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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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2010-01-29
Info/Broken? - Mass. economy shrinks again
Discuss - Mass. economy shrinks again
Mass. economy shrinks again
2010-01-29
Info/Broken? - Boston Bubble Brief, Dec 2009: First real YOY increase in MA SFH median since Aug 2005
Discuss - Boston Bubble Brief, Dec 2009: First real YOY increase in MA SFH median since Aug 2005
Boston Bubble Brief, Dec 2009: First real YOY increase in MA SFH median since Aug 2005
2010-01-29
Info/Broken? - Shopping for a House? Consider Waiting 9 Months
Discuss - Shopping for a House? Consider Waiting 9 Months
Shopping for a House? Consider Waiting 9 Months
2010-01-29
Info/Broken? - Needham attorney disbarred in mortgage payment case
Discuss - Needham attorney disbarred in mortgage payment case
Needham attorney disbarred in mortgage payment case
2010-01-28
Info/Broken? - Crashachusetts Existing Home Sales and Prices: December 2009
Discuss - Crashachusetts Existing Home Sales and Prices: December 2009
Crashachusetts Existing Home Sales and Prices: December 2009
2010-01-28
Info/Broken? - Yes, Virginia, there is still a housing bubble
Discuss - Yes, Virginia, there is still a housing bubble
Yes, Virginia, there is still a housing bubble
2010-01-28
Info/Broken? - CNNMoney calls Boston homes 16.30% undervalued at a median of $316K
Discuss - CNNMoney calls Boston homes 16.30% undervalued at a median of $316K
CNNMoney calls Boston homes 16.30% undervalued at a median of $316K
2010-01-27
Info/Broken? - Brockton area foreclosures expected to rise this year after dropping in 2009
Discuss - Brockton area foreclosures expected to rise this year after dropping in 2009
Brockton area foreclosures expected to rise this year after dropping in 2009
2010-01-27
Info/Broken? - Fed May Take Chance End to Debt Purchases Won't Hurt Housing
Discuss - Fed May Take Chance End to Debt Purchases Won't Hurt Housing
Fed May Take Chance End to Debt Purchases Won't Hurt Housing
2010-01-26
Info/Broken? - US home prices: First drop in 7 months
Discuss - US home prices: First drop in 7 months
US home prices: First drop in 7 months
2010-01-26
Info/Broken? - MA SFH Dec 2009 vs 2008 - Warren Group: median up 10.4% (nominal); MAR: median up 10.9% (nominal)
Discuss - MA SFH Dec 2009 vs 2008 - Warren Group: median up 10.4% (nominal); MAR: median up 10.9% (nominal)
MA SFH Dec 2009 vs 2008 - Warren Group: median up 10.4% (nominal); MAR: median up 10.9% (nominal)
2010-01-25
Info/Broken? - The housing market - Still in the cellar - Small signs of recovery cannot shift the general gloom
Discuss - The housing market - Still in the cellar - Small signs of recovery cannot shift the general gloom
The housing market - Still in the cellar - Small signs of recovery cannot shift the general gloom
2010-01-25
Info/Broken? - Sales of existing U.S. homes decreased 17% in December
Discuss - Sales of existing U.S. homes decreased 17% in December
Sales of existing U.S. homes decreased 17% in December
2010-01-25
Info/Broken? - Lost decade for Bay State jobs - State ends decade with less jobs than beginning for 1st time since WWII
Discuss - Lost decade for Bay State jobs - State ends decade with less jobs than beginning for 1st time since WWII
Lost decade for Bay State jobs - State ends decade with less jobs than beginning for 1st time since WWII
2010-01-25
Info/Broken? - Unemployment in MA vs. RI December 2009
Discuss - Unemployment in MA vs. RI December 2009
Unemployment in MA vs. RI December 2009
2010-01-22
Info/Broken? - Altucher: notion that buying a home is a ticket to financial security is a "scam"
Discuss - Altucher: notion that buying a home is a ticket to financial security is a "scam"
