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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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2006-11-30
Info/Broken? - Paying The Price For Overheated Appreciation
Paying The Price For Overheated Appreciation
2006-11-30
Info/Broken? - Taking issue with Boston Globe real estate articles
Taking issue with Boston Globe real estate articles
2006-11-30
Info/Broken? - Massachusetts Housing Market Blog: Long term graphs of sales, nominal prices, and inventory, updated with October 2006 numbers
Massachusetts Housing Market Blog: Long term graphs of sales, nominal prices, and inventory, updated with October 2006 numbers
2006-11-30
Info/Broken? - Condo sales slide in Southeastern Massachusetts
Condo sales slide in Southeastern Massachusetts
2006-11-29
Info/Broken? - Transcript of Blanton chat - she is not predicting stabilization
Transcript of Blanton chat - she is not predicting stabilization
2006-11-29
Info/Broken? - Live chat right now with Kimberly Blanton (from the Globe) on the Boston and Massachusetts real estate market
Live chat right now with Kimberly Blanton (from the Globe) on the Boston and Massachusetts real estate market
2006-11-29
Info/Broken? - MAR attempts to twist some of country's worst regional housing numbers into positive light with "stabilization" talk
MAR attempts to twist some of country's worst regional housing numbers into positive light with "stabilization" talk
2006-11-29
Info/Broken? - "A Significant Correction" In Massachusetts
"A Significant Correction" In Massachusetts
2006-11-29
Info/Broken? - Globe picks up on MAR's "stabilization" claims, but Warren Group says "We're still headed down"
Globe picks up on MAR's "stabilization" claims, but Warren Group says "We're still headed down"
2006-11-28
Info/Broken? - Massachusetts Association of Realtors October 2006 data shows nominal MA prices fell 2% YOY - MAR claims "home sales are stabilizing"
Massachusetts Association of Realtors October 2006 data shows nominal MA prices fell 2% YOY - MAR claims "home sales are stabilizing"
2006-11-28
Info/Broken? - Nominal US home prices fall 3.5% YOY, largest drop on record
Nominal US home prices fall 3.5% YOY, largest drop on record
2006-11-28
Info/Broken? - Warren Group MA numbers for October 2006: YOY prices down 6.9% nominally, 14.9% YOY drop in SFH sales
Warren Group MA numbers for October 2006: YOY prices down 6.9% nominally, 14.9% YOY drop in SFH sales
2006-11-28
Info/Broken? - Beware of new homes selling at bargain prices: What sounds like a great deal is more like trouble
Beware of new homes selling at bargain prices: What sounds like a great deal is more like trouble
2006-11-27
Info/Broken? - Boston Globe extols shrewd, informed buyer (a Boston Bubble reader)
Boston Globe extols shrewd, informed buyer (a Boston Bubble reader)
2006-11-27
Info/Broken? - Housing double-whammy in Taunton and beyond
Housing double-whammy in Taunton and beyond
2006-11-25
Info/Broken? - Massachusetts foreclosure increases hitting minority communities particularly hard
Massachusetts foreclosure increases hitting minority communities particularly hard
2006-11-24
Info/Broken? - A frightening look at the future of Greater Boston
A frightening look at the future of Greater Boston
2006-11-24
Info/Broken? - Middlesex North Registry of Deeds: 2006 foreclosures already more than 3 times all of 2005
Middlesex North Registry of Deeds: 2006 foreclosures already more than 3 times all of 2005
2006-11-24
Info/Broken? - Property disputes clog the system: Foreclosures swamp court
Property disputes clog the system: Foreclosures swamp court
2006-11-24
Info/Broken? - Rising rates spell doom: Foreclosures piling up in SouthCoast
Rising rates spell doom: Foreclosures piling up in SouthCoast
2006-11-24
Info/Broken? - Facing housing's winter chill: Pros and cons of listing your home after Thanksgiving
Facing housing's winter chill: Pros and cons of listing your home after Thanksgiving
2006-11-24
Info/Broken? - Downsizing dreams delayed: Housing slowdown making it hard for suburban empty-nesters to fly the coop
Downsizing dreams delayed: Housing slowdown making it hard for suburban empty-nesters to fly the coop
2006-11-23
Info/Broken? - Revision of Boston Proper population estimate is not cause for bullishness
Discuss - Revision of Boston Proper population estimate is not cause for bullishness
Revision of Boston Proper population estimate is not cause for bullishness
2006-11-23
Info/Broken? - Is real estate safer than stocks?  A look at some Boston area declines
Is real estate safer than stocks? A look at some Boston area declines
2006-11-21
Info/Broken? - Massachusetts Is "Still In A Slide"
Massachusetts Is "Still In A Slide"
2006-11-21
Info/Broken? - More detailed info on Q3 2006 23% fall in MA sales, with regional breakdown chart
More detailed info on Q3 2006 23% fall in MA sales, with regional breakdown chart
2006-11-20
Info/Broken? - Massachusetts Association of Realtors: single family home sales plummet 23% in Q3 2006 vs Q3 2005, Cape Cod hit hardest
Massachusetts Association of Realtors: single family home sales plummet 23% in Q3 2006 vs Q3 2005, Cape Cod hit hardest
2006-11-20
Info/Broken? - Methuen/Haverhill: Construction on hold: Slumping market slows down developers
Methuen/Haverhill: Construction on hold: Slumping market slows down developers
2006-11-20
Info/Broken? - Boston area homeowners hit with "double whammy" of sliding prices and big property tax increases
Boston area homeowners hit with "double whammy" of sliding prices and big property tax increases
2006-11-19
Info/Broken? - Gary Shilling: "[US] housing bubble is gigantic and will burst before long with massive implications here and abroad."  Massachusetts noted as leading price declines.
