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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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2007-12-31
Info/Broken? - Lender Lobbying Blitz - Ameriquest (Gov. Patrick's previous employer) Pressed For Changes in Laws
Discuss - Lender Lobbying Blitz - Ameriquest (Gov. Patrick's previous employer) Pressed For Changes in Laws
Lender Lobbying Blitz - Ameriquest (Gov. Patrick's previous employer) Pressed For Changes in Laws
2007-12-31
Info/Broken? - Jon Bryan, professor at Bridgewater State College: "The simple fact is we went through a phenomenal boom by any measurement, and the bubble popped. It's going to take years to work off."
Discuss - Jon Bryan, professor at Bridgewater State College: "The simple fact is we went through a phenomenal boom by any measurement, and the bubble popped. It's going to take years to work off."
Jon Bryan, professor at Bridgewater State College: "The simple fact is we went through a phenomenal boom by any measurement, and the bubble popped. It's going to take years to work off."
2007-12-28
Info/Broken? - Boston Bubble Brief Nov 2007: MA real SFH prices down 6.66%, lowest November on record, prices 18.49% below peak
Discuss - Boston Bubble Brief Nov 2007: MA real SFH prices down 6.66%, lowest November on record, prices 18.49% below peak
Boston Bubble Brief Nov 2007: MA real SFH prices down 6.66%, lowest November on record, prices 18.49% below peak
2007-12-28
Info/Broken? - State home sales sink deeper
Discuss - State home sales sink deeper
State home sales sink deeper
2007-12-27
Info/Broken? - Globe runs story about woman saved from foreclosure; truth is, she was deep in over her head
Discuss - Globe runs story about woman saved from foreclosure; truth is, she was deep in over her head
Globe runs story about woman saved from foreclosure; truth is, she was deep in over her head
2007-12-27
Info/Broken? - Crashachusetts Existing Home Sales: November 2007
Discuss - Crashachusetts Existing Home Sales: November 2007
Crashachusetts Existing Home Sales: November 2007
2007-12-27
Info/Broken? - Survey Blitz for TV News: Boston housing prices in 2008 & beyond
Discuss - Survey Blitz for TV News: Boston housing prices in 2008 & beyond
Survey Blitz for TV News: Boston housing prices in 2008 & beyond
2007-12-27
Info/Broken? - MAR on Nov 2007 vs Nov 2006: nominal SFH prices down 2.9%, sales hit 13-year low
Discuss - MAR on Nov 2007 vs Nov 2006: nominal SFH prices down 2.9%, sales hit 13-year low
MAR on Nov 2007 vs Nov 2006: nominal SFH prices down 2.9%, sales hit 13-year low
2007-12-27
Info/Broken? - Paper mill project along banks of Nashua River falls off the map
Discuss - Paper mill project along banks of Nashua River falls off the map
Paper mill project along banks of Nashua River falls off the map
2007-12-27
Info/Broken? - America's Housing Troubles Won't End with 2007 - NPR covers MA and Boston area
Discuss - America's Housing Troubles Won't End with 2007 - NPR covers MA and Boston area
America's Housing Troubles Won't End with 2007 - NPR covers MA and Boston area
2007-12-27
Info/Broken? - The Arlington Artifice: November 2007
Discuss - The Arlington Artifice: November 2007
The Arlington Artifice: November 2007
2007-12-26
Info/Broken? - Will Massachusetts be a good place to retire?
Discuss - Will Massachusetts be a good place to retire?
Will Massachusetts be a good place to retire?
