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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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2009-08-31
Info/Broken? - Natick collection condo builders file liens
Discuss - Natick collection condo builders file liens
Natick collection condo builders file liens
2009-08-31
Info/Broken? - Only about 10% of US home sales are the result of a normal selling process; Vast majority come from distressed and crisis-driven sellers
Discuss - Only about 10% of US home sales are the result of a normal selling process; Vast majority come from distressed and crisis-driven sellers
Only about 10% of US home sales are the result of a normal selling process; Vast majority come from distressed and crisis-driven sellers
2009-08-31
Info/Broken? - Mortgage deductions may change
Discuss - Mortgage deductions may change
Mortgage deductions may change
2009-08-28
Info/Broken? - S&P/Case-Shiller Boston Snapshot: Aug 25, 2009 - Spring bounce puts decline back on schedule
Discuss - S&P/Case-Shiller Boston Snapshot: Aug 25, 2009 - Spring bounce puts decline back on schedule
S&P/Case-Shiller Boston Snapshot: Aug 25, 2009 - Spring bounce puts decline back on schedule
2009-08-28
Info/Broken? - Boston Bubble Brief, Jul 2009: 3.24% real YOY decline in MA SFH median, spring bounce continues
Discuss - Boston Bubble Brief, Jul 2009: 3.24% real YOY decline in MA SFH median, spring bounce continues
Boston Bubble Brief, Jul 2009: 3.24% real YOY decline in MA SFH median, spring bounce continues
2009-08-27
Info/Broken? - National housing signaling likely bottom. Is bottom false? New bubble forming?
Discuss - National housing signaling likely bottom. Is bottom false? New bubble forming?
National housing signaling likely bottom. Is bottom false? New bubble forming?
2009-08-26
Info/Broken? - Ginnie Mae: Falling Home Prices = Does Not Compute
Discuss - Ginnie Mae: Falling Home Prices = Does Not Compute
Ginnie Mae: Falling Home Prices = Does Not Compute
2009-08-26
Info/Broken? - Warren Group: MA SFH nominal median down 4.7%
Discuss - Warren Group: MA SFH nominal median down 4.7%
Warren Group: MA SFH nominal median down 4.7%
2009-08-26
Info/Broken? - Crashachusetts Existing Home Sales and Prices: July 2009
Discuss - Crashachusetts Existing Home Sales and Prices: July 2009
Crashachusetts Existing Home Sales and Prices: July 2009
2009-08-25
Info/Broken? - Boston adds $720K in stimulus - Federal funds total $172.6M
Discuss - Boston adds $720K in stimulus - Federal funds total $172.6M
Boston adds $720K in stimulus - Federal funds total $172.6M
2009-08-24
Info/Broken? - Second Wave Of The Credit Crisis: Collapsing Commercial Real Estate
Discuss - Second Wave Of The Credit Crisis: Collapsing Commercial Real Estate
Second Wave Of The Credit Crisis: Collapsing Commercial Real Estate
2009-08-24
Info/Broken? - Redfin July Market Wrap-Up for Eastern Mass: Sales up 8% YOY, median down 4% YOY
Discuss - Redfin July Market Wrap-Up for Eastern Mass: Sales up 8% YOY, median down 4% YOY
Redfin July Market Wrap-Up for Eastern Mass: Sales up 8% YOY, median down 4% YOY
2009-08-24
Info/Broken? - MA vs. RI unemployment, July 2009: MA up to 8.8%, RI up to 12.6%
Discuss - MA vs. RI unemployment, July 2009: MA up to 8.8%, RI up to 12.6%
MA vs. RI unemployment, July 2009: MA up to 8.8%, RI up to 12.6%
2009-08-21
Info/Broken? - Massachusetts unemployment rate rises from 8.6 to 8.8%
Discuss - Massachusetts unemployment rate rises from 8.6 to 8.8%
Massachusetts unemployment rate rises from 8.6 to 8.8%
2009-08-21
Info/Broken? - Bay State blind spot on housing
Discuss - Bay State blind spot on housing
Bay State blind spot on housing
2009-08-20
Info/Broken? - Another wave of foreclosures could be coming to Massachusetts
Discuss - Another wave of foreclosures could be coming to Massachusetts
Another wave of foreclosures could be coming to Massachusetts
2009-08-20
