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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
2006-09-29
Info/Broken? - Boston Bubble Report: 10.18% fall in real prices from Aug 2005 - 2006.  Real prices now below 2003 levels - lowest August on record. YOY declines for 12 straight months.
Discuss - Boston Bubble Report: 10.18% fall in real prices from Aug 2005 - 2006.  Real prices now below 2003 levels - lowest August on record. YOY declines for 12 straight months.
Boston Bubble Report: 10.18% fall in real prices from Aug 2005 - 2006. Real prices now below 2003 levels - lowest August on record. YOY declines for 12 straight months.
2006-09-28
Info/Broken? - Batten down the hatches! Housing slump could last years
Batten down the hatches! Housing slump could last years
2006-09-28
Info/Broken? - The Massachusetts Housing Market: August Market Wrap
The Massachusetts Housing Market: August Market Wrap
2006-09-28
Info/Broken? - The Massachusetts Housing Market: Historical Trends as a Guide to Future Price Movements
The Massachusetts Housing Market: Historical Trends as a Guide to Future Price Movements
2006-09-27
Info/Broken? - Boston Bubble webmaster appears on The Natural Truth with Michael Graham (96.9 FM Talk)
Discuss - Boston Bubble webmaster appears on The Natural Truth with Michael Graham (96.9 FM Talk)
Boston Bubble webmaster appears on The Natural Truth with Michael Graham (96.9 FM Talk)
2006-09-27
Info/Broken? - Housing ills a "weight" on economy
Housing ills a "weight" on economy
2006-09-27
Info/Broken? - Study contends high cost of housing hurting state
Study contends high cost of housing hurting state
2006-09-26
Info/Broken? - Mass. foreclosure filings jump 72% in August
Mass. foreclosure filings jump 72% in August
2006-09-26
Info/Broken? - MAR reported home prices fall 6.1% nominally as downturn gathers speed
MAR reported home prices fall 6.1% nominally as downturn gathers speed
2006-09-26
Info/Broken? - Boston Herald: "Home buyers taste blood: Prices take worst drop since '93"
Boston Herald: "Home buyers taste blood: Prices take worst drop since '93"
2006-09-25
Info/Broken? - Mass. home sales plunge, prices drop
Mass. home sales plunge, prices drop
2006-09-25
Info/Broken? - Massachusetts housing sales plummet
Massachusetts housing sales plummet
2006-09-25
Info/Broken? - Mass. Home Sales Slowest In Ten Years
Mass. Home Sales Slowest In Ten Years
2006-09-25
Info/Broken? - MA home sales fall 20% in August, YOY nominal prices plummet 8%, 5% drop in nominal condo prices biggest since 1995
MA home sales fall 20% in August, YOY nominal prices plummet 8%, 5% drop in nominal condo prices biggest since 1995
2006-09-24
Info/Broken? - There Are Real Estate Issues Everywhere
There Are Real Estate Issues Everywhere
2006-09-24
Info/Broken? - Lowell Sun on Boston area homes selling below assessed value
Lowell Sun on Boston area homes selling below assessed value
2006-09-24
Info/Broken? - Revision of many ARMs yet to impact people's pocketbooks
Revision of many ARMs yet to impact people's pocketbooks
2006-09-22
Info/Broken? - More home markets "extremely" overvalued, Boston among the shakiest
More home markets "extremely" overvalued, Boston among the shakiest
2006-09-20
Info/Broken? - The Onion's cynical take on dropping home sales
The Onion's cynical take on dropping home sales
2006-09-19
Info/Broken? - PMI Group increases probability of near term nominal price declines in Boston to 59.6%
PMI Group increases probability of near term nominal price declines in Boston to 59.6%
2006-09-18
Info/Broken? - Housing Slump in U.S. May Lead to First Drop Since Depression, Massachusetts Provides Cautionary Examples
Housing Slump in U.S. May Lead to First Drop Since Depression, Massachusetts Provides Cautionary Examples
2006-09-17
Info/Broken? - Standoff in Boston's soft housing market
Standoff in Boston's soft housing market
2006-09-17
Info/Broken? - National Association of Realtors President having trouble selling his own home
National Association of Realtors President having trouble selling his own home
2006-09-17
Info/Broken? - Massachusetts Mortgage Foreclosures At Highest Rates In More Than A Year
Massachusetts Mortgage Foreclosures At Highest Rates In More Than A Year
2006-09-15
Info/Broken? - Comparison of Boston and Seattle markets
Comparison of Boston and Seattle markets
2006-09-15
Info/Broken? - Video of Wednesday's Senate Banking Committee meeting on the housing bubble
Video of Wednesday's Senate Banking Committee meeting on the housing bubble
2006-09-14
Info/Broken? - Chat with David Wluka, president of the Massachusetts Association of Realtors, at 11AM today
Discuss - Chat with David Wluka, president of the Massachusetts Association of Realtors, at 11AM today
Chat with David Wluka, president of the Massachusetts Association of Realtors, at 11AM today
2006-09-14
Info/Broken? - Shifts in Hub home prices all over the map
Shifts in Hub home prices all over the map
2006-09-12
Info/Broken? - Request that C-Span cover Senate Banking Committee housing bubble hearing
Request that C-Span cover Senate Banking Committee housing bubble hearing
2006-09-12
Info/Broken? - Boston Fed chief acknowledges risk of housing decline exceeding a moderate downturn
Boston Fed chief acknowledges risk of housing decline exceeding a moderate downturn
2006-09-10
Info/Broken? - Boston resident gives 1st hand account of real estate bubble aftermath in Japan
Discuss - Boston resident gives 1st hand account of real estate bubble aftermath in Japan
Boston resident gives 1st hand account of real estate bubble aftermath in Japan
2006-09-09
Info/Broken? - Mass. takes action against lenders
Mass. takes action against lenders
2006-09-08
Info/Broken? - National home prices may fall in nominal terms for 1st time since 1993
National home prices may fall in nominal terms for 1st time since 1993
2006-09-07
Info/Broken? - Cape Cod Bubble Map documents sales below assessed value
Cape Cod Bubble Map documents sales below assessed value
2006-09-07
Info/Broken? - Major investor may be cashing out of Arlington
Major investor may be cashing out of Arlington
2006-09-07
Info/Broken? - Growing number of Boston area homes priced below assessment
Growing number of Boston area homes priced below assessment
2006-09-06
Info/Broken? - In echo of '90s bust, auction set for 34 unsold luxury condos in Hub
In echo of '90s bust, auction set for 34 unsold luxury condos in Hub
2006-09-06
Info/Broken? - Home prices show huge slowdown
Home prices show huge slowdown
2006-09-05
Info/Broken? - Sharpest US home price deceleration since 1975 - MA among losers
Sharpest US home price deceleration since 1975 - MA among losers
2006-09-05
Info/Broken? - Housing market cools, sellers retool in Attleboro
Housing market cools, sellers retool in Attleboro
2006-09-04
Info/Broken? - Real median hourly wage has fallen ~5% between 2003 and 2005 in Massachusetts
Real median hourly wage has fallen ~5% between 2003 and 2005 in Massachusetts
2006-09-03
Info/Broken? - The State of the Cape
The State of the Cape
2006-09-02
Info/Broken? - Further analysis and historical context on surge of August foreclosures by Middlesex North Registry of Deeds
Further analysis and historical context on surge of August foreclosures by Middlesex North Registry of Deeds
2006-09-01
Info/Broken? - Foreclosures nearly double in Fitchburg
Foreclosures nearly double in Fitchburg

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