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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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2007-08-31
Info/Broken? - Middlesex North Registry of Deeds August stats: Foreclosures still on the rise
Discuss - Middlesex North Registry of Deeds August stats: Foreclosures still on the rise
Middlesex North Registry of Deeds August stats: Foreclosures still on the rise
2007-08-31
Info/Broken? - Bush Outlines Aid for Mortgage Holders
Discuss - Bush Outlines Aid for Mortgage Holders
Bush Outlines Aid for Mortgage Holders
2007-08-30
Info/Broken? - Foreclosures outlook seen grim in area
Discuss - Foreclosures outlook seen grim in area
Foreclosures outlook seen grim in area
2007-08-30
Info/Broken? - Harbor Condo Project Abruptly Shifts Course
Discuss - Harbor Condo Project Abruptly Shifts Course
Harbor Condo Project Abruptly Shifts Course
2007-08-30
Info/Broken? - Buzz at Middlesex recording counter: $300K+ loans hard to find; ARM holders worried
Discuss - Buzz at Middlesex recording counter: $300K+ loans hard to find; ARM holders worried
Buzz at Middlesex recording counter: $300K+ loans hard to find; ARM holders worried
2007-08-30
Info/Broken? - Wait 2.0: Negative cycle creating marginal or mega-savings for patient homebuyers?
Discuss - Wait 2.0: Negative cycle creating marginal or mega-savings for patient homebuyers?
Wait 2.0: Negative cycle creating marginal or mega-savings for patient homebuyers?
2007-08-30
Info/Broken? - Pond View condo prices to drop; Joseph Flatley: "We've never had a loss in our 17 years - this is the first"
Discuss - Pond View condo prices to drop; Joseph Flatley: "We've never had a loss in our 17 years - this is the first"
Pond View condo prices to drop; Joseph Flatley: "We've never had a loss in our 17 years - this is the first"
2007-08-30
Info/Broken? - MA housing woes cost jobs: Big projects ease blow
Discuss - MA housing woes cost jobs: Big projects ease blow
MA housing woes cost jobs: Big projects ease blow
2007-08-29
Info/Broken? - Massachusetts Petitions to Foreclose Continue Rising in July; Auction Announcements More Than Double, According to The Warren Group
Discuss - Massachusetts Petitions to Foreclose Continue Rising in July; Auction Announcements More Than Double, According to The Warren Group
Massachusetts Petitions to Foreclose Continue Rising in July; Auction Announcements More Than Double, According to The Warren Group
2007-08-28
Info/Broken? - S&P Case-Shiller Index for Boston down 3.7% nominally YOY in June (PDF)
Discuss - S&P Case-Shiller Index for Boston down 3.7% nominally YOY in June (PDF)
S&P Case-Shiller Index for Boston down 3.7% nominally YOY in June (PDF)
2007-08-28
Info/Broken? - Petition: Tax Payers Against a Wall Street and Mortgage Bailout
Discuss - Petition: Tax Payers Against a Wall Street and Mortgage Bailout
Petition: Tax Payers Against a Wall Street and Mortgage Bailout
2007-08-28
Info/Broken? - Countrywide tries to reassure its clients in MA and US
Discuss - Countrywide tries to reassure its clients in MA and US
Countrywide tries to reassure its clients in MA and US
2007-08-28
Info/Broken? - Dismal scientists fear dismal housing recovery
Discuss - Dismal scientists fear dismal housing recovery
Dismal scientists fear dismal housing recovery
2007-08-27
Info/Broken? - Housing slump cuts MA Realtor ranks: Trade association numbers down 2.5%; Mortgage Bankers Association membership drops 17%
Discuss - Housing slump cuts MA Realtor ranks: Trade association numbers down 2.5%; Mortgage Bankers Association membership drops 17%
Housing slump cuts MA Realtor ranks: Trade association numbers down 2.5%; Mortgage Bankers Association membership drops 17%
2007-08-24