Info/Broken? - State may absorb $30m on project built over Pike
Discuss - State may absorb $30m on project built over Pike
State may absorb $30m on project built over Pike
2009-08-19
Info/Broken? - Boston faces rental glut
Discuss - Boston faces rental glut
Boston faces rental glut
2009-08-19
Info/Broken? - Foreclosures up in July from June but down from '08 - However, foreclosure petitions spike
Discuss - Foreclosures up in July from June but down from '08 - However, foreclosure petitions spike
Foreclosures up in July from June but down from '08 - However, foreclosure petitions spike
2009-08-19
Info/Broken? - RE/MAX: Housing market is starting to stabilize
Discuss - RE/MAX: Housing market is starting to stabilize
RE/MAX: Housing market is starting to stabilize
2009-08-19
Info/Broken? - Litton Loan Servicing agrees to injunction giving MA right to review foreclosures against any of 1,100 customers
Discuss - Litton Loan Servicing agrees to injunction giving MA right to review foreclosures against any of 1,100 customers
Litton Loan Servicing agrees to injunction giving MA right to review foreclosures against any of 1,100 customers
2009-08-18
Info/Broken? - China reduces holdings in US debt by largest margin in nearly 9 years
Discuss - China reduces holdings in US debt by largest margin in nearly 9 years
China reduces holdings in US debt by largest margin in nearly 9 years
2009-08-18
Info/Broken? - Pike to pay for Columbus cleanup
Discuss - Pike to pay for Columbus cleanup
Pike to pay for Columbus cleanup
2009-08-18
Info/Broken? - Trends in Lowell Home Sales
Discuss - Trends in Lowell Home Sales
Trends in Lowell Home Sales
2009-08-17
Info/Broken? - Greenspan: Inflation to exceed 10% if Fed fails to shrink balance-sheet and raise rates
Discuss - Greenspan: Inflation to exceed 10% if Fed fails to shrink balance-sheet and raise rates
Greenspan: Inflation to exceed 10% if Fed fails to shrink balance-sheet and raise rates
2009-08-17
Info/Broken? - President shifts focus to renting, not owning - Using $4.25b to build affordable housing
Discuss - President shifts focus to renting, not owning - Using $4.25b to build affordable housing
President shifts focus to renting, not owning - Using $4.25b to build affordable housing
2009-08-17
Info/Broken? - Roofer: Nouvelle at Natick owner owes $326G
Discuss - Roofer: Nouvelle at Natick owner owes $326G
Roofer: Nouvelle at Natick owner owes $326G
2009-08-14
Info/Broken? - Mass. likely to lose seat in US House - Population shifting to West, South
Discuss - Mass. likely to lose seat in US House - Population shifting to West, South
Mass. likely to lose seat in US House - Population shifting to West, South
2009-08-14
Info/Broken? - U.S. Homeowners Cut Asking Prices $27.8 Billion; MA among highest share of reductions
Discuss - U.S. Homeowners Cut Asking Prices $27.8 Billion; MA among highest share of reductions
U.S. Homeowners Cut Asking Prices $27.8 Billion; MA among highest share of reductions
2009-08-13
Info/Broken? - Foreclosure crisis prompts proposed 'vacant property' law in Melrose
Discuss - Foreclosure crisis prompts proposed 'vacant property' law in Melrose
Foreclosure crisis prompts proposed 'vacant property' law in Melrose
2009-08-13
Info/Broken? - Commercial rental rates falling in Brookline as vacancies grow
Discuss - Commercial rental rates falling in Brookline as vacancies grow
Commercial rental rates falling in Brookline as vacancies grow
2009-08-12
Info/Broken? - New Bull, New Bubble, New Meltdown by 2012
Discuss - New Bull, New Bubble, New Meltdown by 2012
New Bull, New Bubble, New Meltdown by 2012
2009-08-12
Info/Broken? - Fed May Recognize Faster Growth, Keep Rates 'Exceptionally' Low
Discuss - Fed May Recognize Faster Growth, Keep Rates 'Exceptionally' Low
Fed May Recognize Faster Growth, Keep Rates 'Exceptionally' Low
2009-08-11
Info/Broken? - China, next bubble to burst?  Dramatically higher US interest rates one potential outcome.
