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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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2007-01-31
Info/Broken? - Middlesex North Registry of Deeds: foreclosures "drastically increased" in final 3rd of 2006
Middlesex North Registry of Deeds: foreclosures "drastically increased" in final 3rd of 2006
2007-01-31
Info/Broken? - Massachusetts tries to bribe people from leaving with money for housing
Massachusetts tries to bribe people from leaving with money for housing
2007-01-31
Info/Broken? - MarketWatch demonstrates that David Lereah and the NAR are chronically unreliable in their projections
MarketWatch demonstrates that David Lereah and the NAR are chronically unreliable in their projections
2007-01-30
Info/Broken? - Foreclosures double: Hub's hit 1,007 in '06
Foreclosures double: Hub's hit 1,007 in '06
2007-01-30
Info/Broken? - When the going gets tough...Real estate values sink, agents bail out
When the going gets tough...Real estate values sink, agents bail out
2007-01-29
Info/Broken? - Affordability tracker for Boston - compare housing prices to rents and incomes
Affordability tracker for Boston - compare housing prices to rents and incomes
2007-01-29
Info/Broken? - MA foreclosure filings up 70% in 2006
MA foreclosure filings up 70% in 2006
2007-01-29
Info/Broken? - Massachusetts Housing Market: December Market Wrap
Massachusetts Housing Market: December Market Wrap
2007-01-29
Info/Broken? - Real Estate Fraud 201
Real Estate Fraud 201
2007-01-29
Info/Broken? - "Balance Definitely Tips Toward Buyer": MAR
"Balance Definitely Tips Toward Buyer": MAR
2007-01-26
Info/Broken? - Boston Bubble Brief, Dec 2006: Real prices down 8.09% YOY, 14.12% below peak. Appreciation almost 4 standard deviations below 0%.
Discuss - Boston Bubble Brief, Dec 2006: Real prices down 8.09% YOY, 14.12% below peak. Appreciation almost 4 standard deviations below 0%.
Boston Bubble Brief, Dec 2006: Real prices down 8.09% YOY, 14.12% below peak. Appreciation almost 4 standard deviations below 0%.
2007-01-25
Info/Broken? - US home sales plunged in '06 with largest drop in 17 years
US home sales plunged in '06 with largest drop in 17 years
2007-01-25
Info/Broken? - Boston-Quincy near top of PMI Group's risk index with 59.5% chance of further declines
Boston-Quincy near top of PMI Group's risk index with 59.5% chance of further declines
2007-01-25
Info/Broken? - Real Estate Bubble Map of Boston wins Platial 2006 Map Award
Real Estate Bubble Map of Boston wins Platial 2006 Map Award
2007-01-25
Info/Broken? - Forbes' list of worst housing markets includes Boston-Cambridge-Quincy, Mass., N.H.
Forbes' list of worst housing markets includes Boston-Cambridge-Quincy, Mass., N.H.
2007-01-25
Info/Broken? - State housing slump deepens: MAR reports 5.4% nominal price decline in Dec 2006 vs Dec 2005
State housing slump deepens: MAR reports 5.4% nominal price decline in Dec 2006 vs Dec 2005
2007-01-25
Info/Broken? - Massachusetts foreclosures up approximately 226% in 2006 vs. 2005
Massachusetts foreclosures up approximately 226% in 2006 vs. 2005
2007-01-24
Info/Broken? - Falling Prices "Part Of The New Reality" in Massachusetts
Falling Prices "Part Of The New Reality" in Massachusetts
2007-01-23
Info/Broken? - Sale prices for homes dip sharply - Housing market slump hits Central Mass. hard
Sale prices for homes dip sharply - Housing market slump hits Central Mass. hard
2007-01-22
Info/Broken? - MA SFH posts worst December since 1991, nominal prices down 8.1% YOY according to Warren Group
MA SFH posts worst December since 1991, nominal prices down 8.1% YOY according to Warren Group
2007-01-21
Info/Broken? - Many more are losing their homes
Many more are losing their homes
2007-01-20
Info/Broken? - Mass. orders Mortgage Lenders Network to halt
Mass. orders Mortgage Lenders Network to halt
2007-01-20
Info/Broken? - Westfield sees home building slow in '06
Westfield sees home building slow in '06
2007-01-19
Info/Broken? - With a slow market, more houses are being sold through auctions, live and online
With a slow market, more houses are being sold through auctions, live and online
2007-01-18
Info/Broken? - Boston "Urban Core Condo Market" Performance
Boston "Urban Core Condo Market" Performance
2007-01-18
Info/Broken? - Fed "Beige Book" gives mixed report on Boston economy, housing cited as a negative
Fed "Beige Book" gives mixed report on Boston economy, housing cited as a negative
2007-01-18
Info/Broken? - Hidden legal fees push some into foreclosure: Lenders often hire lawyers to handle overdue mortgages
Hidden legal fees push some into foreclosure: Lenders often hire lawyers to handle overdue mortgages
2007-01-17
Info/Broken? - Nominal condo prices down 22% from 1 year earlier in Rhode Island
Nominal condo prices down 22% from 1 year earlier in Rhode Island
2007-01-17
Info/Broken? - Boston Herald: Fremont Investment & Loan is "Boston's foreclosure king"
Boston Herald: Fremont Investment & Loan is "Boston's foreclosure king"
2007-01-16
Info/Broken? - New York Times: Buyers Scarce, Many Condos Are for Rent, "[condo market in] Boston has collapsed"
New York Times: Buyers Scarce, Many Condos Are for Rent, "[condo market in] Boston has collapsed"
2007-01-15
Info/Broken? - Rental market in Worcester County recoils from boom
Rental market in Worcester County recoils from boom
2007-01-14
Info/Broken? - Study: Exodus of young people crippling Mass.
