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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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2008-09-30
Info/Broken? - S&P/Case-Shiller Boston Index down nominal 5.4% YOY in July
Discuss - S&P/Case-Shiller Boston Index down nominal 5.4% YOY in July
S&P/Case-Shiller Boston Index down nominal 5.4% YOY in July
2008-09-30
Info/Broken? - Don't buy the "nobody saw it coming" fallacy - another public figure (this one local) on record providing early warnings
Discuss - Don't buy the "nobody saw it coming" fallacy - another public figure (this one local) on record providing early warnings
Don't buy the "nobody saw it coming" fallacy - another public figure (this one local) on record providing early warnings
2008-09-30
Info/Broken? - Herald Op-Ed by Barney Frank attempting to deflect blame over Fannie and Freddie
Discuss - Herald Op-Ed by Barney Frank attempting to deflect blame over Fannie and Freddie
Herald Op-Ed by Barney Frank attempting to deflect blame over Fannie and Freddie
2008-09-30
Info/Broken? - Harvard's Miron: Bankruptcy, not bailout, is the right answer
Discuss - Harvard's Miron: Bankruptcy, not bailout, is the right answer
Harvard's Miron: Bankruptcy, not bailout, is the right answer
2008-09-29
Info/Broken? - List of which MA reps voted for and against the bailout
Discuss - List of which MA reps voted for and against the bailout
List of which MA reps voted for and against the bailout
2008-09-29
Info/Broken? - $700 billion bailout bill fails in House
Discuss - $700 billion bailout bill fails in House
$700 billion bailout bill fails in House
2008-09-29
Info/Broken? - WaMu flooded Massachusetts with subprime mortgages
Discuss - WaMu flooded Massachusetts with subprime mortgages
WaMu flooded Massachusetts with subprime mortgages
2008-09-29
Info/Broken? - Barney Frank feeling heat in crisis
Discuss - Barney Frank feeling heat in crisis
Barney Frank feeling heat in crisis
2008-09-29
Info/Broken? - Video of Frank, et al, impeding regulatory reform of Fannie Mae and Freddie Mac in 2004
Discuss - Video of Frank, et al, impeding regulatory reform of Fannie Mae and Freddie Mac in 2004
Video of Frank, et al, impeding regulatory reform of Fannie Mae and Freddie Mac in 2004
2008-09-26
Info/Broken? - Boston Bubble Brief, Aug 2008: 13.73% YOY real price decline, lowest August on record
Discuss - Boston Bubble Brief, Aug 2008: 13.73% YOY real price decline, lowest August on record
Boston Bubble Brief, Aug 2008: 13.73% YOY real price decline, lowest August on record
2008-09-26
Info/Broken? - Mass. bank chief foretold crisis - in '97
Discuss - Mass. bank chief foretold crisis - in '97
Mass. bank chief foretold crisis - in '97
2008-09-26
Info/Broken? - Slide show from Prof. Case's Monday lecture
Discuss - Slide show from Prof. Case's Monday lecture
Slide show from Prof. Case's Monday lecture
2008-09-26
Info/Broken? - Mass. foreclosure seizures fall slightly but new proceedings jump
Discuss - Mass. foreclosure seizures fall slightly but new proceedings jump
Mass. foreclosure seizures fall slightly but new proceedings jump
2008-09-25
Info/Broken? - Crashachusetts Existing Home Sales and Prices: August 2008
Discuss - Crashachusetts Existing Home Sales and Prices: August 2008
Crashachusetts Existing Home Sales and Prices: August 2008
2008-09-25
Info/Broken? - Buffett Supports (and bet on) Bailout ; Says Gov't Will Make Money
Discuss - Buffett Supports (and bet on) Bailout ; Says Gov't Will Make Money
Buffett Supports (and bet on) Bailout ; Says Gov't Will Make Money
2008-09-25
Info/Broken? - Rep. DeFazio Stands Up to Hank "usually wrong" Paulson
Discuss - Rep. DeFazio Stands Up to Hank "usually wrong" Paulson
Rep. DeFazio Stands Up to Hank "usually wrong" Paulson
2008-09-24
Info/Broken? - Prof. Karl Case retracts forecast of housing recovery in early 2009
Discuss - Prof. Karl Case retracts forecast of housing recovery in early 2009
Prof. Karl Case retracts forecast of housing recovery in early 2009
2008-09-24
Info/Broken? - Barney Frank 'Fesses Up on Financial Crisis