Discuss - China, next bubble to burst?  Dramatically higher US interest rates one potential outcome.
China, next bubble to burst? Dramatically higher US interest rates one potential outcome.
2009-08-11
Info/Broken? - CEPR: price to rent ratio returning to normal level for low end of market in Boston, but equity prospects still negative
Discuss - CEPR: price to rent ratio returning to normal level for low end of market in Boston, but equity prospects still negative
CEPR: price to rent ratio returning to normal level for low end of market in Boston, but equity prospects still negative
2009-08-11
Info/Broken? - Brockton tops in foreclosures in the state
Discuss - Brockton tops in foreclosures in the state
Brockton tops in foreclosures in the state
2009-08-11
Info/Broken? - State tells lender (Taylor, Bean & Whitaker Mortgage Corp.) to cease and desist
Discuss - State tells lender (Taylor, Bean & Whitaker Mortgage Corp.) to cease and desist
State tells lender (Taylor, Bean & Whitaker Mortgage Corp.) to cease and desist
2009-08-10
Info/Broken? - U.S. Considers Remaking Mortgage Giants
Discuss - U.S. Considers Remaking Mortgage Giants
U.S. Considers Remaking Mortgage Giants
2009-08-10
Info/Broken? - Higher Education Bubble: The Next Bubble To Burst
Discuss - Higher Education Bubble: The Next Bubble To Burst
Higher Education Bubble: The Next Bubble To Burst
2009-08-10
Info/Broken? - Research on homeownership through 2030 projects "remarkable change," shift toward renting, no return to 2004/2005 levels of housing production
Discuss - Research on homeownership through 2030 projects "remarkable change," shift toward renting, no return to 2004/2005 levels of housing production
Research on homeownership through 2030 projects "remarkable change," shift toward renting, no return to 2004/2005 levels of housing production
2009-08-07
Info/Broken? - Housing growth in Mass. near lowest in US
Discuss - Housing growth in Mass. near lowest in US
Housing growth in Mass. near lowest in US
2009-08-06
Info/Broken? - Deutsche Bank: Half of U.S. Mortgages Underwater by 2011 - Next phase of decline to have "far greater impact on prime borrowers"
Discuss - Deutsche Bank: Half of U.S. Mortgages Underwater by 2011 - Next phase of decline to have "far greater impact on prime borrowers"
Deutsche Bank: Half of U.S. Mortgages Underwater by 2011 - Next phase of decline to have "far greater impact on prime borrowers"
2009-08-06
Info/Broken? - Obama's plan to help homeowners is struggling
Discuss - Obama's plan to help homeowners is struggling
Obama's plan to help homeowners is struggling
2009-08-05
Info/Broken? - Holders of delinquent loans under fire
Discuss - Holders of delinquent loans under fire
Holders of delinquent loans under fire
2009-08-05
Info/Broken? - Low-cost housing law targeted
Discuss - Low-cost housing law targeted
Low-cost housing law targeted
2009-08-05
Info/Broken? - GGP takes $55.9M impairment on Nouvelle at Natick
Discuss - GGP takes $55.9M impairment on Nouvelle at Natick
GGP takes $55.9M impairment on Nouvelle at Natick
2009-08-04
Info/Broken? - Commercial real estate prices slide
Discuss - Commercial real estate prices slide
Commercial real estate prices slide
2009-08-04
Info/Broken? - Unsold homes in Northeast being shrink-wrapped (literally)
Discuss - Unsold homes in Northeast being shrink-wrapped (literally)
Unsold homes in Northeast being shrink-wrapped (literally)
2009-08-04
Info/Broken? - Loan losses still battering Citizens' bottom line - FDIC report also shows bank preparing for more problems
Discuss - Loan losses still battering Citizens' bottom line - FDIC report also shows bank preparing for more problems
Loan losses still battering Citizens' bottom line - FDIC report also shows bank preparing for more problems
2009-08-03
Info/Broken? - Middlesex North Registry of Deeds: No sign of rebound
Discuss - Middlesex North Registry of Deeds: No sign of rebound
Middlesex North Registry of Deeds: No sign of rebound

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