depreciation accelerating.
Discuss - Boston Bubble Report: The Real Story for MA - Mar 2006.  Year over year change sets record low of -4.85%.  Prices 10.75% below peak with year over year depreciation accelerating.
Boston Bubble Report: The Real Story for MA - Mar 2006. Year over year change sets record low of -4.85%. Prices 10.75% below peak with year over year depreciation accelerating.
2006-04-27
Info/Broken? - Boston "one of the weakest markets" for real estate in the US
Boston "one of the weakest markets" for real estate in the US
2006-04-26
Info/Broken? - A clarification of seemingly contradictory March data - MA sales are down in the more inclusive data set
A clarification of seemingly contradictory March data - MA sales are down in the more inclusive data set
2006-04-26
Info/Broken? - "It's The Law Of Gravity" For The Massachusetts Bubble
"It's The Law Of Gravity" For The Massachusetts Bubble
2006-04-26
Info/Broken? - Housing slowdown deepens in Massachusetts: Single-family prices, sales slip in March
Housing slowdown deepens in Massachusetts: Single-family prices, sales slip in March
2006-04-25
Info/Broken? - Massachusetts Housing Market Blog March Market Wrap
Massachusetts Housing Market Blog March Market Wrap
2006-04-25
Info/Broken? - Reminder: talk tonight at MIT on how various asset classes, including real estate, are richly priced, have little upside potential, and may suffer major declines
Reminder: talk tonight at MIT on how various asset classes, including real estate, are richly priced, have little upside potential, and may suffer major declines
2006-04-24
Info/Broken? - Boston area communities' increasingly restrictive lot size requirements hurting regional economy
Boston area communities' increasingly restrictive lot size requirements hurting regional economy
2006-04-24
Info/Broken? - Bay Staters are heading south, west, any place it's cheaper, and the state's economic health is at risk.
Bay Staters are heading south, west, any place it's cheaper, and the state's economic health is at risk.
2006-04-24
Info/Broken? - Multifamily home sales plunged 15% in Mass. last year
Multifamily home sales plunged 15% in Mass. last year
2006-04-24
Info/Broken? - Massachusetts market "saturated with condos"
Massachusetts market "saturated with condos"
2006-04-21
Info/Broken? - Foreclosure rates in Hub through roof
Foreclosure rates in Hub through roof
2006-04-21
Info/Broken? - Does buying a condo make sense in Allston / Brighton / Brookline / Cambridge?
Discuss - Does buying a condo make sense in Allston / Brighton / Brookline / Cambridge?
Does buying a condo make sense in Allston / Brighton / Brookline / Cambridge?
2006-04-20
Info/Broken? - Somerville may tighten restrictions on condo conversions
Somerville may tighten restrictions on condo conversions
2006-04-20
Info/Broken? - Bay State exodus 2nd only to NY
Bay State exodus 2nd only to NY
2006-04-20
Info/Broken? - Housing prices put Americans on the move: Residents leaving high-priced markets in Northeast and West Coast for Sun Belt
Housing prices put Americans on the move: Residents leaving high-priced markets in Northeast and West Coast for Sun Belt
2006-04-20
Info/Broken? - Massachusetts' loss of population and sky-high housing costs cited as important issues for November elections
Massachusetts' loss of population and sky-high housing costs cited as important issues for November elections
2006-04-18
Info/Broken? - "World's scariest building" goes condo in Danvers
"World's scariest building" goes condo in Danvers
2006-04-18
Info/Broken? - Applying The Wall Street Journal's real estate metrics to Massachusetts
Applying The Wall Street Journal's real estate metrics to Massachusetts
2006-04-17
Info/Broken? - SouthCoast MA News: Fears burden housing market - As ARMs rise, many in line for mortgage hikes
SouthCoast MA News: Fears burden housing market - As ARMs rise, many in line for mortgage hikes
2006-04-16
Info/Broken? - High real-estate costs in Boston force young adults far from city
High real-estate costs in Boston force young adults far from city
2006-04-16
Info/Broken? - SouthCoast MA News: When to sell an investment property
SouthCoast MA News: When to sell an investment property
2006-04-15
Info/Broken? - Home sales in Massachusetts sliding
Home sales in Massachusetts sliding
2006-04-14
Info/Broken? - Greater Boston Realtors avoiding reality
Greater Boston Realtors avoiding reality
2006-04-14
Info/Broken? - Barnstable and Cape Code "extremely overvalued."  Cape Code inventory 62% higher than last year.