Info/Broken? - Boston Bubble Brief Jul 2007: real MA SFH prices down 0.78% over Jul 2006, discrepancy with Warren Group 15.39%
Discuss - Boston Bubble Brief Jul 2007: real MA SFH prices down 0.78% over Jul 2006, discrepancy with Warren Group 15.39%
Boston Bubble Brief Jul 2007: real MA SFH prices down 0.78% over Jul 2006, discrepancy with Warren Group 15.39%
2007-08-23
Info/Broken? - Crashachusetts Existing Home Sales: July 2007
Discuss - Crashachusetts Existing Home Sales: July 2007
Crashachusetts Existing Home Sales: July 2007
2007-08-23
Info/Broken? - Home prices fall for 15th month - Mortgage woes are tripping up willing buyers
Discuss - Home prices fall for 15th month - Mortgage woes are tripping up willing buyers
Home prices fall for 15th month - Mortgage woes are tripping up willing buyers
2007-08-22
Info/Broken? - Banks ready for 'old way' of business
Discuss - Banks ready for 'old way' of business
Banks ready for 'old way' of business
2007-08-22
Info/Broken? - State agency ignores own guidelines in condo loans - Awards $20m set aside for apartments
Discuss - State agency ignores own guidelines in condo loans - Awards $20m set aside for apartments
State agency ignores own guidelines in condo loans - Awards $20m set aside for apartments
2007-08-21
Info/Broken? - MAR on Jul 2007 vs Jul 2006: nominal SFH prices up 1.3%. Price discrepancy now 15% above Warren Group.
Discuss - MAR on Jul 2007 vs Jul 2006: nominal SFH prices up 1.3%. Price discrepancy now 15% above Warren Group.
MAR on Jul 2007 vs Jul 2006: nominal SFH prices up 1.3%. Price discrepancy now 15% above Warren Group.
2007-08-21
Info/Broken? - Warren Group on Jul 2007 vs Jul 2006 for MA: nominal SFH prices down 4.6%, volume up 1.5%
Discuss - Warren Group on Jul 2007 vs Jul 2006 for MA: nominal SFH prices down 4.6%, volume up 1.5%
Warren Group on Jul 2007 vs Jul 2006 for MA: nominal SFH prices down 4.6%, volume up 1.5%
2007-08-20
Info/Broken? - Summer slump of 2007: For every 2 sales, 3 listings failing in MA
Discuss - Summer slump of 2007: For every 2 sales, 3 listings failing in MA
Summer slump of 2007: For every 2 sales, 3 listings failing in MA
2007-08-20
Info/Broken? - Talk of recession grows: Housing woes keep building
Discuss - Talk of recession grows: Housing woes keep building
Talk of recession grows: Housing woes keep building
2007-08-19
Info/Broken? - Cape and Islands brace for loan fallout
Discuss - Cape and Islands brace for loan fallout
Cape and Islands brace for loan fallout
2007-08-18
Info/Broken? - Escalating mortgage crisis expected to further depress house sales and prices in Massachusetts this fall
Discuss - Escalating mortgage crisis expected to further depress house sales and prices in Massachusetts this fall
Escalating mortgage crisis expected to further depress house sales and prices in Massachusetts this fall
2007-08-17
Info/Broken? - Bay State firms add 4,200 jobs in past month
Discuss - Bay State firms add 4,200 jobs in past month
Bay State firms add 4,200 jobs in past month
2007-08-17
Info/Broken? - Real Estate Cafe hosting picnic-style "Bubble Hour" on Esplanade tonight
Discuss - Real Estate Cafe hosting picnic-style "Bubble Hour" on Esplanade tonight
Real Estate Cafe hosting picnic-style "Bubble Hour" on Esplanade tonight
2007-08-16
Info/Broken? - Zillow market trends for the quarter, for Boston et al
Discuss - Zillow market trends for the quarter, for Boston et al
Zillow market trends for the quarter, for Boston et al
2007-08-16
Info/Broken? - Massachusetts ranked 4th most expensive state to do business
Discuss - Massachusetts ranked 4th most expensive state to do business
Massachusetts ranked 4th most expensive state to do business
2007-08-15
Info/Broken? - Need your prediction:  How far will rising cost of jumbo loans drive prices down?
