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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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2006-05-31
Info/Broken? - House glut hitting hard: Mass. home, condo sales slump
House glut hitting hard: Mass. home, condo sales slump
2006-05-30
Info/Broken? - Coming soon: Real Estate Bubble Reality Tours?
Coming soon: Real Estate Bubble Reality Tours?
2006-05-30
Info/Broken? - 'Crunch Time' For The Spring Selling Season
'Crunch Time' For The Spring Selling Season
2006-05-30
Info/Broken? - Downtown New Bedford real estate agent feels 'awful burden'
Downtown New Bedford real estate agent feels 'awful burden'
2006-05-30
Info/Broken? - Housing prices drive young people away
Housing prices drive young people away
2006-05-30
Info/Broken? - Somerville reining in condo conversions
Somerville reining in condo conversions
2006-05-30
Info/Broken? - Quotes of unrealistic optimism from David Wluka, et al
Quotes of unrealistic optimism from David Wluka, et al
2006-05-30
Info/Broken? - The Massachusetts Housing Market: April Market Wrap
The Massachusetts Housing Market: April Market Wrap
2006-05-26
Info/Broken? - Boston Bubble Report: The Real Story for MA - Apr 2006.  8th straight month of year over year declines.  Prices down 9% from peak.
Discuss - Boston Bubble Report: The Real Story for MA - Apr 2006.  8th straight month of year over year declines.  Prices down 9% from peak.
Boston Bubble Report: The Real Story for MA - Apr 2006. 8th straight month of year over year declines. Prices down 9% from peak.
2006-05-26
Info/Broken? - New study links high home prices to job losses
New study links high home prices to job losses
2006-05-26
Info/Broken? - New Home Sales In Mass. Reach 5-Year Low
New Home Sales In Mass. Reach 5-Year Low
2006-05-26
Info/Broken? - Cape leads foreclosure surge in state
Cape leads foreclosure surge in state
2006-05-25
Info/Broken? - Restrictive zoning unsettling Mass economy
Restrictive zoning unsettling Mass economy
2006-05-24
Info/Broken? - Mass. home, condo sales plunge to their lowest levels in a decade
Mass. home, condo sales plunge to their lowest levels in a decade
2006-05-24
Info/Broken? -  ForeclosuresMass Reports That Foreclosures Filings in Massachusetts for April 2006 Were 44% Higher Than April 2005
ForeclosuresMass Reports That Foreclosures Filings in Massachusetts for April 2006 Were 44% Higher Than April 2005
2006-05-24
Info/Broken? - A record glut of houses for sale in Mass. should send prices tumbling
A record glut of houses for sale in Mass. should send prices tumbling
2006-05-23
Info/Broken? - Increase looms for home tax bills: Hub group predicts 5-8% hike
Increase looms for home tax bills: Hub group predicts 5-8% hike
2006-05-23
Info/Broken? - Home sales plunge 16.5% in April
Home sales plunge 16.5% in April
2006-05-23
Info/Broken? - Massachusetts home sales slow dramatically in April
Massachusetts home sales slow dramatically in April
2006-05-23
Info/Broken? - Shorting Boston: CME begins trading Boston futures after delays
Discuss - Shorting Boston: CME begins trading Boston futures after delays
Shorting Boston: CME begins trading Boston futures after delays
2006-05-23
Info/Broken? - Gillette facility to be closed, jobs cut
Gillette facility to be closed, jobs cut
2006-05-22
Info/Broken? - Home costs are called a drag on state growth
Home costs are called a drag on state growth
2006-05-21
Info/Broken? - Downturn in real estate may have closed the window of opportunity for Lowe's to open near Lowell
Downturn in real estate may have closed the window of opportunity for Lowe's to open near Lowell
2006-05-21
Info/Broken? - 2.2% of Massachusetts homes are priced at $1M or more.  This exceeds most states.
2.2% of Massachusetts homes are priced at $1M or more. This exceeds most states.
2006-05-21
Info/Broken? - Anecdote of one Cape Code owner pressured into a questionable purchase
Anecdote of one Cape Code owner pressured into a questionable purchase
2006-05-19
Info/Broken? - Letter to Globe editor regarding the foreclosure situation being much worse than reported
Letter to Globe editor regarding the foreclosure situation being much worse than reported
2006-05-19
Info/Broken? - Shorting Boston: HedgeStreet to begin coverage
Discuss - Shorting Boston: HedgeStreet to begin coverage
Shorting Boston: HedgeStreet to begin coverage
2006-05-19
Info/Broken? - Massive inventory reshapes Massachusetts real estate
Massive inventory reshapes Massachusetts real estate
2006-05-19
Info/Broken? - Irrational exuberance of MA Association of Realtors losing exuberance
Irrational exuberance of MA Association of Realtors losing exuberance
2006-05-18
Info/Broken? - Unsold Hub condo badge of bubble
Unsold Hub condo badge of bubble
2006-05-17
Info/Broken? - Nightmare Scenario?
