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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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2008-12-31
Info/Broken? - Fierce recession hits Mass. late, but hard
Discuss - Fierce recession hits Mass. late, but hard
Fierce recession hits Mass. late, but hard
2008-12-31
Info/Broken? - Mass. foreclosures ease a bit in Nov.
Discuss - Mass. foreclosures ease a bit in Nov.
Mass. foreclosures ease a bit in Nov.
2008-12-30
Info/Broken? - Beantown Bust: Boston CSI and RPX October 2008 - S&P/Case-Shiller Boston Index down 6.0% nominally YOY, Radar Logic down 14.77%
Discuss - Beantown Bust: Boston CSI and RPX October 2008 - S&P/Case-Shiller Boston Index down 6.0% nominally YOY, Radar Logic down 14.77%
Beantown Bust: Boston CSI and RPX October 2008 - S&P/Case-Shiller Boston Index down 6.0% nominally YOY, Radar Logic down 14.77%
2008-12-30
Info/Broken? - HousingPredictor.com projects Massachusetts to sustain double-digit housing price deflation in 2009
Discuss - HousingPredictor.com projects Massachusetts to sustain double-digit housing price deflation in 2009
HousingPredictor.com projects Massachusetts to sustain double-digit housing price deflation in 2009
2008-12-29
Info/Broken? - Closings would roil commercial real estate market
Discuss - Closings would roil commercial real estate market
Closings would roil commercial real estate market
2008-12-29
Info/Broken? - Letter to Globe Editor: Skittish homebuyers have their reasons
Discuss - Letter to Globe Editor: Skittish homebuyers have their reasons
Letter to Globe Editor: Skittish homebuyers have their reasons
2008-12-28
Info/Broken? - Futures added to Case-Shiller Home Price Visualization Application
Discuss - Futures added to Case-Shiller Home Price Visualization Application
Futures added to Case-Shiller Home Price Visualization Application
2008-12-28
Info/Broken? - Outlook for 2009 is grim - New England Economic Partnerships forecasts MA to lose 80,000 jobs (2% of employment)
Discuss - Outlook for 2009 is grim - New England Economic Partnerships forecasts MA to lose 80,000 jobs (2% of employment)
Outlook for 2009 is grim - New England Economic Partnerships forecasts MA to lose 80,000 jobs (2% of employment)
2008-12-26
Info/Broken? - Boston Bubble Brief, Nov 2008: MA SFH real prices fall 15.71% YOY, continue below estimate for 2001
Discuss - Boston Bubble Brief, Nov 2008: MA SFH real prices fall 15.71% YOY, continue below estimate for 2001
Boston Bubble Brief, Nov 2008: MA SFH real prices fall 15.71% YOY, continue below estimate for 2001
2008-12-26
Info/Broken? - Mortgage practice hindering MA recovery - Piggyback loans pose big problem for housing sector
Discuss - Mortgage practice hindering MA recovery - Piggyback loans pose big problem for housing sector
Mortgage practice hindering MA recovery - Piggyback loans pose big problem for housing sector
2008-12-24
Info/Broken? - Crashachusetts Existing Home Sales and Prices: November 2008
Discuss - Crashachusetts Existing Home Sales and Prices: November 2008
Crashachusetts Existing Home Sales and Prices: November 2008
2008-12-23
Info/Broken? - US Home Sales in November Fell at Faster Pace Than Expected
Discuss - US Home Sales in November Fell at Faster Pace Than Expected
US Home Sales in November Fell at Faster Pace Than Expected
2008-12-23
Info/Broken? - Warren Group: MA housing has its worst price drop in 20 years; Nominal median SFH price plunges 16.7%
Discuss - Warren Group: MA housing has its worst price drop in 20 years; Nominal median SFH price plunges 16.7%
Warren Group: MA housing has its worst price drop in 20 years; Nominal median SFH price plunges 16.7%
2008-12-23
Info/Broken? - MAR on Nov 2008 vs Nov 2007: MA SFH median price plunges 14.2% nominally, sales down 21.8%
Discuss - MAR on Nov 2008 vs Nov 2007: MA SFH median price plunges 14.2% nominally, sales down 21.8%
MAR on Nov 2008 vs Nov 2007: MA SFH median price plunges 14.2% nominally, sales down 21.8%
2008-12-23
Info/Broken? - Bay State logs a 3d straight year of population growth
Discuss - Bay State logs a 3d straight year of population growth
Bay State logs a 3d straight year of population growth
