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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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2007-06-29
Info/Broken? - Boston Bubble Brief, May 2007: MAR data suggests possibility of moderating declines but suffers from pronounced divergence from more thorough data sources
Discuss - Boston Bubble Brief, May 2007: MAR data suggests possibility of moderating declines but suffers from pronounced divergence from more thorough data sources
Boston Bubble Brief, May 2007: MAR data suggests possibility of moderating declines but suffers from pronounced divergence from more thorough data sources
2007-06-29
Info/Broken? - Discuss: Say No to Deval's Bailout
Discuss - Discuss: Say No to Deval's Bailout
Discuss: Say No to Deval's Bailout
2007-06-29
Info/Broken? - Patrick Administration exploring massive, state-backed bailout of homeowners with subprime mortgages
Patrick Administration exploring massive, state-backed bailout of homeowners with subprime mortgages
2007-06-28
Info/Broken? - Boston area homes sit on market longer
Boston area homes sit on market longer
2007-06-27
Info/Broken? - Paper Money Blog: Crashachusetts Existing Home Sales: May 2007.  Note comments on "eyebrow-raising" declines in towns (Cambridge down 20% YOY, Somerville down 30% over 2005)
Paper Money Blog: Crashachusetts Existing Home Sales: May 2007. Note comments on "eyebrow-raising" declines in towns (Cambridge down 20% YOY, Somerville down 30% over 2005)
2007-06-27
Info/Broken? - Globe: Hopes for real estate revival wilt - Single-family home sales drop by up to 9% in May, cap disappointing spring
Globe: Hopes for real estate revival wilt - Single-family home sales drop by up to 9% in May, cap disappointing spring
2007-06-27
Info/Broken? - Herald: Bay State sales staying on downward slide
Herald: Bay State sales staying on downward slide
2007-06-27
Info/Broken? - Home sales down sharply in WMass
Home sales down sharply in WMass
2007-06-26
Info/Broken? - S&P/Case-Shiller April nominal price index: Boston down 4.5% YOY, US home prices prices fell at fastest rate in 16 years
S&P/Case-Shiller April nominal price index: Boston down 4.5% YOY, US home prices prices fell at fastest rate in 16 years
2007-06-26
Info/Broken? - Warren Group: nominal SFH prices down 4.6% in May 2007 vs. May 2006, with volume taking biggest hit yet this year
Warren Group: nominal SFH prices down 4.6% in May 2007 vs. May 2006, with volume taking biggest hit yet this year
2007-06-26
Info/Broken? - Massachusetts Association of Realtors: nominal SFH prices up 0.7% in May 2007 vs. May 2006
Massachusetts Association of Realtors: nominal SFH prices up 0.7% in May 2007 vs. May 2006
2007-06-24
Info/Broken? - The loss of a dream - Skyrocketing foreclosures a tragedy that is still unfolding
The loss of a dream - Skyrocketing foreclosures a tragedy that is still unfolding
2007-06-22
Info/Broken? - First stage of real estate grief: Denial.  55% of Americans believe their home would sell for more today than it would have last year.
First stage of real estate grief: Denial. 55% of Americans believe their home would sell for more today than it would have last year.
2007-06-22
Info/Broken? - Study: One in 177 homes in Hub area in foreclosure
Study: One in 177 homes in Hub area in foreclosure
2007-06-20
Info/Broken? - Mortgage Rate Rise Pushes U.S. Housing, Economy to "Blood Bath"
Mortgage Rate Rise Pushes U.S. Housing, Economy to "Blood Bath"
2007-06-20
Info/Broken? - 1,500 Mass. foreclosure actions initiated in May - Rising interest rates, more sluggish sales squeeze homeowners
1,500 Mass. foreclosure actions initiated in May - Rising interest rates, more sluggish sales squeeze homeowners
2007-06-19
Info/Broken? - Latest PMI Group report continues to rank Boston as a High Risk, High Volatility, Low Affordability MSA, with a 50.1% chance of additional declines
Latest PMI Group report continues to rank Boston as a High Risk, High Volatility, Low Affordability MSA, with a 50.1% chance of additional declines
2007-06-19
Info/Broken? - Massachusetts Foreclosures Jump Again - Warren Group reports foreclosures more than doubled in May 2007 vs May 2006
Massachusetts Foreclosures Jump Again - Warren Group reports foreclosures more than doubled in May 2007 vs May 2006
2007-06-19
Info/Broken? - Bargain at the Mandarin: Only $5.2M for condo
Bargain at the Mandarin: Only $5.2M for condo
2007-06-19
Info/Broken? - Boston Foundation calls for "revolution"
Boston Foundation calls for "revolution"
2007-06-19
Info/Broken? - Boston Foundation report: only 8 years ago, 92% of Boston towns were affordable - now just 17% are
Boston Foundation report: only 8 years ago, 92% of Boston towns were affordable - now just 17% are
2007-06-18
