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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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2006-10-31
Info/Broken? - Boston leads declines in S&P/Case-Shiller Home Price Index
Boston leads declines in S&P/Case-Shiller Home Price Index
2006-10-30
Info/Broken? - Even If Prices Are Dropping, They're "Still High"
Even If Prices Are Dropping, They're "Still High"
2006-10-30
Info/Broken? - Boston condo sales drop 20%, prices down 7%
Boston condo sales drop 20%, prices down 7%
2006-10-30
Info/Broken? - Yankee Damon's home set to sell for $5M: Other ex-Sox' homes still for sale
Yankee Damon's home set to sell for $5M: Other ex-Sox' homes still for sale
2006-10-30
Info/Broken? - Federal Reserve study finds Suffolk, Middlesex, and Norfolk Counties all losing population
Federal Reserve study finds Suffolk, Middlesex, and Norfolk Counties all losing population
2006-10-30
Info/Broken? - Population of Boston proper may actually be increasing after all
Population of Boston proper may actually be increasing after all
2006-10-27
Info/Broken? - Boston Bubble Report: 7.66% fall in real prices from Sep 2005 - 2006, 2nd straight month below 2003 levels - have prices "hit bottom?"
Discuss - Boston Bubble Report: 7.66% fall in real prices from Sep 2005 - 2006, 2nd straight month below 2003 levels - have prices "hit bottom?"
Boston Bubble Report: 7.66% fall in real prices from Sep 2005 - 2006, 2nd straight month below 2003 levels - have prices "hit bottom?"
2006-10-27
Info/Broken? - Preliminary data from the Middlesex North Registry of Deeds shows October 2006 deeds declining 42% from October 2005
Preliminary data from the Middlesex North Registry of Deeds shows October 2006 deeds declining 42% from October 2005
2006-10-26
Info/Broken? - Home sales in Middlesex County are moving as slowly as the state as a whole
Home sales in Middlesex County are moving as slowly as the state as a whole
2006-10-25
Info/Broken? - One way to get affordable real estate: move - to another dimension
One way to get affordable real estate: move - to another dimension
2006-10-25
Info/Broken? - US Home Prices Post Record Drop: Median Price At Lowest Level In 40 years
US Home Prices Post Record Drop: Median Price At Lowest Level In 40 years
2006-10-25
Info/Broken? - Middlesex North Registry of Deeds: "It is unlikely that prices will increase or stabilize until the present inventory shrinks."
Middlesex North Registry of Deeds: "It is unlikely that prices will increase or stabilize until the present inventory shrinks."
2006-10-25
Info/Broken? - "Buyers Adopt Guarded Approach" In Massachusetts
"Buyers Adopt Guarded Approach" In Massachusetts
2006-10-25
Info/Broken? - The Massachusetts Housing Market Blog: Preliminary 3rd Q Analysis - Bear Market Deepens
The Massachusetts Housing Market Blog: Preliminary 3rd Q Analysis - Bear Market Deepens
2006-10-24
Info/Broken? - Banker & Tradesman editor on downturn: "It's accelerating rather than receding. We don't expect it to end in the near future."
Banker & Tradesman editor on downturn: "It's accelerating rather than receding. We don't expect it to end in the near future."
2006-10-24
Info/Broken? - The Massachusetts Housing Market Blog: September Price and Inventory Stats (with graphs)
The Massachusetts Housing Market Blog: September Price and Inventory Stats (with graphs)
2006-10-24
Info/Broken? - MA poised to set record for yearly drop in sales in 2006
MA poised to set record for yearly drop in sales in 2006
2006-10-24
Info/Broken? - "You Don't Know Where The Bottom Is": Massachusetts
"You Don't Know Where The Bottom Is": Massachusetts
2006-10-23
Info/Broken? - Massachusetts Third-Quarter Home Sales Decline Steepest in Two Decades, The Warren Group Reports
Massachusetts Third-Quarter Home Sales Decline Steepest in Two Decades, The Warren Group Reports
2006-10-23
Info/Broken? - Sep 2006 vs. Sep 2005 in MA: single-family home sales down 24%, condo sales down 28%, nominal SFH prices down 5.3%
Sep 2006 vs. Sep 2005 in MA: single-family home sales down 24%, condo sales down 28%, nominal SFH prices down 5.3%
2006-10-23
Info/Broken? - Boston condo sales keep sliding down
Boston condo sales keep sliding down
2006-10-22
Info/Broken? - Prices down, bills up
Prices down, bills up
2006-10-20
Info/Broken? - Andover single family homes taking twice as long to sell, nominal prices down ~8% compared to 2005
Andover single family homes taking twice as long to sell, nominal prices down ~8% compared to 2005
2006-10-20
Info/Broken? - Futures market predicts 7.3% additional, nominal drop in Boston housing prices by next fall
Futures market predicts 7.3% additional, nominal drop in Boston housing prices by next fall
2006-10-19
Info/Broken? - Foreclosure help on way: Local banks set aside $100M for refinancing
Foreclosure help on way: Local banks set aside $100M for refinancing
2006-10-19
Info/Broken? - Downtown condo plans ditched
Downtown condo plans ditched
2006-10-19
Info/Broken? - Forum tonight in Lexington Center on "Greater Boston: Too Expensive to Survive?"