Discuss - Barney Frank 'Fesses Up on Financial Crisis
Barney Frank 'Fesses Up on Financial Crisis
2008-09-24
Info/Broken? - 120+ Economists Sign Petition Opposing Treasury's Proposed Bailout
Discuss - 120+ Economists Sign Petition Opposing Treasury's Proposed Bailout
120+ Economists Sign Petition Opposing Treasury's Proposed Bailout
2008-09-24
Info/Broken? - Commentary: Bailouts will lead to rough economic ride
Discuss - Commentary: Bailouts will lead to rough economic ride
Commentary: Bailouts will lead to rough economic ride
2008-09-23
Info/Broken? - Summary of Karl Case's lecture yesterday at Harvard
Discuss - Summary of Karl Case's lecture yesterday at Harvard
Summary of Karl Case's lecture yesterday at Harvard
2008-09-23
Info/Broken? - Worst August (for sellers) in 6 years - MA SFH YOY nominal decline of 9% reported by both MAR and Warren Group
Discuss - Worst August (for sellers) in 6 years - MA SFH YOY nominal decline of 9% reported by both MAR and Warren Group
Worst August (for sellers) in 6 years - MA SFH YOY nominal decline of 9% reported by both MAR and Warren Group
2008-09-23
Info/Broken? - Better not bank on Barney Frank - He brought the (fiscal) house down
Discuss - Better not bank on Barney Frank - He brought the (fiscal) house down
Better not bank on Barney Frank - He brought the (fiscal) house down
2008-09-23
Info/Broken? - Krugman on Treasury Proposal: "The more I think about this, the more skeptical I get"
Discuss - Krugman on Treasury Proposal: "The more I think about this, the more skeptical I get"
Krugman on Treasury Proposal: "The more I think about this, the more skeptical I get"
2008-09-22
Info/Broken? - Patrick ponders big cuts as state revenue tumbles
Discuss - Patrick ponders big cuts as state revenue tumbles
Patrick ponders big cuts as state revenue tumbles
2008-09-22
Info/Broken? - Ron Paul on the $700 Billion Bailout
Discuss - Ron Paul on the $700 Billion Bailout
Ron Paul on the $700 Billion Bailout
2008-09-21
Info/Broken? - MA SFH August median down 9.0% YOY nominally, sales down 14.3%
Discuss - MA SFH August median down 9.0% YOY nominally, sales down 14.3%
MA SFH August median down 9.0% YOY nominally, sales down 14.3%
2008-09-21
Info/Broken? - Globe asks: Why is it my responsibility to bail these companies out?
Discuss - Globe asks: Why is it my responsibility to bail these companies out?
Globe asks: Why is it my responsibility to bail these companies out?
2008-09-21
Info/Broken? - Yun: "This winter will be better than last winter.  There is this great pent-up demand that cannot be held back any further."
Discuss - Yun: "This winter will be better than last winter.  There is this great pent-up demand that cannot be held back any further."
Yun: "This winter will be better than last winter. There is this great pent-up demand that cannot be held back any further."
2008-09-20
Info/Broken? - Bush administration working on plan to buy hundreds of billions of dollars worth of dubious quality mortgages
Discuss - Bush administration working on plan to buy hundreds of billions of dollars worth of dubious quality mortgages
Bush administration working on plan to buy hundreds of billions of dollars worth of dubious quality mortgages
2008-09-19
Info/Broken? - Barney Frank Throwing Bad Debt After Bad - Again!  Overturns ban on "seller-financed down payments" of government backed mortgages.
Discuss - Barney Frank Throwing Bad Debt After Bad - Again!  Overturns ban on "seller-financed down payments" of government backed mortgages.
Barney Frank Throwing Bad Debt After Bad - Again! Overturns ban on "seller-financed down payments" of government backed mortgages.
2008-09-19
Info/Broken? - Hub's fall housing market feeling wintry
Discuss - Hub's fall housing market feeling wintry
Hub's fall housing market feeling wintry
2008-09-19
Info/Broken? - MA builders may owe $100M
Discuss - MA builders may owe $100M
MA builders may owe $100M
2008-09-18
Info/Broken? - Harvard lecture Sep 22 with Karl Case, et al - Housing Prices and the Current Fiscal Crisis: How Will the Market Clear?