Info/Broken? - Report commissioned by the state Executive Office of Economic Development and Central Massachusetts Regional Competitiveness Council cites housing as major factor in why recent grads leave area
Report commissioned by the state Executive Office of Economic Development and Central Massachusetts Regional Competitiveness Council cites housing as major factor in why recent grads leave area
2007-06-17
Info/Broken? - Forecasters predict further housing market slump
Forecasters predict further housing market slump
2007-06-15
Info/Broken? - State to cap profits on affordable housing law
State to cap profits on affordable housing law
2007-06-14
Info/Broken? - Acton using Community Preservation Act funds to subsidize condo purchases
Acton using Community Preservation Act funds to subsidize condo purchases
2007-06-13
Info/Broken? - May US foreclosure filings soar 90%; more housing woes likely - MA rate was 11th highest
May US foreclosure filings soar 90%; more housing woes likely - MA rate was 11th highest
2007-06-12
Info/Broken? - ZipRealty Price Reduction Index, June 2007: 42.4% of Boston homes reduced as of 6/1, up from 40.1% on 5/1
ZipRealty Price Reduction Index, June 2007: 42.4% of Boston homes reduced as of 6/1, up from 40.1% on 5/1
2007-06-12
Info/Broken? - Foreclosure rates across the U.S. - MA among leaders
Foreclosure rates across the U.S. - MA among leaders
2007-06-12
Info/Broken? - Paper Money Blog incensed by Harvard's State of The Nation's Housing 2007
Paper Money Blog incensed by Harvard's State of The Nation's Housing 2007
2007-06-12
Info/Broken? - Commentary at The Housing Bubble Blog on recent Globe and Herald articles, including the 2007 Harvard report
Commentary at The Housing Bubble Blog on recent Globe and Herald articles, including the 2007 Harvard report
2007-06-11
Info/Broken? - Analogous Harvard study from 2005: "house prices should keep rising as long as job and income growth continue to offset the recent jump in short-term interest rates"
Analogous Harvard study from 2005: "house prices should keep rising as long as job and income growth continue to offset the recent jump in short-term interest rates"
2007-06-11
Info/Broken? - Discuss: Globe article - 10 mistakes buyers make
Discuss - Discuss: Globe article - 10 mistakes buyers make
Discuss: Globe article - 10 mistakes buyers make
2007-06-11
Info/Broken? - Harvard's Nicolas Retsinas: MA housing market to rebound late 2007 or 2008.  David Wluka: MA needs modest starter homes for those only making $80K - $130K.  Report: prices need to fall 35% - 44% to return to historical affordability.  Retsinas: the market will not return [to those levels].
Harvard's Nicolas Retsinas: MA housing market to rebound late 2007 or 2008. David Wluka: MA needs modest starter homes for those only making $80K - $130K. Report: prices need to fall 35% - 44% to return to historical affordability. Retsinas: the market will not return [to those levels].
2007-06-11
Info/Broken? - David Lereah's Statements Vs. Performance of Housing Stocks
David Lereah's Statements Vs. Performance of Housing Stocks
2007-06-08
Info/Broken? - Housing crisis causing bleak economic future for Worcester
Housing crisis causing bleak economic future for Worcester
2007-06-08
Info/Broken? - More on foreclosures from the Middlesex North Registry of Deeds in Lowell
More on foreclosures from the Middlesex North Registry of Deeds in Lowell
2007-06-08
Info/Broken? -  OFHEO Home Price Index: Q1 2007 with graphs of MA, Boston-Quincy, and Cambridge-Newton-Framingham
OFHEO Home Price Index: Q1 2007 with graphs of MA, Boston-Quincy, and Cambridge-Newton-Framingham
2007-06-07
Info/Broken? - Avoiding foreclosure in Somerville and the Boston area in general
Avoiding foreclosure in Somerville and the Boston area in general
2007-06-06
Info/Broken? - Middlesex North Registry of Deeds: May foreclosure orders of notice down, but foreclosure deeds way up
Middlesex North Registry of Deeds: May foreclosure orders of notice down, but foreclosure deeds way up
2007-06-05
Info/Broken? - Boston neighborhood learns an ugly lesson about mortgage lending
Boston neighborhood learns an ugly lesson about mortgage lending
2007-06-04
Info/Broken? - Declining home prices boost sales
Declining home prices boost sales
2007-06-03
Info/Broken? - E. Boston waterfront project stalls
E. Boston waterfront project stalls
2007-06-03
Info/Broken? - State cracks down on bailout scams - Coakley: Emergency rule needed to protect those in foreclosure
State cracks down on bailout scams - Coakley: Emergency rule needed to protect those in foreclosure
2007-06-01
Info/Broken? - Southie Binges: Gentrification hits a glut
Southie Binges: Gentrification hits a glut
2007-06-01
Info/Broken? - Home ownership unaffordable for 78.9% in Portland, Maine
Home ownership unaffordable for 78.9% in Portland, Maine

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