2008-12-22
Info/Broken? - Local protesters call on Bank of America to curb post-foreclosure evictions
Discuss - Local protesters call on Bank of America to curb post-foreclosure evictions
Local protesters call on Bank of America to curb post-foreclosure evictions
2008-12-22
Info/Broken? - Bush Philosophy Stoked Mortgage Bonfire
Discuss - Bush Philosophy Stoked Mortgage Bonfire
Bush Philosophy Stoked Mortgage Bonfire
2008-12-19
Info/Broken? - Locals lobby Congress to further subsidize housing industry with mortgage rate welfare
Discuss - Locals lobby Congress to further subsidize housing industry with mortgage rate welfare
Locals lobby Congress to further subsidize housing industry with mortgage rate welfare
2008-12-19
Info/Broken? - MA and RI unemployment both spike, reaching 5.9% and 9.6% respectively
Discuss - MA and RI unemployment both spike, reaching 5.9% and 9.6% respectively
MA and RI unemployment both spike, reaching 5.9% and 9.6% respectively
2008-12-18
Info/Broken? - Profile of Sherborn couple "just getting by" on $150K because their house is pushing them to the brink of financial ruin
Discuss - Profile of Sherborn couple "just getting by" on $150K because their house is pushing them to the brink of financial ruin
Profile of Sherborn couple "just getting by" on $150K because their house is pushing them to the brink of financial ruin
2008-12-18
Info/Broken? - Over 20% of Mandarin buyers trying to flip, less than 3 months after opening
Discuss - Over 20% of Mandarin buyers trying to flip, less than 3 months after opening
Over 20% of Mandarin buyers trying to flip, less than 3 months after opening
2008-12-18
Info/Broken? - Vow to add jobs appears doomed - Patrick's promise is overtaken by national economic downturn
Discuss - Vow to add jobs appears doomed - Patrick's promise is overtaken by national economic downturn
Vow to add jobs appears doomed - Patrick's promise is overtaken by national economic downturn
2008-12-17
Info/Broken? - How low can prices go around Boston?
Discuss - How low can prices go around Boston?
How low can prices go around Boston?
2008-12-17
Info/Broken? - Fed cuts rate to record low of 0 - 0.25%
Discuss - Fed cuts rate to record low of 0 - 0.25%
Fed cuts rate to record low of 0 - 0.25%
2008-12-16
Info/Broken? - Pets, too, losing homes to recession, foreclosure
Discuss - Pets, too, losing homes to recession, foreclosure
Pets, too, losing homes to recession, foreclosure
2008-12-15
Info/Broken? - Foreclosures continue to rise
Discuss - Foreclosures continue to rise
Foreclosures continue to rise
2008-12-12
Info/Broken? - How long before housing prices recover: Years or decades?
Discuss - How long before housing prices recover: Years or decades?
How long before housing prices recover: Years or decades?
2008-12-12
Info/Broken? - Developer seeks to cut wharf housing
Discuss - Developer seeks to cut wharf housing
Developer seeks to cut wharf housing
2008-12-11
Info/Broken? - VP of Kush Real Estate arrested in alleged Back Bay drug ring
Discuss - VP of Kush Real Estate arrested in alleged Back Bay drug ring
VP of Kush Real Estate arrested in alleged Back Bay drug ring
2008-12-11
Info/Broken? - Big tax hike could lead to massive layoffs
Discuss - Big tax hike could lead to massive layoffs
Big tax hike could lead to massive layoffs
2008-12-11
Info/Broken? - Massachusetts lender, Fremont Investment & Loan, required to seek court approval before foreclosures
Discuss - Massachusetts lender, Fremont Investment & Loan, required to seek court approval before foreclosures
Massachusetts lender, Fremont Investment & Loan, required to seek court approval before foreclosures
2008-12-10
Info/Broken? - NARcasting The Future: December 2008 - Yun "confident" government handouts will lift market
Discuss - NARcasting The Future: December 2008 - Yun "confident" government handouts will lift market
NARcasting The Future: December 2008 - Yun "confident" government handouts will lift market
2008-12-09
Info/Broken? - New foreclosure brochure outlines MA renters' rights in foreclosed buildings
Discuss - New foreclosure brochure outlines MA renters' rights in foreclosed buildings