Discuss - Harvard lecture Sep 22 with Karl Case, et al - Housing Prices and the Current Fiscal Crisis: How Will the Market Clear?
Harvard lecture Sep 22 with Karl Case, et al - Housing Prices and the Current Fiscal Crisis: How Will the Market Clear?
2008-09-18
Info/Broken? - In most Boston area communities, taxes rise as values fall
Discuss - In most Boston area communities, taxes rise as values fall
In most Boston area communities, taxes rise as values fall
2008-09-18
Info/Broken? - Struggling economy affects availability of student loans
Discuss - Struggling economy affects availability of student loans
Struggling economy affects availability of student loans
2008-09-17
Info/Broken? - Frank impeded Fannie/Freddie reform as far back as 2003, denying "any kind of financial crisis"
Discuss - Frank impeded Fannie/Freddie reform as far back as 2003, denying "any kind of financial crisis"
Frank impeded Fannie/Freddie reform as far back as 2003, denying "any kind of financial crisis"
2008-09-17
Info/Broken? - Hub job losses likely in Merrill takeover, Lehman bankruptcy
Discuss - Hub job losses likely in Merrill takeover, Lehman bankruptcy
Hub job losses likely in Merrill takeover, Lehman bankruptcy
2008-09-16
Info/Broken? - Boston assesses financial fallout - Money managers gird for change in Wall St. landscape
Discuss - Boston assesses financial fallout - Money managers gird for change in Wall St. landscape
Boston assesses financial fallout - Money managers gird for change in Wall St. landscape
2008-09-16
Info/Broken? - Former Fannie and Freddie CEOs May Not Get Millions After All
Discuss - Former Fannie and Freddie CEOs May Not Get Millions After All
Former Fannie and Freddie CEOs May Not Get Millions After All
2008-09-15
Info/Broken? - Shirley Residents Worried After Bank Forecloses On Builder
Discuss - Shirley Residents Worried After Bank Forecloses On Builder
Shirley Residents Worried After Bank Forecloses On Builder
2008-09-15
Info/Broken? - With Lehman Bros. on brink, shudder is felt in Boston
Discuss - With Lehman Bros. on brink, shudder is felt in Boston
With Lehman Bros. on brink, shudder is felt in Boston
2008-09-15
Info/Broken? - Lehman's Boston employees clear out
Discuss - Lehman's Boston employees clear out
Lehman's Boston employees clear out
2008-09-15
Info/Broken? - Spike of homes in MA for $100K or less (mostly in poorer areas at present)
Discuss - Spike of homes in MA for $100K or less (mostly in poorer areas at present)
Spike of homes in MA for $100K or less (mostly in poorer areas at present)
2008-09-13
Info/Broken? - Former Somerville attorney charged in mortgage stacking scheme
Discuss - Former Somerville attorney charged in mortgage stacking scheme
Former Somerville attorney charged in mortgage stacking scheme
2008-09-12
Info/Broken? - Brothers default on 30 mortgages in Jamaica Plain and Roslindale
Discuss - Brothers default on 30 mortgages in Jamaica Plain and Roslindale
Brothers default on 30 mortgages in Jamaica Plain and Roslindale
2008-09-12
Info/Broken? - Karl Case and Alan Clayton-Matthews: Bottom is near - Recovery, however, may take years
Discuss - Karl Case and Alan Clayton-Matthews: Bottom is near - Recovery, however, may take years
Karl Case and Alan Clayton-Matthews: Bottom is near - Recovery, however, may take years
2008-09-12
Info/Broken? - Patriot Ledger special report on local foreclosures
Discuss - Patriot Ledger special report on local foreclosures
Patriot Ledger special report on local foreclosures
2008-09-11
Info/Broken? - Will MA unemployment follow RI's spike, as in the past?
Discuss - Will MA unemployment follow RI's spike, as in the past?
Will MA unemployment follow RI's spike, as in the past?