Study: Exodus of young people crippling Mass.
2007-01-14
Info/Broken? - Bottom Spotting in Massachusetts
Bottom Spotting in Massachusetts
2007-01-14
Info/Broken? - Brookline officials finding that converting condos into affordable housing is too expensive
Brookline officials finding that converting condos into affordable housing is too expensive
2007-01-12
Info/Broken? - Mass. economy continued slow growth in November
Mass. economy continued slow growth in November
2007-01-12
Info/Broken? - A rant on why MA can't keep its young workforce
Discuss - A rant on why MA can't keep its young workforce
A rant on why MA can't keep its young workforce
2007-01-11
Info/Broken? - Retreat in Chelsea - Developers back off plans to convert old church buildings into condominiums
Retreat in Chelsea - Developers back off plans to convert old church buildings into condominiums
2007-01-11
Info/Broken? - James B. Leary: single biggest challenge faced by the state is keeping people in Massachusetts
James B. Leary: single biggest challenge faced by the state is keeping people in Massachusetts
2007-01-11
Info/Broken? - "High-risk" forecast for Maine economy
"High-risk" forecast for Maine economy
2007-01-11
Info/Broken? - Connecticut housing market still slowing
Connecticut housing market still slowing
2007-01-10
Info/Broken? - A renter's market in Westwood
A renter's market in Westwood
2007-01-10
Info/Broken? - Some Boston area sellers turning to lease-to-buy options
Some Boston area sellers turning to lease-to-buy options
2007-01-10
Info/Broken? - Housing is key factor in state's economic equation
Housing is key factor in state's economic equation
2007-01-09
Info/Broken? - Mortgage Lenders Network "strands" 75 borrowers in Rhode Island
Mortgage Lenders Network "strands" 75 borrowers in Rhode Island
2007-01-09
Info/Broken? - MA GOP pushing to even further subsidize lofty housing prices
MA GOP pushing to even further subsidize lofty housing prices
2007-01-09
Info/Broken? - PropertyShark.com Offers Neighborhood Maps to Target Areas of Rich, Single Men and Women in Boston and Elsewhere
PropertyShark.com Offers Neighborhood Maps to Target Areas of Rich, Single Men and Women in Boston and Elsewhere
2007-01-09
Info/Broken? - NH communities near MA border try to retain young people by limiting 55-plus housing
NH communities near MA border try to retain young people by limiting 55-plus housing
2007-01-08
Info/Broken? - Massachusetts losing labor force diversification
Massachusetts losing labor force diversification
2007-01-08
Info/Broken? - Not so bullish on Massachusetts economy in 2007
Not so bullish on Massachusetts economy in 2007
2007-01-08
Info/Broken? - Reporter for public radio looking for people affected by housing bubble
Discuss - Reporter for public radio looking for people affected by housing bubble
Reporter for public radio looking for people affected by housing bubble
2007-01-08
Info/Broken? - The Mortgage Lender Implode-O-Meter
The Mortgage Lender Implode-O-Meter
2007-01-08
Info/Broken? - Backlog clogs Boston Land Court: Audit shows 66,289 filings
Backlog clogs Boston Land Court: Audit shows 66,289 filings
2007-01-08
Info/Broken? - Massachusetts foreclosures up 184.35% in 2006
Massachusetts foreclosures up 184.35% in 2006
2007-01-08
Info/Broken? - Retreat in Chelsea: Developers back off plans to convert old church buildings into condominiums
Retreat in Chelsea: Developers back off plans to convert old church buildings into condominiums
2007-01-07
Info/Broken? - Buyers vs. homesellers: Standoff could lead to recession
Buyers vs. homesellers: Standoff could lead to recession
2007-01-04
Info/Broken? - Mass. Realtor group twists truth on low home sales
Mass. Realtor group twists truth on low home sales
2007-01-04
Info/Broken? - MA home loans take dive: Activity drops 41 percent
MA home loans take dive: Activity drops 41 percent
2007-01-04
Info/Broken? - Scores of mortgage borrowers left in lurch in Massachusetts
Scores of mortgage borrowers left in lurch in Massachusetts
2007-01-03
Info/Broken? - Property tax bills rising across state: Average hike is 5.3%; Hub much higher
Property tax bills rising across state: Average hike is 5.3%; Hub much higher
2007-01-03
Info/Broken? - Mass property tax increases by city and town - average increase is 5.3%
Mass property tax increases by city and town - average increase is 5.3%
2007-01-03
Info/Broken? - The Massachusetts Housing Market: November Market Wrap
The Massachusetts Housing Market: November Market Wrap
2007-01-02
Info/Broken? - Nation Association of Realtors loses clout with one of the worst predictions of 2006
Nation Association of Realtors loses clout with one of the worst predictions of 2006
2007-01-01
Info/Broken? - Market continues a slow adjustment
Market continues a slow adjustment

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