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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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Legend: Info/Broken? Info/Broken? Discuss Discuss
<< << << Show Recent Links
2007-02-28
Info/Broken? - Massachusetts Home Sales Rebound?
Massachusetts Home Sales Rebound?
2007-02-28
Info/Broken? - Housing market on mend? Realtors are hopeful, but analysts less so as sales leap, price declines moderate
Housing market on mend? Realtors are hopeful, but analysts less so as sales leap, price declines moderate
2007-02-28
Info/Broken? - Boston Globe Special: The Real Estate Market Downturn of 2006 and 2007
Boston Globe Special: The Real Estate Market Downturn of 2006 and 2007
2007-02-27
Info/Broken? - Mass. foreclosure filings smash record in January
Mass. foreclosure filings smash record in January
2007-02-27
Info/Broken? - Warren Group reports MA SFH prices down 3.4% nominally in Jan 2007 vs. Jan 2006, volume up
Warren Group reports MA SFH prices down 3.4% nominally in Jan 2007 vs. Jan 2006, volume up
2007-02-23
Info/Broken? - Home sales in Connecticut hit 10-year low during '06
Home sales in Connecticut hit 10-year low during '06
2007-02-22
Info/Broken? - Fears of increased mortgage defaults put spotlight on subprime lenders
Fears of increased mortgage defaults put spotlight on subprime lenders
2007-02-21
Info/Broken? - Boston urban condo market analysis: noise or signal?
Boston urban condo market analysis: noise or signal?
2007-02-20
Info/Broken? - Chairman of Greater Boston R.E. Board calls the bottom (with plenty of "ifs"), advises buyers to buy now before it's too late
Chairman of Greater Boston R.E. Board calls the bottom (with plenty of "ifs"), advises buyers to buy now before it's too late
2007-02-20
Info/Broken? - Predatory lending and Maine homeowners
Predatory lending and Maine homeowners
2007-02-20
Info/Broken? - Foreclosures on the rise in New Hampshire
Foreclosures on the rise in New Hampshire
2007-02-18
Info/Broken? - Higher property tax bills prompt flood of relief requests
Higher property tax bills prompt flood of relief requests
2007-02-17
Info/Broken? - Crime does not pay (or lower housing costs)
Crime does not pay (or lower housing costs)
2007-02-17
Info/Broken? - Speculators doing brisk business in housing flips, raising red flags
Speculators doing brisk business in housing flips, raising red flags
2007-02-15
Info/Broken? - US Q4 prices set record decrease, NAR and Lereah say worst is over (again)
US Q4 prices set record decrease, NAR and Lereah say worst is over (again)
2007-02-15
Info/Broken? - MIT Professor: Housing prices could decline another 20%
MIT Professor: Housing prices could decline another 20%
2007-02-15
Info/Broken? - Anecdotal example of gap in expectations between buyers and sellers
Discuss - Anecdotal example of gap in expectations between buyers and sellers
Anecdotal example of gap in expectations between buyers and sellers
2007-02-14
Info/Broken? - Warren Group reports nominal housing prices in MA fell 5.8% in 2006
Warren Group reports nominal housing prices in MA fell 5.8% in 2006
2007-02-14
Info/Broken? - Yarmouth census numbers show slow, steady decline
Yarmouth census numbers show slow, steady decline
2007-02-14
Info/Broken? - Ramirez changes game plan, takes condo off market
Ramirez changes game plan, takes condo off market
2007-02-13
Info/Broken? - Middlesex North Registry of Deeds: Feb '07 foreclosures already very high, history suggests trend could last 5+ years
Middlesex North Registry of Deeds: Feb '07 foreclosures already very high, history suggests trend could last 5+ years
2007-02-12
Info/Broken? - Massachusetts now #1 in foreclosures for Northeast Region
Massachusetts now #1 in foreclosures for Northeast Region
2007-02-10
Info/Broken? - The median home price fell in Mass. last year but actual property values varied widely from town to town
The median home price fell in Mass. last year but actual property values varied widely from town to town
2007-02-09
Info/Broken? - Malden condos go on the auction block
Malden condos go on the auction block
2007-02-09
Info/Broken? - Real Estate Cafe adds another 127 sales below assessed value to local bubble map
Real Estate Cafe adds another 127 sales below assessed value to local bubble map
2007-02-09
Info/Broken? - Everett, Lowell lead foreclosure spike: 2006 was record-setting year
Everett, Lowell lead foreclosure spike: 2006 was record-setting year
2007-02-08
Info/Broken? - Housing costs top concern of Mass. residents
Housing costs top concern of Mass. residents
2007-02-07
Info/Broken? - Report: Costly housing hurts New England economy
Report: Costly housing hurts New England economy
2007-02-07
Info/Broken? - Boston Globe on record number of foreclosures in 2006
Boston Globe on record number of foreclosures in 2006
2007-02-06
Info/Broken? - With prices still lofty, end of housing slump is questionable
With prices still lofty, end of housing slump is questionable
2007-02-06
Info/Broken? - ForeclosuresMass.com Report: 2006 Massachusetts Foreclosure Filings Are Highest in Recorded History
ForeclosuresMass.com Report: 2006 Massachusetts Foreclosure Filings Are Highest in Recorded History
2007-02-02
Info/Broken? - Discuss: Advice on helping sellers to price properly
Discuss - Discuss: Advice on helping sellers to price properly
Discuss: Advice on helping sellers to price properly
2007-02-02
Info/Broken? - Housing costs major factor impeding single mothers in MA
Housing costs major factor impeding single mothers in MA
2007-02-01
Info/Broken? - Detroit and Boston: two worst performing housing markets
Detroit and Boston: two worst performing housing markets
2007-02-01
Info/Broken? - Editorial: Soaring foreclosures sign of trouble ahead
Editorial: Soaring foreclosures sign of trouble ahead
2007-02-01
Info/Broken? - Massachusetts Ranked 3rd Worst in (Business) Taxes
Massachusetts Ranked 3rd Worst in (Business) Taxes

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