2007-12-26
Info/Broken? - The S&P/Case-Shiller(R) U.S. National Home Price Index Posts a Record Annual Decline in the 3rd Quarter of 2007
Discuss - The S&P/Case-Shiller(R) U.S. National Home Price Index Posts a Record Annual Decline in the 3rd Quarter of 2007
The S&P/Case-Shiller(R) U.S. National Home Price Index Posts a Record Annual Decline in the 3rd Quarter of 2007
2007-12-26
Info/Broken? - First borrower gets loan aid
Discuss - First borrower gets loan aid
First borrower gets loan aid
2007-12-24
Info/Broken? - Bottom Drops Out of Connecticut Home Market -  Sales slide to lowest level in 14 years
Discuss - Bottom Drops Out of Connecticut Home Market -  Sales slide to lowest level in 14 years
Bottom Drops Out of Connecticut Home Market - Sales slide to lowest level in 14 years
2007-12-24
Info/Broken? - Central Mass. Economic Forecast: Sizing Up 2008
Discuss - Central Mass. Economic Forecast: Sizing Up 2008
Central Mass. Economic Forecast: Sizing Up 2008
2007-12-23
Info/Broken? - Property taxes rising on North Shore
Discuss - Property taxes rising on North Shore
Property taxes rising on North Shore
2007-12-23
Info/Broken? - New MA mortgage laws bring change in 2008
Discuss - New MA mortgage laws bring change in 2008
New MA mortgage laws bring change in 2008
2007-12-22
Info/Broken? - Heat a casualty in foreclosures - As Boston buildings are taken over by mortgage firms, tenants face slow repairs of systems and limited fuel deliveries
Discuss - Heat a casualty in foreclosures - As Boston buildings are taken over by mortgage firms, tenants face slow repairs of systems and limited fuel deliveries
Heat a casualty in foreclosures - As Boston buildings are taken over by mortgage firms, tenants face slow repairs of systems and limited fuel deliveries
2007-12-21
Info/Broken? - Up to 15,000 Massachusetts subprime-mortgage borrowers probably qualify for better loans, but don't know where to turn for help
Discuss - Up to 15,000 Massachusetts subprime-mortgage borrowers probably qualify for better loans, but don't know where to turn for help
Up to 15,000 Massachusetts subprime-mortgage borrowers probably qualify for better loans, but don't know where to turn for help
2007-12-20
Info/Broken? - New England: Mortgage relief fund set up
Discuss - New England: Mortgage relief fund set up
New England: Mortgage relief fund set up
2007-12-20
Info/Broken? - MA goes from #19 to #15 in foreclosure ranking
Discuss - MA goes from #19 to #15 in foreclosure ranking
MA goes from #19 to #15 in foreclosure ranking
2007-12-20
Info/Broken? - Housing news isn't all bad for North Shore
Discuss - Housing news isn't all bad for North Shore
Housing news isn't all bad for North Shore
2007-12-19
Info/Broken? - Economist John Bitner of Boston-based Eastern Bank pushes his prediction of market bottom back about 6 months to 2nd half of 2008
Discuss - Economist John Bitner of Boston-based Eastern Bank pushes his prediction of market bottom back about 6 months to 2nd half of 2008
Economist John Bitner of Boston-based Eastern Bank pushes his prediction of market bottom back about 6 months to 2nd half of 2008
2007-12-19
Info/Broken? - Franklin and Bristol counties post largest declines in November sales
Discuss - Franklin and Bristol counties post largest declines in November sales
Franklin and Bristol counties post largest declines in November sales
2007-12-19
Info/Broken? - Market realities foil Fort Point community plan
Discuss - Market realities foil Fort Point community plan
Market realities foil Fort Point community plan
2007-12-18
Info/Broken? - The US sub-prime crisis in graphics
Discuss - The US sub-prime crisis in graphics
The US sub-prime crisis in graphics
2007-12-18
Info/Broken? - Warren Group on Nov 2007 vs Nov 2006 for Massachusetts: Nominal prices down 5.8%, sales down 15.4% hitting 16-year low
Discuss - Warren Group on Nov 2007 vs Nov 2006 for Massachusetts: Nominal prices down 5.8%, sales down 15.4% hitting 16-year low
Warren Group on Nov 2007 vs Nov 2006 for Massachusetts: Nominal prices down 5.8%, sales down 15.4% hitting 16-year low
2007-12-18
Info/Broken? - Globe Opinion: The dangers of overreacting to mortgage crisis
Discuss - Globe Opinion: The dangers of overreacting to mortgage crisis