Gary Shilling: "[US] housing bubble is gigantic and will burst before long with massive implications here and abroad." Massachusetts noted as leading price declines.
2006-11-19
Info/Broken? - 46% of homes for sale in Boston area had reduced prices in October, up from 36% in April
46% of homes for sale in Boston area had reduced prices in October, up from 36% in April
2006-11-18
Info/Broken? - Massachusetts on track to set all time foreclosure record in 2006
Massachusetts on track to set all time foreclosure record in 2006
2006-11-17
Info/Broken? - Plunge in housing starts "sharp poke in the eye" for those who claimed the market had hit bottom last month
Plunge in housing starts "sharp poke in the eye" for those who claimed the market had hit bottom last month
2006-11-16
Info/Broken? - "Buyers Not Willing To Pull The Trigger" In Massachusetts
"Buyers Not Willing To Pull The Trigger" In Massachusetts
2006-11-16
Info/Broken? - Holiday sales may not soar: Drop in house prices could hurt
Holiday sales may not soar: Drop in house prices could hurt
2006-11-15
Info/Broken? - MA home prices to reel?  Study sees 10% drop
MA home prices to reel? Study sees 10% drop
2006-11-15
Info/Broken? - Map and chart of Massachusetts foreclosures by community
Map and chart of Massachusetts foreclosures by community
2006-11-15
Info/Broken? - Foreclosure filings surging in MA: 1st nine months of 2006 top all of '05
Foreclosure filings surging in MA: 1st nine months of 2006 top all of '05
2006-11-15
Info/Broken? - Housing slide may deepen
Housing slide may deepen
2006-11-15
Info/Broken? - MA economy stuck in low gear, not expected to recover all jobs lost in last recession until 2011
MA economy stuck in low gear, not expected to recover all jobs lost in last recession until 2011
2006-11-14
Info/Broken? - New England Economic Partnership predicts continued housing price declines for Massachusetts through 2008
New England Economic Partnership predicts continued housing price declines for Massachusetts through 2008
2006-11-14
Info/Broken? - Price slump spreads to Rhode Island
Price slump spreads to Rhode Island
2006-11-13
Info/Broken? - Tracking Boston market decline via random Zillow sampling
Tracking Boston market decline via random Zillow sampling
2006-11-13
Info/Broken? - 2006 Massachusetts foreclosures already up 122.9% over 2005
2006 Massachusetts foreclosures already up 122.9% over 2005
2006-11-12
Info/Broken? - Lawrence foreclosures on the rise
Lawrence foreclosures on the rise
2006-11-12
Info/Broken? - Here comes winter
Here comes winter
2006-11-12
Info/Broken? - Lower condo prices through greatly reduced space
Lower condo prices through greatly reduced space
2006-11-10
Info/Broken? - Upcoming absolute auction (no reserve/minimum) in Kensington, NH
Upcoming absolute auction (no reserve/minimum) in Kensington, NH
2006-11-09
Info/Broken? - Over-extended due to the housing bubble?  Montreal Gazette looking for interviewees in Boston
Discuss - Over-extended due to the housing bubble?  Montreal Gazette looking for interviewees in Boston
Over-extended due to the housing bubble? Montreal Gazette looking for interviewees in Boston
2006-11-09
Info/Broken? - Metropolitan Area Planning Council bearish on Greater Boston's economic outlook for the near term
Metropolitan Area Planning Council bearish on Greater Boston's economic outlook for the near term
2006-11-07
Info/Broken? - Brookline, Dover and Lincoln lose million-dollar status amid housing slowdown
Brookline, Dover and Lincoln lose million-dollar status amid housing slowdown
2006-11-07
Info/Broken? - Federal Reserve Official Says Bad Data Fueled Rate Cuts, Housing Speculation
Federal Reserve Official Says Bad Data Fueled Rate Cuts, Housing Speculation
2006-11-07
Info/Broken? - Housing recovery on hold: Toll Brothers Quarterly home orders fall 57% as builder rivals post profit declines
Housing recovery on hold: Toll Brothers Quarterly home orders fall 57% as builder rivals post profit declines
2006-11-06
Info/Broken? - Massachusetts population estimate undergoing recalculation
Massachusetts population estimate undergoing recalculation
2006-11-02
Info/Broken? - NPR covers 18% price decline in Arlington
NPR covers 18% price decline in Arlington
2006-11-01
Info/Broken? - Housing market "upside down": More homes selling below purchase price
Housing market "upside down": More homes selling below purchase price
2006-11-01
Info/Broken? - Downtown condo prices fall for 2nd quarter - Median 11% off peak; sales fell almost 20%
Downtown condo prices fall for 2nd quarter - Median 11% off peak; sales fell almost 20%

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