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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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2006-12-29
Info/Broken? - Boston Bubble Brief, Nov 2006: Real prices down 6.10% YOY, 12.67% below peak. Appreciation over 2 standard deviations below 0%.
Discuss - Boston Bubble Brief, Nov 2006: Real prices down 6.10% YOY, 12.67% below peak. Appreciation over 2 standard deviations below 0%.
Boston Bubble Brief, Nov 2006: Real prices down 6.10% YOY, 12.67% below peak. Appreciation over 2 standard deviations below 0%.
2006-12-29
Info/Broken? - Double-digit drop recorded in Maine real estate sales
Double-digit drop recorded in Maine real estate sales
2006-12-28
Info/Broken? - Median Home Prices Fall on Vineyard as Real Estate Market Begins to Stall
Median Home Prices Fall on Vineyard as Real Estate Market Begins to Stall
2006-12-28
Info/Broken? - A "Healthy Correction" In Massachusetts
A "Healthy Correction" In Massachusetts
2006-12-28
Info/Broken? - Boston.com poll on where real estate prices will head in 2007
Boston.com poll on where real estate prices will head in 2007
2006-12-28
Info/Broken? - Massachusetts Association of Realtors repeats assurances of stabilization despite double digit decline
Massachusetts Association of Realtors repeats assurances of stabilization despite double digit decline
2006-12-28
Info/Broken? - MAR November 2006 stats: nominal YOY prices fell 4%, sales fell 13%
MAR November 2006 stats: nominal YOY prices fell 4%, sales fell 13%
2006-12-27
Info/Broken? - Worcester County home sales down 20 percent from year before
Worcester County home sales down 20 percent from year before
2006-12-27
Info/Broken? - Home sales sink in November: 14-year low reached
Home sales sink in November: 14-year low reached
2006-12-26
Info/Broken? - Warren Group: nominal MA SFH YOY prices fell 6.5% in November, both condo and SFH sales down by double digit percentages
Warren Group: nominal MA SFH YOY prices fell 6.5% in November, both condo and SFH sales down by double digit percentages
2006-12-24
Info/Broken? - Marie McDonnell, an Orleans (Mass.)-based mortgage finance analyst, describes some of the worst frauds perpetrated by predatory lenders
Marie McDonnell, an Orleans (Mass.)-based mortgage finance analyst, describes some of the worst frauds perpetrated by predatory lenders
2006-12-24
Info/Broken? - Boston Globe's top story of 2006: real estate bubble deflation begins, but prices haven't fallen enough
Boston Globe's top story of 2006: real estate bubble deflation begins, but prices haven't fallen enough
2006-12-23
Info/Broken? - With Bay State foreclosure rates soaring, Mayor Menino calls on Legislature to tighten mortgage-lending rules
With Bay State foreclosure rates soaring, Mayor Menino calls on Legislature to tighten mortgage-lending rules
2006-12-22
Info/Broken? - NAR now claiming they predicted gradual market slowdowns, despite records to the contrary.  Also, mischaracterization of Professor Shiller's related analysis.
NAR now claiming they predicted gradual market slowdowns, despite records to the contrary. Also, mischaracterization of Professor Shiller's related analysis.
2006-12-22
Info/Broken? - Massachusetts losing large numbers of people to other states
Massachusetts losing large numbers of people to other states
2006-12-22
Info/Broken? - Massachusetts' population growth on stagnant course - Immigration helps offset departures
Massachusetts' population growth on stagnant course - Immigration helps offset departures
2006-12-21
Info/Broken? - Study predicts 20% of subprime mortgages will end in foreclosure
Study predicts 20% of subprime mortgages will end in foreclosure
2006-12-20
Info/Broken? - Foreclosures up 60% across Merrimack County, NH - Adjustable mortgages largely to blame
Foreclosures up 60% across Merrimack County, NH - Adjustable mortgages largely to blame
2006-12-19
Info/Broken? - MIT on the Bubble - Boston's price correction should have started in 2001
MIT on the Bubble - Boston's price correction should have started in 2001
2006-12-19
Info/Broken? - 2006 Foreclosure Details From Middlesex North Registry of Deeds
2006 Foreclosure Details From Middlesex North Registry of Deeds
2006-12-18
Info/Broken? - Report calls Mass. a new-jobs laggard
Report calls Mass. a new-jobs laggard
2006-12-18
Info/Broken? - Massachusetts Technology Collaborative: State is losing its most-talented
Massachusetts Technology Collaborative: State is losing its most-talented
2006-12-17
Info/Broken? - Sovereign to cut 800 jobs (77 locally) and close most wholesale mortgage operations