Globe Opinion: The dangers of overreacting to mortgage crisis
2007-12-17
Info/Broken? - As foreclosures mount, tenants suffer - Mortgage firms want buildings empty, evict even reliable rent-payers
Discuss - As foreclosures mount, tenants suffer - Mortgage firms want buildings empty, evict even reliable rent-payers
As foreclosures mount, tenants suffer - Mortgage firms want buildings empty, evict even reliable rent-payers
2007-12-17
Info/Broken? - Realtors face tough reality - Carlson cuts offices, agents; others suffering
Discuss - Realtors face tough reality - Carlson cuts offices, agents; others suffering
Realtors face tough reality - Carlson cuts offices, agents; others suffering
2007-12-16
Info/Broken? - Housing prices dip this year in N.H., Maine
Discuss - Housing prices dip this year in N.H., Maine
Housing prices dip this year in N.H., Maine
2007-12-16
Info/Broken? - Housing crash may deepen in '08
Discuss - Housing crash may deepen in '08
Housing crash may deepen in '08
2007-12-13
Info/Broken? - Turnpike may halt Columbus Center job - $800m project loses its biggest lender
Discuss - Turnpike may halt Columbus Center job - $800m project loses its biggest lender
Turnpike may halt Columbus Center job - $800m project loses its biggest lender
2007-12-12
Info/Broken? - Foreclosure mess will get worse: NH foreclosure numbers
Discuss - Foreclosure mess will get worse: NH foreclosure numbers
Foreclosure mess will get worse: NH foreclosure numbers
2007-12-12
Info/Broken? - Be leery of those mortgage-meltdown fixes
Discuss - Be leery of those mortgage-meltdown fixes
Be leery of those mortgage-meltdown fixes
2007-12-12
Info/Broken? - Boston chief Rosengren casts lone dissenting vote to lower rate 0.5%, analysts say in an attempt to prop up lofty housing prices
Discuss - Boston chief Rosengren casts lone dissenting vote to lower rate 0.5%, analysts say in an attempt to prop up lofty housing prices
Boston chief Rosengren casts lone dissenting vote to lower rate 0.5%, analysts say in an attempt to prop up lofty housing prices
2007-12-11
Info/Broken? - Human Cost of Subprime Mortgage Meltdown
Discuss - Human Cost of Subprime Mortgage Meltdown
Human Cost of Subprime Mortgage Meltdown
2007-12-11
Info/Broken? - Worst. Forecasters. Ever? The cockeyed optimists of the National Association of Realtors.
Discuss - Worst. Forecasters. Ever? The cockeyed optimists of the National Association of Realtors.
Worst. Forecasters. Ever? The cockeyed optimists of the National Association of Realtors.
2007-12-11
Info/Broken? - NARcasting The Future: December 2007 - NAR predicts sales and prices to rise in 2008
Discuss - NARcasting The Future: December 2007 - NAR predicts sales and prices to rise in 2008
NARcasting The Future: December 2007 - NAR predicts sales and prices to rise in 2008
2007-12-11
Info/Broken? - Middlesex North Registry of Deeds: 2007 foreclosures already higher than every year since 1994
Discuss - Middlesex North Registry of Deeds: 2007 foreclosures already higher than every year since 1994
Middlesex North Registry of Deeds: 2007 foreclosures already higher than every year since 1994
2007-12-10
Info/Broken? - Interest rate 'freeze' - the real story is fraud. Bankers pay lip service to families while scurrying to avert suits, prison.
Discuss - Interest rate 'freeze' - the real story is fraud. Bankers pay lip service to families while scurrying to avert suits, prison.
Interest rate 'freeze' - the real story is fraud. Bankers pay lip service to families while scurrying to avert suits, prison.
2007-12-10
Info/Broken? - Gloom on home front - situation likely to get worse
Discuss - Gloom on home front - situation likely to get worse
Gloom on home front - situation likely to get worse
2007-12-10
Info/Broken? - Local Mortgage Firms Shrink Because Of Housing Woes
Discuss - Local Mortgage Firms Shrink Because Of Housing Woes
Local Mortgage Firms Shrink Because Of Housing Woes
2007-12-07
Info/Broken? - S&P/Case-Shiller Boston Special Edition: Nov 2012 contracts debut, new inflation adjusted graph (past and future).  Contract prices imply: falling housing prices at least through 2012, real decline from peak of 36.45%.
