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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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2006-08-31
Info/Broken? - August 2006 stats from Middlesex North Registry of Deeds: deeds recorded down 30%, foreclosure deeds up a "disturbing" 283%
August 2006 stats from Middlesex North Registry of Deeds: deeds recorded down 30%, foreclosure deeds up a "disturbing" 283%
2006-08-30
Info/Broken? - Mass. home sale data MAR-red
Mass. home sale data MAR-red
2006-08-30
Info/Broken? -  Sales and Inventory Trends in MA
Sales and Inventory Trends in MA
2006-08-30
Info/Broken? - Massachusetts real estate used as a cautionary example
Massachusetts real estate used as a cautionary example
2006-08-29
Info/Broken? - Latest ForeclosuresMass.com Report Confirms Dramatic Rise in Massachusetts Foreclosure Filings
Latest ForeclosuresMass.com Report Confirms Dramatic Rise in Massachusetts Foreclosure Filings
2006-08-29
Info/Broken? - Mass. home foreclosures continue to rise quickly
Mass. home foreclosures continue to rise quickly
2006-08-28
Info/Broken? - Are seller concessions masking deeper discounts on sales prices?
Are seller concessions masking deeper discounts on sales prices?
2006-08-25
Info/Broken? - Boston Bubble Report: The Real Story for MA - July 2006.  Record setting drop of 7.79% in year over year prices.  11th straight month of year over year declines with trend rapidly accelerating downward.
Discuss - Boston Bubble Report: The Real Story for MA - July 2006.  Record setting drop of 7.79% in year over year prices.  11th straight month of year over year declines with trend rapidly accelerating downward.
Boston Bubble Report: The Real Story for MA - July 2006. Record setting drop of 7.79% in year over year prices. 11th straight month of year over year declines with trend rapidly accelerating downward.
2006-08-24
Info/Broken? - Market unease: Home prices fall 3.5% (in nominal terms)
Market unease: Home prices fall 3.5% (in nominal terms)
2006-08-24
Info/Broken? - Key Statistics for July 2006
Key Statistics for July 2006
2006-08-24
Info/Broken? - Industry's seller bias understates risk to homebuyers
Industry's seller bias understates risk to homebuyers
2006-08-24
Info/Broken? - The Massachusetts Housing Market: July Market Wrap
The Massachusetts Housing Market: July Market Wrap
2006-08-24
Info/Broken? - State real estate market slows dramatically in July
State real estate market slows dramatically in July
2006-08-23
Info/Broken? - Sell freezes over: Fewest homes moving since 1995
Sell freezes over: Fewest homes moving since 1995
2006-08-23
Info/Broken? - Census: Mass. housing growth among worst
Census: Mass. housing growth among worst
2006-08-22
Info/Broken? - July single-family home sales drop at sharpest rate in 11 years
July single-family home sales drop at sharpest rate in 11 years
2006-08-22
Info/Broken? - Lowell property sales "don't look good"
Lowell property sales "don't look good"
2006-08-22
Info/Broken? - Portland, Maine: Owners cut prices amid flat sales in Boston's northern neighbor
Portland, Maine: Owners cut prices amid flat sales in Boston's northern neighbor
2006-08-21
Info/Broken? - ForeclosureS.com: Massachusetts Remains the Foreclosure Hot Spot in Northeast
ForeclosureS.com: Massachusetts Remains the Foreclosure Hot Spot in Northeast
2006-08-20
Info/Broken? - 2nd Quarter Weakness in Massachusetts
2nd Quarter Weakness in Massachusetts
2006-08-20
Info/Broken? - When sales fall, they call St. Joe
When sales fall, they call St. Joe
2006-08-18
Info/Broken? - Discuss: If interest rates stay put, how will Boston prices be affected?
Discuss - Discuss: If interest rates stay put, how will Boston prices be affected?
Discuss: If interest rates stay put, how will Boston prices be affected?
2006-08-18
Info/Broken? - Discredited: National Association of Realtors' Anti Bubble Reports
Discredited: National Association of Realtors' Anti Bubble Reports
2006-08-17
Info/Broken? - Home and condo sales continue to slow, single family home prices drop nearly everywhere in MA
Home and condo sales continue to slow, single family home prices drop nearly everywhere in MA
2006-08-17
Info/Broken? - Boston leads country in price reductions
Boston leads country in price reductions
2006-08-17
Info/Broken? - From stocks to houses and from boom to bust
From stocks to houses and from boom to bust
2006-08-16
Info/Broken? - Brockton lenders say their community is near crisis
Brockton lenders say their community is near crisis
2006-08-16
Info/Broken? - State closes 2 mortgage firms in Lawrence
State closes 2 mortgage firms in Lawrence
2006-08-16
Info/Broken? - Mass. home sales show decline
Mass. home sales show decline
2006-08-16
Info/Broken? - 53% of single family homes for sale in Boston area have price reductions
53% of single family homes for sale in Boston area have price reductions
2006-08-15
Info/Broken? - Double-Digit Drop For Mass. Home Sales
Double-Digit Drop For Mass. Home Sales
2006-08-13
Info/Broken? - For wages to "catch up" to nominal housing prices in Arlington, Cambridge, Belmont, Lexington, etc., wages would need to increase at very optimistic rates for many, many years
For wages to "catch up" to nominal housing prices in Arlington, Cambridge, Belmont, Lexington, etc., wages would need to increase at very optimistic rates for many, many years
2006-08-11
Info/Broken? - Massachusetts' housing market still high-priced despite swoon
Massachusetts' housing market still high-priced despite swoon
2006-08-10
Info/Broken? - Mass. a leader in foreclosures, home price reductions
Mass. a leader in foreclosures, home price reductions
2006-08-09
Info/Broken? - Steep drops in value of signed contracts in Massachusetts and nationally
Steep drops in value of signed contracts in Massachusetts and nationally
2006-08-04
Info/Broken? - Creative financing fuels foreclosures
Creative financing fuels foreclosures
2006-08-03
Info/Broken? - Sales of condominiums in Rhode Island fell sharply this spring
Sales of condominiums in Rhode Island fell sharply this spring
2006-08-03
Info/Broken? - Add properties to bubble map before "Un-conference"
Add properties to bubble map before "Un-conference"
2006-08-02
Info/Broken? - NBC Nightly News reporting from Newton: Have an adjustable rate mortgage? Look out!
NBC Nightly News reporting from Newton: Have an adjustable rate mortgage? Look out!
2006-08-02
Info/Broken? - State housing slump deepens
State housing slump deepens
2006-08-01
Info/Broken? -  The Warren Group Reports Massachusetts Second-Quarter Home Sales Fall to Lowest Level since 1995; Quarterly Numbers Point to Continued Slowdown in State Housing Sector
The Warren Group Reports Massachusetts Second-Quarter Home Sales Fall to Lowest Level since 1995; Quarterly Numbers Point to Continued Slowdown in State Housing Sector
2006-08-01
Info/Broken? - Downtown condo sales drop 12%
Downtown condo sales drop 12%

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