Discuss - Need your prediction:  How far will rising cost of jumbo loans drive prices down?
Need your prediction: How far will rising cost of jumbo loans drive prices down?
2007-08-15
Info/Broken? - Subprime mortgages finance many of those giant homes in New Hampshire
Discuss - Subprime mortgages finance many of those giant homes in New Hampshire
Subprime mortgages finance many of those giant homes in New Hampshire
2007-08-15
Info/Broken? - Connecticut Home Sales Fall in First Half of Year, Price Still on the Rise, According to The Warren Group
Discuss - Connecticut Home Sales Fall in First Half of Year, Price Still on the Rise, According to The Warren Group
Connecticut Home Sales Fall in First Half of Year, Price Still on the Rise, According to The Warren Group
2007-08-14
Info/Broken? - Globe blog on absurdity of calling this a "buyer's market"
Discuss - Globe blog on absurdity of calling this a "buyer's market"
Globe blog on absurdity of calling this a "buyer's market"
2007-08-14
Info/Broken? - Rhode Island Home Sales and Prices Down After Second Quarter, June Sees 11 Percent Drop in Sales, According to The Warren Group
Discuss - Rhode Island Home Sales and Prices Down After Second Quarter, June Sees 11 Percent Drop in Sales, According to The Warren Group
Rhode Island Home Sales and Prices Down After Second Quarter, June Sees 11 Percent Drop in Sales, According to The Warren Group
2007-08-14
Info/Broken? - Homestead Volume Rising
Discuss - Homestead Volume Rising
Homestead Volume Rising
2007-08-13
Info/Broken? - State of Massachusetts has lost approximately $80M so far this year due to subprime implosion
Discuss - State of Massachusetts has lost approximately $80M so far this year due to subprime implosion
State of Massachusetts has lost approximately $80M so far this year due to subprime implosion
2007-08-13
Info/Broken? - Consumers ride mortgage-driven market rollercoaster: Local experts not ready to call situation a crisis
Discuss - Consumers ride mortgage-driven market rollercoaster: Local experts not ready to call situation a crisis
Consumers ride mortgage-driven market rollercoaster: Local experts not ready to call situation a crisis
2007-08-13
Info/Broken? - NARcasting The Future: August 2007 - nice graph of continual erosion in NAR's 2007 forecast revisions
Discuss - NARcasting The Future: August 2007 - nice graph of continual erosion in NAR's 2007 forecast revisions
NARcasting The Future: August 2007 - nice graph of continual erosion in NAR's 2007 forecast revisions
2007-08-13
Info/Broken? - Subprime loans' big chill: Freeze hits buyers with good credit, Wall St.
Discuss - Subprime loans' big chill: Freeze hits buyers with good credit, Wall St.
Subprime loans' big chill: Freeze hits buyers with good credit, Wall St.