New foreclosure brochure outlines MA renters' rights in foreclosed buildings
2008-12-09
Info/Broken? - Foreclosure help must wait, Frank says
Discuss - Foreclosure help must wait, Frank says
Foreclosure help must wait, Frank says
2008-12-09
Info/Broken? - Reworked mortgages not working - Even after help, over 50% of homeowners end up back in default
Discuss - Reworked mortgages not working - Even after help, over 50% of homeowners end up back in default
Reworked mortgages not working - Even after help, over 50% of homeowners end up back in default
2008-12-08
Info/Broken? - Brockton and local towns welcome foreclosure help
Discuss - Brockton and local towns welcome foreclosure help
Brockton and local towns welcome foreclosure help
2008-12-08
Info/Broken? - More job losses for Hub's financial sector - State Street to cut up to 1,800; Wellington also confirms layoffs
Discuss - More job losses for Hub's financial sector - State Street to cut up to 1,800; Wellington also confirms layoffs
More job losses for Hub's financial sector - State Street to cut up to 1,800; Wellington also confirms layoffs
2008-12-05
Info/Broken? - The Arlington Artifice: October 2008 - lowest sales since 1990, year-to-date median continues decline
Discuss - The Arlington Artifice: October 2008 - lowest sales since 1990, year-to-date median continues decline
The Arlington Artifice: October 2008 - lowest sales since 1990, year-to-date median continues decline
2008-12-05
Info/Broken? - Economist: Bay State landed in recession after U.S.
Discuss - Economist: Bay State landed in recession after U.S.
Economist: Bay State landed in recession after U.S.
2008-12-05
Info/Broken? - WSJ skewers Barney Frank's cognitive dissonance
Discuss - WSJ skewers Barney Frank's cognitive dissonance
WSJ skewers Barney Frank's cognitive dissonance
2008-12-05
Info/Broken? - Revision puts population estimate for Boston Proper over 600,000, buoyed by students and group housing
Discuss - Revision puts population estimate for Boston Proper over 600,000, buoyed by students and group housing
Revision puts population estimate for Boston Proper over 600,000, buoyed by students and group housing
2008-12-04
Info/Broken? - Case-Shiller Home Price Visualization Application
Discuss - Case-Shiller Home Price Visualization Application
Case-Shiller Home Price Visualization Application
2008-12-04
Info/Broken? - Beige Book finds deterioration in N.E.
Discuss - Beige Book finds deterioration in N.E.
Beige Book finds deterioration in N.E.
2008-12-03
Info/Broken? - Newton October sales down 28% YOY, nominal median price down 3.7% YOY
Discuss - Newton October sales down 28% YOY, nominal median price down 3.7% YOY
Newton October sales down 28% YOY, nominal median price down 3.7% YOY
2008-12-02
Info/Broken? - Patrick administration to distribute $43.4M from HUD to some Greater Boston neighborhoods to redevelop foreclosures
Discuss - Patrick administration to distribute $43.4M from HUD to some Greater Boston neighborhoods to redevelop foreclosures
Patrick administration to distribute $43.4M from HUD to some Greater Boston neighborhoods to redevelop foreclosures
2008-12-02
Info/Broken? - Upcoming REDC auction in Waltham on Dec 18, open houses Dec 6 and Dec 13
Discuss - Upcoming REDC auction in Waltham on Dec 18, open houses Dec 6 and Dec 13
Upcoming REDC auction in Waltham on Dec 18, open houses Dec 6 and Dec 13
2008-12-01
Info/Broken? - Middlesex North Registry of Deeds: Previously reported rise in Nov deeds was misleading, not a viable rise, nominal median price down 27.44%
Discuss - Middlesex North Registry of Deeds: Previously reported rise in Nov deeds was misleading, not a viable rise, nominal median price down 27.44%
Middlesex North Registry of Deeds: Previously reported rise in Nov deeds was misleading, not a viable rise, nominal median price down 27.44%
2008-12-01
Info/Broken? - Conforming loan rates for Greater Boston to revert to $417K on Jan 1st
Discuss - Conforming loan rates for Greater Boston to revert to $417K on Jan 1st
Conforming loan rates for Greater Boston to revert to $417K on Jan 1st

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