Sovereign to cut 800 jobs (77 locally) and close most wholesale mortgage operations
2006-12-15
Info/Broken? - Report shows poorer areas seeing most foreclosures around Boston
Report shows poorer areas seeing most foreclosures around Boston
2006-12-14
Info/Broken? - Massachusetts Association of Realtors goes on the offensive
Massachusetts Association of Realtors goes on the offensive
2006-12-14
Info/Broken? - Globe expands on 300% increase in MA foreclosures
Globe expands on 300% increase in MA foreclosures
2006-12-13
Info/Broken? - Mass. has 2nd biggest increase in foreclosures in nation
Mass. has 2nd biggest increase in foreclosures in nation
2006-12-13
Info/Broken? - Foreclosure filings spike on the Cape
Foreclosure filings spike on the Cape
2006-12-12
Info/Broken? - Federal Reserve statements on housing market becoming substantially more pessimistic
Federal Reserve statements on housing market becoming substantially more pessimistic
2006-12-12
Info/Broken? - Mass. foreclosure filings hit 10-year high
Mass. foreclosure filings hit 10-year high
2006-12-12
Info/Broken? - Latest NAR assurance: housing sales will recover in Q1 2007
Latest NAR assurance: housing sales will recover in Q1 2007
2006-12-11
Info/Broken? - Bay State's labor force diminishing - Low-skilled men hard hit, study reports
Bay State's labor force diminishing - Low-skilled men hard hit, study reports
2006-12-11
Info/Broken? - Housing market has homeowners, contractors feeling the crunch
Housing market has homeowners, contractors feeling the crunch
2006-12-11
Info/Broken? - Study shows shrinking work force affects Mass. business expansion
Study shows shrinking work force affects Mass. business expansion
2006-12-11
Info/Broken? - Rhode Island Housing Market Dips Again in October, The Warren Group Reports
Rhode Island Housing Market Dips Again in October, The Warren Group Reports
2006-12-11
Info/Broken? - Land costs harm Bay State businesses, report says
Land costs harm Bay State businesses, report says
2006-12-11
Info/Broken? - On the Cape, a waiting game
On the Cape, a waiting game
2006-12-11
Info/Broken? - Boston real-time home slide, part 3
Boston real-time home slide, part 3
2006-12-10
Info/Broken? - Affordability is THE problem in Massachusetts
Affordability is THE problem in Massachusetts
2006-12-09
Info/Broken? - Massachusetts losing workers on both ends of economic scale
Massachusetts losing workers on both ends of economic scale
2006-12-09
Info/Broken? - Housing slump hitting New England harder than most of the country
Housing slump hitting New England harder than most of the country
2006-12-08
Info/Broken? - Marblehead: Tax rate, and some bills, go down
Marblehead: Tax rate, and some bills, go down
2006-12-07
Info/Broken? - Arlington to lower property tax rate to offset higher assessments
Arlington to lower property tax rate to offset higher assessments
2006-12-06
Info/Broken? - Boston industry insiders estimate housing values have already fallen 10 - 20%, which is not yet reflected in official statistics
Boston industry insiders estimate housing values have already fallen 10 - 20%, which is not yet reflected in official statistics
2006-12-04
Info/Broken? - Middlesex North Registry of Deeds November stats: foreclosures up again and will continue to rise until bad loans made in recent years are purged
Middlesex North Registry of Deeds November stats: foreclosures up again and will continue to rise until bad loans made in recent years are purged
2006-12-04
Info/Broken? - Condominiums no longer carrying MA housing market
Condominiums no longer carrying MA housing market
2006-12-04
Info/Broken? - RI Realtors launch advertising campaign: "Consumers Urged to Take Action While Housing Market Conditions Are Favorable," "It's a great time to buy or sell a home."
RI Realtors launch advertising campaign: "Consumers Urged to Take Action While Housing Market Conditions Are Favorable," "It's a great time to buy or sell a home."
2006-12-04
Info/Broken? - Boston area sellers take "desperate measures"
Boston area sellers take "desperate measures"
2006-12-01
Info/Broken? - Boston Bubble Report: 3.68% fall in real prices from October 2005 - 2006, 12.58% below peak - have prices "stabilized?"
Discuss - Boston Bubble Report: 3.68% fall in real prices from October 2005 - 2006, 12.58% below peak - have prices "stabilized?"
Boston Bubble Report: 3.68% fall in real prices from October 2005 - 2006, 12.58% below peak - have prices "stabilized?"

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