2007-08-11
Info/Broken? - Immigrants leaving Massachusetts due to falling dollar
Discuss - Immigrants leaving Massachusetts due to falling dollar
Immigrants leaving Massachusetts due to falling dollar
2007-08-10
Info/Broken? - SouthCoastToday.com's View: New mortgage rules protect the public
Discuss - SouthCoastToday.com's View: New mortgage rules protect the public
SouthCoastToday.com's View: New mortgage rules protect the public
2007-08-09
Info/Broken? - Economists Brace for Worsening Subprime Crisis - NPR covers Hyde Park family
Discuss - Economists Brace for Worsening Subprime Crisis - NPR covers Hyde Park family
Economists Brace for Worsening Subprime Crisis - NPR covers Hyde Park family
2007-08-09
Info/Broken? - Public says help subprime's victims, at least according to survey from Experian (a credit services company)
Discuss - Public says help subprime's victims, at least according to survey from Experian (a credit services company)
Public says help subprime's victims, at least according to survey from Experian (a credit services company)
2007-08-09
Info/Broken? - CME Group Extends Offerings of S&P/Case-Shiller Housing Contracts, including Boston - contracts to extend up to 5 years into future
Discuss - CME Group Extends Offerings of S&P/Case-Shiller Housing Contracts, including Boston - contracts to extend up to 5 years into future
CME Group Extends Offerings of S&P/Case-Shiller Housing Contracts, including Boston - contracts to extend up to 5 years into future
2007-08-09
Info/Broken? - Real estate recovery slow as sellers lower expectations in Acton
Discuss - Real estate recovery slow as sellers lower expectations in Acton
Real estate recovery slow as sellers lower expectations in Acton
2007-08-09
Info/Broken? - NH foreclosures up statewide, report says: "They could peak at 2,000 next year"
Discuss - NH foreclosures up statewide, report says: "They could peak at 2,000 next year"
NH foreclosures up statewide, report says: "They could peak at 2,000 next year"
2007-08-08
Info/Broken? - Mortgage seekers caught in squeeze - Crisis in credit spurs loan cutback statewide
Discuss - Mortgage seekers caught in squeeze - Crisis in credit spurs loan cutback statewide
Mortgage seekers caught in squeeze - Crisis in credit spurs loan cutback statewide
2007-08-08
Info/Broken? - MA bill would help renters after foreclosures
Discuss - MA bill would help renters after foreclosures
MA bill would help renters after foreclosures
2007-08-07
Info/Broken? - Lenders as sellers take substantial losses at Middlesex North Registry of Deeds
Discuss - Lenders as sellers take substantial losses at Middlesex North Registry of Deeds
Lenders as sellers take substantial losses at Middlesex North Registry of Deeds
2007-08-07
Info/Broken? - R.I. Home Sales Continue Decline
Discuss - R.I. Home Sales Continue Decline
R.I. Home Sales Continue Decline
2007-08-07
Info/Broken? - Why us?: Tenants say they're foreclosure victims
Discuss - Why us?: Tenants say they're foreclosure victims
Why us?: Tenants say they're foreclosure victims
2007-08-06
Info/Broken? - Non-Subprime Default Rates Will Jump in Next Year, Analyst Says
Discuss - Non-Subprime Default Rates Will Jump in Next Year, Analyst Says
Non-Subprime Default Rates Will Jump in Next Year, Analyst Says
2007-08-04
Info/Broken? - Massachusetts orders American Home Mortgage to cease business in state, other states react similarly
Discuss - Massachusetts orders American Home Mortgage to cease business in state, other states react similarly
Massachusetts orders American Home Mortgage to cease business in state, other states react similarly
2007-08-03
Info/Broken? - Foreclosures on the Cape spiked to a 13-year high in July
Discuss - Foreclosures on the Cape spiked to a 13-year high in July
Foreclosures on the Cape spiked to a 13-year high in July
2007-08-03
Info/Broken? - Mass. bankruptcy surge: Housing woes cited
Discuss - Mass. bankruptcy surge: Housing woes cited
Mass. bankruptcy surge: Housing woes cited
2007-08-02
Info/Broken? - Middlesex North Registry of Deeds July 2007 Statistics
Discuss - Middlesex North Registry of Deeds July 2007 Statistics
Middlesex North Registry of Deeds July 2007 Statistics
2007-08-02
Info/Broken? - Warren Group reports MA foreclosures up 170% in first half of 2007 compared to first half of 2006
Discuss - Warren Group reports MA foreclosures up 170% in first half of 2007 compared to first half of 2006
Warren Group reports MA foreclosures up 170% in first half of 2007 compared to first half of 2006
2007-08-02
Info/Broken? - MA foreclosure announcements still rising in June
Discuss - MA foreclosure announcements still rising in June
MA foreclosure announcements still rising in June
2007-08-01
Info/Broken? - State sets up hotline for subprime borrowers
Discuss - State sets up hotline for subprime borrowers
State sets up hotline for subprime borrowers

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