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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
2006-07-31
Info/Broken? - CNNMoney.com: Boston now 33% overpriced
CNNMoney.com: Boston now 33% overpriced
2006-07-31
Info/Broken? - Sellers' remorse in Massachusetts
Sellers' remorse in Massachusetts
2006-07-28
Info/Broken? - Boston Bubble Report: The Real Story for MA - June 2006.  Record setting drop of 5.80% in year over year prices.  1 full year beneath peak.  10th straight month of year over year declines with trend accelerating downward.
Discuss - Boston Bubble Report: The Real Story for MA - June 2006.  Record setting drop of 5.80% in year over year prices.  1 full year beneath peak.  10th straight month of year over year declines with trend accelerating downward.
Boston Bubble Report: The Real Story for MA - June 2006. Record setting drop of 5.80% in year over year prices. 1 full year beneath peak. 10th straight month of year over year declines with trend accelerating downward.
2006-07-28
Info/Broken? - Home Foreclosure Filings Increase, Barnstable County Leads State
Home Foreclosure Filings Increase, Barnstable County Leads State
2006-07-28
Info/Broken? - The Massachusetts Association of Realtors' response to Forbes is questionable
The Massachusetts Association of Realtors' response to Forbes is questionable
2006-07-27
Info/Broken? - Boston's New Curse?
Boston's New Curse?
2006-07-27
Info/Broken? - 2nd Quarter 2006 Sales Stats
2nd Quarter 2006 Sales Stats
2006-07-27
Info/Broken? - The Only Question Is How Far And For How Long
The Only Question Is How Far And For How Long
2006-07-26
Info/Broken? - Mass. home, condo sales tumble
Mass. home, condo sales tumble
2006-07-26
Info/Broken? - June Market Wrap
June Market Wrap
2006-07-26
Info/Broken? - "Sellers Are Being Short-Sighted" In Massachusetts
"Sellers Are Being Short-Sighted" In Massachusetts
2006-07-26
Info/Broken? - Five Stages of Grief
Five Stages of Grief
2006-07-25
Info/Broken? - Second Quarter Foreclosure Filings Are 66% Above 2005 Levels and 114% Above 2004
Second Quarter Foreclosure Filings Are 66% Above 2005 Levels and 114% Above 2004
2006-07-25
Info/Broken? - Foreclosure filings in Mass. jump 66%
Foreclosure filings in Mass. jump 66%
2006-07-24
Info/Broken? - Slow Burn
Slow Burn
2006-07-24
Info/Broken? - "Housing Boom Now Just A Memory" In Massachusetts
"Housing Boom Now Just A Memory" In Massachusetts
2006-07-23
Info/Broken? - In New England, a different kind of fall
In New England, a different kind of fall
2006-07-20
Info/Broken? - Metro Boston area has large increase of homes for sale, weak employment growth, and one of the weakest pricing trend in the US
Metro Boston area has large increase of homes for sale, weak employment growth, and one of the weakest pricing trend in the US
2006-07-20
Info/Broken? - MetroWest now part of slowing market
MetroWest now part of slowing market
2006-07-19
Info/Broken? - Suicide Loans: Piggyback Mortgages Default by up to 50%.  Massachusetts has huge proportion of these loans.
Suicide Loans: Piggyback Mortgages Default by up to 50%. Massachusetts has huge proportion of these loans.
2006-07-17
Info/Broken? - To fight the glut, Boston area home sellers push their prices down
To fight the glut, Boston area home sellers push their prices down
2006-07-17
Info/Broken? - ForeclosureS.com: Massachusetts Leads Northeast in Foreclosures
ForeclosureS.com: Massachusetts Leads Northeast in Foreclosures
2006-07-17
Info/Broken? - More Greater Boston houses falling below assessed values
More Greater Boston houses falling below assessed values
2006-07-16
Info/Broken? - Don't get caught in the downturn
Don't get caught in the downturn
2006-07-14
Info/Broken? - Forecasts from the NAR and David Lereah have a poor historical track record, are from a biased source, and promote unrealistic optimism
Forecasts from the NAR and David Lereah have a poor historical track record, are from a biased source, and promote unrealistic optimism
2006-07-13
Info/Broken? - Executions up dramatically at Middlesex North Registry of Deeds
Executions up dramatically at Middlesex North Registry of Deeds
2006-07-11
Info/Broken? - Forbes: Essex County #1 Most Overpriced Place in US in 2006
Forbes: Essex County #1 Most Overpriced Place in US in 2006
2006-07-10
Info/Broken? - Sales volumes in MA for first 5 months of 2006 declining from previous years
Sales volumes in MA for first 5 months of 2006 declining from previous years
2006-07-09
Info/Broken? - MA homeowners attempting to trade up stung by inability to sell
MA homeowners attempting to trade up stung by inability to sell
2006-07-06
Info/Broken? - Mid-Year Statistics From Middlesex North Registry of Deeds
Mid-Year Statistics From Middlesex North Registry of Deeds
2006-07-05
Info/Broken? - Kenneth Heebner: real estate up the East Coast could fall 50% from its peak
Kenneth Heebner: real estate up the East Coast could fall 50% from its peak
2006-07-04
Info/Broken? - Real estate bubble map and wiki for Boston-Quincy area.  Shows savings below asking price and assessed values.
Real estate bubble map and wiki for Boston-Quincy area. Shows savings below asking price and assessed values.
2006-07-03
Info/Broken? - Borrowers "Don't Have That Luxury" In Massachusetts
Borrowers "Don't Have That Luxury" In Massachusetts
2006-07-03
Info/Broken? - Boston Housing Strangled: Key Statistics for May 2006
Boston Housing Strangled: Key Statistics for May 2006

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