Forum tonight in Lexington Center on "Greater Boston: Too Expensive to Survive?"
2006-10-18
Info/Broken? - Local blogger points out exaggeration of current pain levels in Globe article on housing market downturn
Local blogger points out exaggeration of current pain levels in Globe article on housing market downturn
2006-10-17
Info/Broken? - Portland, Maine: Market stalls, condos follow
Portland, Maine: Market stalls, condos follow
2006-10-16
Info/Broken? - The homeowner's day of reckoning
The homeowner's day of reckoning
2006-10-16
Info/Broken? - Massachusetts housing slump extends to more than just single family homes and condos
Massachusetts housing slump extends to more than just single family homes and condos
2006-10-13
Info/Broken? - Boston Bubble Report: MA Housing vs. Income 1984 - 2005.  Prices are multiple standard deviations from norm.
Discuss - Boston Bubble Report: MA Housing vs. Income 1984 - 2005.  Prices are multiple standard deviations from norm.
Boston Bubble Report: MA Housing vs. Income 1984 - 2005. Prices are multiple standard deviations from norm.
2006-10-12
Info/Broken? - Pricey digs go unsold in town Damon's, McCourt's pads still on market
Pricey digs go unsold in town Damon's, McCourt's pads still on market
2006-10-11
Info/Broken? - Marblehead assessor: "People are confused" about rising property taxes when more homes are selling for less than assessed value
Marblehead assessor: "People are confused" about rising property taxes when more homes are selling for less than assessed value
2006-10-11
Info/Broken? - Folio auction did not include some units which remain unsold
Folio auction did not include some units which remain unsold
2006-10-11
Info/Broken? - National New-House Prices Will Fall for First Time in 15 Years
National New-House Prices Will Fall for First Time in 15 Years
2006-10-10
Info/Broken? - A broker's take on this weekend's Folio auction
A broker's take on this weekend's Folio auction
2006-10-10
Info/Broken? - Discussion on yesterday's Globe article: sympathy is one sided, inconsistent, and misplaced
Discuss - Discussion on yesterday's Globe article: sympathy is one sided, inconsistent, and misplaced
Discussion on yesterday's Globe article: sympathy is one sided, inconsistent, and misplaced
2006-10-09
Info/Broken? - Auctioned Folio condos sold on average 30% below asking
Auctioned Folio condos sold on average 30% below asking
2006-10-09
Info/Broken? - Fear and anxiety in the housing market
Fear and anxiety in the housing market
2006-10-07
Info/Broken? - Foreclosures on rise in Danvers
Foreclosures on rise in Danvers
2006-10-06
Info/Broken? - Luxury Condos Up For Auction In Boston
Luxury Condos Up For Auction In Boston
2006-10-04
Info/Broken? - Moody's predicts 1st yearly decline in national home prices since Great Depression, Northeast to be hit hardest
Moody's predicts 1st yearly decline in national home prices since Great Depression, Northeast to be hit hardest
2006-10-04
Info/Broken? - Only two states more costly than Mass. for homeowners
Only two states more costly than Mass. for homeowners
2006-10-03
Info/Broken? - State shutters 2 more mortgage brokers in fraud case, warns 4 operating without licenses
State shutters 2 more mortgage brokers in fraud case, warns 4 operating without licenses
2006-10-03
Info/Broken? - Most Middlesex North September foreclosures were for recent mortgages (2004 and 2005)
Most Middlesex North September foreclosures were for recent mortgages (2004 and 2005)
2006-10-03
Info/Broken? - Boston, Springfield, and Worcester all make top 10 list of most hurting job markets in US
Boston, Springfield, and Worcester all make top 10 list of most hurting job markets in US
2006-10-03
Info/Broken? - Boston and Wellesley make CNNMoney.com's list of most expensive markets in US
Boston and Wellesley make CNNMoney.com's list of most expensive markets in US
2006-10-02
Info/Broken? - Middlesex North Registry of Deeds reports September 2006 stats - deeds down 32% from last year, foreclosure deeds up from 3 to 20
Middlesex North Registry of Deeds reports September 2006 stats - deeds down 32% from last year, foreclosure deeds up from 3 to 20
2006-10-02
Info/Broken? - SouthCoast home sales slumping: Prices declining, houses staying on market longer in the region
SouthCoast home sales slumping: Prices declining, houses staying on market longer in the region

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