Discuss - S&P/Case-Shiller Boston Special Edition: Nov 2012 contracts debut, new inflation adjusted graph (past and future).  Contract prices imply: falling housing prices at least through 2012, real decline from peak of 36.45%.
S&P/Case-Shiller Boston Special Edition: Nov 2012 contracts debut, new inflation adjusted graph (past and future). Contract prices imply: falling housing prices at least through 2012, real decline from peak of 36.45%.
2007-12-07
Info/Broken? - Long drop - Credit crisis turns market for commercial property from hot to suddenly cold in Boston, across country
Discuss - Long drop - Credit crisis turns market for commercial property from hot to suddenly cold in Boston, across country
Long drop - Credit crisis turns market for commercial property from hot to suddenly cold in Boston, across country
2007-12-07
Info/Broken? - Menino: "Simply not enough" - Critics say Bush mortgage plan falls short
Discuss - Menino: "Simply not enough" - Critics say Bush mortgage plan falls short
Menino: "Simply not enough" - Critics say Bush mortgage plan falls short
2007-12-07
Info/Broken? - Middlesex North Registry of Deeds Nov 2007 vs Nov 2006: Documents down 23%, deeds down 16%, foreclosure deeds up 63%
Discuss - Middlesex North Registry of Deeds Nov 2007 vs Nov 2006: Documents down 23%, deeds down 16%, foreclosure deeds up 63%
Middlesex North Registry of Deeds Nov 2007 vs Nov 2006: Documents down 23%, deeds down 16%, foreclosure deeds up 63%
2007-12-06
Info/Broken? - US house prices seen falling 30 pct
Discuss - US house prices seen falling 30 pct
US house prices seen falling 30 pct
2007-12-06
Info/Broken? - Mass. mortgage delinquency rates up
Discuss - Mass. mortgage delinquency rates up
Mass. mortgage delinquency rates up
2007-12-06
Info/Broken? - Prices cut by a third, Pond View condos selling again
Discuss - Prices cut by a third, Pond View condos selling again
Prices cut by a third, Pond View condos selling again
2007-12-06
Info/Broken? - Opponents pushing for repeal of affordable housing law
Discuss - Opponents pushing for repeal of affordable housing law
Opponents pushing for repeal of affordable housing law
2007-12-05
Info/Broken? - Law firm team targets mortgage mess
Discuss - Law firm team targets mortgage mess
Law firm team targets mortgage mess
2007-12-04
Info/Broken? - Mass. subprime business shrinks amid spike in foreclosures
Discuss - Mass. subprime business shrinks amid spike in foreclosures
Mass. subprime business shrinks amid spike in foreclosures
2007-12-04
Info/Broken? - Falling MA prices driving crisis - Fed: Foreclosures not primarily due to high loan payments
Discuss - Falling MA prices driving crisis - Fed: Foreclosures not primarily due to high loan payments
Falling MA prices driving crisis - Fed: Foreclosures not primarily due to high loan payments
2007-12-04
Info/Broken? - Foreclosure crisis hits Essex County
Discuss - Foreclosure crisis hits Essex County
Foreclosure crisis hits Essex County
2007-12-04
Info/Broken? - '08 property taxes drop in Hub - Lower home values, changes in law add up
Discuss - '08 property taxes drop in Hub - Lower home values, changes in law add up
'08 property taxes drop in Hub - Lower home values, changes in law add up
2007-12-03
Info/Broken? - Subprime relief: Winners and losers
Discuss - Subprime relief: Winners and losers
Subprime relief: Winners and losers
2007-12-03
Info/Broken? - Mortgage mess cost: $3B - Study sees big '08 hit to Boston-area economy, putting it in the top 10 metro areas likely to be hardest hit
Discuss - Mortgage mess cost: $3B - Study sees big '08 hit to Boston-area economy, putting it in the top 10 metro areas likely to be hardest hit
Mortgage mess cost: $3B - Study sees big '08 hit to Boston-area economy, putting it in the top 10 metro areas likely to be hardest hit
2007-12-02
Info/Broken? - MA mortgage bankers wary of Paulson plan
Discuss - MA mortgage bankers wary of Paulson plan
MA mortgage bankers wary of Paulson plan

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