2008-09-11
Info/Broken? - Freddie, Fannie Scam Hidden in Broad Daylight: Jonathan Weil
Discuss - Freddie, Fannie Scam Hidden in Broad Daylight: Jonathan Weil
Freddie, Fannie Scam Hidden in Broad Daylight: Jonathan Weil
2008-09-10
Info/Broken? - Homeowners with good credit get hit by downturn - record 3.73% of Mass. borrowers behind on prime loans
Discuss - Homeowners with good credit get hit by downturn - record 3.73% of Mass. borrowers behind on prime loans
Homeowners with good credit get hit by downturn - record 3.73% of Mass. borrowers behind on prime loans
2008-09-10
Info/Broken? - Several real estate agencies closing up shop in Somerville
Discuss - Several real estate agencies closing up shop in Somerville
Several real estate agencies closing up shop in Somerville
2008-09-10
Info/Broken? - NARcasting The Future: September 2008
Discuss - NARcasting The Future: September 2008
NARcasting The Future: September 2008
2008-09-09
Info/Broken? - Outrageous Severance Deals For Fannie/Freddie CEOs -- Paid For By You
Discuss - Outrageous Severance Deals For Fannie/Freddie CEOs -- Paid For By You
Outrageous Severance Deals For Fannie/Freddie CEOs -- Paid For By You
2008-09-07
Info/Broken? - U.S. seizes Fannie and Freddie
Discuss - U.S. seizes Fannie and Freddie
U.S. seizes Fannie and Freddie
2008-09-06
Info/Broken? - Banks told to provide collateral on state funds
Discuss - Banks told to provide collateral on state funds
Banks told to provide collateral on state funds
2008-09-06
Info/Broken? - U.S. to take control of Fannie and Freddie, contrary to previous assurances from Frank
Discuss - U.S. to take control of Fannie and Freddie, contrary to previous assurances from Frank
U.S. to take control of Fannie and Freddie, contrary to previous assurances from Frank
2008-09-05
Info/Broken? - Merrimack Valley Housing Report, August 2008
Discuss - Merrimack Valley Housing Report, August 2008
Merrimack Valley Housing Report, August 2008
2008-09-05
Info/Broken? - Frank outlines foreclosure aid at forum in Marlboro
Discuss - Frank outlines foreclosure aid at forum in Marlboro
Frank outlines foreclosure aid at forum in Marlboro
2008-09-04
Info/Broken? - Flames of "irrational exuberance" burning Realtors, too
Discuss - Flames of "irrational exuberance" burning Realtors, too
Flames of "irrational exuberance" burning Realtors, too
2008-09-04
Info/Broken? - "Crashachusetts" Rebutted
Discuss - "Crashachusetts" Rebutted
"Crashachusetts" Rebutted
2008-09-04
Info/Broken? - Fed's Rosengren sees more risks ahead - Low interest rates aren't quite working, Boston chief warns
Discuss - Fed's Rosengren sees more risks ahead - Low interest rates aren't quite working, Boston chief warns
Fed's Rosengren sees more risks ahead - Low interest rates aren't quite working, Boston chief warns
2008-09-03
Info/Broken? - MA home seizures surge - 2008 has already passed all of 2007, even with new 90 day delay
Discuss - MA home seizures surge - 2008 has already passed all of 2007, even with new 90 day delay
MA home seizures surge - 2008 has already passed all of 2007, even with new 90 day delay
2008-09-03
Info/Broken? - Radar Logic Boston Index down 10.2% nominally YOY in June (PDF)
Discuss - Radar Logic Boston Index down 10.2% nominally YOY in June (PDF)
Radar Logic Boston Index down 10.2% nominally YOY in June (PDF)
2008-09-02
Info/Broken? - The Arlington Artifice: July 2008 - Lowest sales since 1989, year-to-date median continues decline
Discuss - The Arlington Artifice: July 2008 - Lowest sales since 1989, year-to-date median continues decline
The Arlington Artifice: July 2008 - Lowest sales since 1989, year-to-date median continues decline
2008-09-01
Info/Broken? - Middlesex North Registry of Deeds, Aug 2008 vs Aug 2007: 24% decline in deeds, 39% drop in mortgages, foreclosure deeds down 13%
Discuss - Middlesex North Registry of Deeds, Aug 2008 vs Aug 2007: 24% decline in deeds, 39% drop in mortgages, foreclosure deeds down 13%
Middlesex North Registry of Deeds, Aug 2008 vs Aug 2007: 24% decline in deeds, 39% drop in mortgages, foreclosure deeds down 13%

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