Nightmare Scenario?
2006-05-17
Info/Broken? - International giants look to Bay State for brainpower, but workers fear high costs may drive them away
International giants look to Bay State for brainpower, but workers fear high costs may drive them away
2006-05-16
Info/Broken? - Bay State home market takes dip: First nominal price drop since '93
Bay State home market takes dip: First nominal price drop since '93
2006-05-16
Info/Broken? - MA April foreclosures up 34% from March and 51% from April 2005
MA April foreclosures up 34% from March and 51% from April 2005
2006-05-15
Info/Broken? - The Bear Market Begins
The Bear Market Begins
2006-05-15
Info/Broken? - Housing Market Slump Sends Prices Down in Massachusetts
Housing Market Slump Sends Prices Down in Massachusetts
2006-05-15
Info/Broken? - AG Reilly Warns Homeowners Not to Fall Victim to Mortgage Foreclosure Rescue Scams
AG Reilly Warns Homeowners Not to Fall Victim to Mortgage Foreclosure Rescue Scams
2006-05-15
Info/Broken? - Boston one of first metro areas to begin price declines
Boston one of first metro areas to begin price declines
2006-05-14
Info/Broken? - Most who left state don't plan to return
Most who left state don't plan to return
2006-05-12
Info/Broken? - Price Reductions "On The Agenda" In Massachusetts
Price Reductions "On The Agenda" In Massachusetts
2006-05-12
Info/Broken? - Middlesex North saw 100% year over year increase in foreclosures in March and 75% in April
Middlesex North saw 100% year over year increase in foreclosures in March and 75% in April
2006-05-11
Info/Broken? - Chicago Mercantile Exchange expected to begin offering futures and options for Boston real estate starting May 22
Chicago Mercantile Exchange expected to begin offering futures and options for Boston real estate starting May 22
2006-05-11
Info/Broken? - Federal Reserve raises interest rate for 16th consecutive time
Federal Reserve raises interest rate for 16th consecutive time
2006-05-10
Info/Broken? - Foreclosures in Massachusetts for March 2006 62% higher than March 2005
Foreclosures in Massachusetts for March 2006 62% higher than March 2005
2006-05-10
Info/Broken? - Foreclosure explosion confirmed by Middlesex North Registry of Deeds
Foreclosure explosion confirmed by Middlesex North Registry of Deeds
2006-05-10
Info/Broken? - Foreclosure filings up 30% in Mass. from Q1 2005 to Q1 2006
Foreclosure filings up 30% in Mass. from Q1 2005 to Q1 2006
2006-05-09
Info/Broken? - Prices have been trimmed in 35.7% of all homes now listed for sale in the Boston area
Prices have been trimmed in 35.7% of all homes now listed for sale in the Boston area
2006-05-08
Info/Broken? - Buffett: Real estate slowdown ahead
Buffett: Real estate slowdown ahead
2006-05-08
Info/Broken? - Lowell landlords unable to raise rents, even amidst rising ownership costs
Lowell landlords unable to raise rents, even amidst rising ownership costs
2006-05-07
Info/Broken? - Energy costs, inventory glut spur home builders to reduce size, add amenities in Central Massachusetts
Energy costs, inventory glut spur home builders to reduce size, add amenities in Central Massachusetts
2006-05-06
Info/Broken? - Ameriquest shuts 10 Massachusetts offices
Ameriquest shuts 10 Massachusetts offices
2006-05-06
Info/Broken? - Control is starting to return to the buyers in Boston
Control is starting to return to the buyers in Boston
2006-05-05
Info/Broken? - Boston declared "dead zone" for real estate by FORTUNE, estimated 30% overpriced
Boston declared "dead zone" for real estate by FORTUNE, estimated 30% overpriced
2006-05-05
Info/Broken? - Brookline eyeing property tax increase of 3% surcharge to support additional constraining of land use
Brookline eyeing property tax increase of 3% surcharge to support additional constraining of land use
2006-05-04
Info/Broken? - Boston waterfront condo woes: Average price 40% less than '05
Boston waterfront condo woes: Average price 40% less than '05
2006-05-04
Info/Broken? - Real estate agents begin refusing listings not priced low enough
Real estate agents begin refusing listings not priced low enough
2006-05-03
Info/Broken? - Ameriquest lays off 3,800 - several Massachusetts branches in question
Ameriquest lays off 3,800 - several Massachusetts branches in question
2006-05-03
Info/Broken? - Almost all Massachusetts counties experience declining sales between Q1 2006 and Q1 2005
Almost all Massachusetts counties experience declining sales between Q1 2006 and Q1 2005
2006-05-01
Info/Broken? - Caution: Slowdown ahead for metro Boston
Caution: Slowdown ahead for metro Boston

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