Barnstable and Cape Code "extremely overvalued." Cape Code inventory 62% higher than last year.
2006-04-14
Info/Broken? - Chicago Mercantile Exchange expected to begin trading futures and options for real estate this month for Boston and elsewhere
Chicago Mercantile Exchange expected to begin trading futures and options for real estate this month for Boston and elsewhere
2006-04-12
Info/Broken? - Boston area sellers misappropriating the term "luxury" to the point of making it meaningless
Boston area sellers misappropriating the term "luxury" to the point of making it meaningless
2006-04-12
Info/Broken? - A chill in the Northeast
A chill in the Northeast
2006-04-11
Info/Broken? - March 2006 year over year data from Middlesex North Registry of Deeds: 20% decrease in documents recorded, 30% decrease in mortgages, 18% decrease in deeds, 225% increase in foreclosures, 100% increase in orders of notice
March 2006 year over year data from Middlesex North Registry of Deeds: 20% decrease in documents recorded, 30% decrease in mortgages, 18% decrease in deeds, 225% increase in foreclosures, 100% increase in orders of notice
2006-04-11
Info/Broken? - Bay State doctors struggle in toughest work environment ever due to high housing costs (among other factors)
Bay State doctors struggle in toughest work environment ever due to high housing costs (among other factors)
2006-04-10
Info/Broken? - S&P warns of correction for real-estate stocks
S&P warns of correction for real-estate stocks
2006-04-10
Info/Broken? - High-end Greater Boston buyers driving harder bargains
High-end Greater Boston buyers driving harder bargains
2006-04-09
Info/Broken? - CNN Money calculates Boston real estate is now 32% overvalued
CNN Money calculates Boston real estate is now 32% overvalued
2006-04-09
Info/Broken? - Mass. economy expected to remain in doldrums
Mass. economy expected to remain in doldrums
2006-04-09
Info/Broken? - How to afford a home in the Boston area: don't live near Boston
How to afford a home in the Boston area: don't live near Boston
2006-04-06
Info/Broken? - Boston Herald: Foreclosures up: Rise occurs in 'affordable' Hub neighborhoods
Boston Herald: Foreclosures up: Rise occurs in 'affordable' Hub neighborhoods
2006-04-06
Info/Broken? - The Housing Bubble Blog: Foreclosure Woes In Boston's 'Affordable Neighborhoods'
The Housing Bubble Blog: Foreclosure Woes In Boston's 'Affordable Neighborhoods'
2006-04-06
Info/Broken? - Westwood considering 2% surcharge on home sales, adding $20,000 to the price of an average home
Westwood considering 2% surcharge on home sales, adding $20,000 to the price of an average home
2006-04-05
Info/Broken? - Real-estate brokers step up rebates as market cools
Real-estate brokers step up rebates as market cools
2006-04-05
Info/Broken? - Guilty pleas expected in Springfield-area land-flip scam
Guilty pleas expected in Springfield-area land-flip scam
2006-04-05
Info/Broken? - 93% of lenders predict US housing prices will drop 10 - 20% with the Northeast being hit even harder
93% of lenders predict US housing prices will drop 10 - 20% with the Northeast being hit even harder
2006-04-04
Info/Broken? - PMI Group increases probability of near term nominal price declines in Boston from 57.3% to 58.8% and declares Boston one of the highest risk areas in the country
PMI Group increases probability of near term nominal price declines in Boston from 57.3% to 58.8% and declares Boston one of the highest risk areas in the country
2006-04-04
Info/Broken? - February 2006 Massachusetts foreclosures up 25.4% from 2005, 63.3% from 2004.  Shortest month produces longest list of foreclosures in three years.
February 2006 Massachusetts foreclosures up 25.4% from 2005, 63.3% from 2004. Shortest month produces longest list of foreclosures in three years.
2006-04-04
Info/Broken? - Signs of a cooling market are not hard to find in Boston
Signs of a cooling market are not hard to find in Boston
2006-04-01
Info/Broken? - Reassurances of real estate market stability are unwarranted
Reassurances of real estate market stability are unwarranted
2006-04-01
Info/Broken? - Some New Math on Homes
Discuss - Some New Math on Homes
Some New Math on Homes

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