Altucher: notion that buying a home is a ticket to financial security is a "scam"
2010-01-22
Info/Broken? - Frank to Recommend Replacing Fannie Mae, Freddie Mac
Discuss - Frank to Recommend Replacing Fannie Mae, Freddie Mac
Frank to Recommend Replacing Fannie Mae, Freddie Mac
2010-01-22
Info/Broken? - Long run Dutch house price index shows flat real prices from 1628 on
Discuss - Long run Dutch house price index shows flat real prices from 1628 on
Long run Dutch house price index shows flat real prices from 1628 on
2010-01-21
Info/Broken? - Mass. unemployment rate rises to 9.4 percent
Discuss - Mass. unemployment rate rises to 9.4 percent
Mass. unemployment rate rises to 9.4 percent
2010-01-21
Info/Broken? - Fed faces trap as it frets over withdrawal from QE
Discuss - Fed faces trap as it frets over withdrawal from QE
Fed faces trap as it frets over withdrawal from QE
2010-01-20
Info/Broken? - FHA Sets Tighter Lending Requirements
Discuss - FHA Sets Tighter Lending Requirements
FHA Sets Tighter Lending Requirements
2010-01-20
Info/Broken? - Housing Starts in U.S. Decrease, Permits Jump 11%
Discuss - Housing Starts in U.S. Decrease, Permits Jump 11%
Housing Starts in U.S. Decrease, Permits Jump 11%
2010-01-19
Info/Broken? - Blue-collar workers bear brunt of decline - Ratio of job losses at depression level
Discuss - Blue-collar workers bear brunt of decline - Ratio of job losses at depression level
Blue-collar workers bear brunt of decline - Ratio of job losses at depression level
2010-01-18
Info/Broken? - Beijing's Bubblicious Prices: 27:1 Apartment to Average Income Value
Discuss - Beijing's Bubblicious Prices: 27:1 Apartment to Average Income Value
Beijing's Bubblicious Prices: 27:1 Apartment to Average Income Value
2010-01-18
Info/Broken? - Mass. Market: State legislature will be asked to tackle controversial home appraisal system
Discuss - Mass. Market: State legislature will be asked to tackle controversial home appraisal system
Mass. Market: State legislature will be asked to tackle controversial home appraisal system
2010-01-18
Info/Broken? - Did Foreigners Cause America's Financial Crisis?
Discuss - Did Foreigners Cause America's Financial Crisis?
Did Foreigners Cause America's Financial Crisis?
2010-01-18
Info/Broken? - Trust No Bankers - The financial industry has always been wrong about the dangers of regulation
Discuss - Trust No Bankers - The financial industry has always been wrong about the dangers of regulation
Trust No Bankers - The financial industry has always been wrong about the dangers of regulation
2010-01-15
Info/Broken? - Strengthening U.S. Recovery May Intensify Fed Debate on Exit
Discuss - Strengthening U.S. Recovery May Intensify Fed Debate on Exit
Strengthening U.S. Recovery May Intensify Fed Debate on Exit
2010-01-15
Info/Broken? - Towns step up efforts to chase property tax delinquents
Discuss - Towns step up efforts to chase property tax delinquents
Towns step up efforts to chase property tax delinquents
2010-01-14
Info/Broken? - Estimated GSE Losses = $448 Billion
Discuss - Estimated GSE Losses = $448 Billion
Estimated GSE Losses = $448 Billion
2010-01-14
Info/Broken? - Foreclosures May Rise to Record 3 Million U.S. Homes This Year
Discuss - Foreclosures May Rise to Record 3 Million U.S. Homes This Year
Foreclosures May Rise to Record 3 Million U.S. Homes This Year
2010-01-14
Info/Broken? - 2009 US foreclosures hit record high
Discuss - 2009 US foreclosures hit record high
2009 US foreclosures hit record high
2010-01-13
Info/Broken? - Federal Reserve: Mass. economy improving
Discuss - Federal Reserve: Mass. economy improving
Federal Reserve: Mass. economy improving
2010-01-13
Info/Broken? - Fed's Record Profit Does Not Change Anything. US Still "Doomed" says Marc Faber
Discuss - Fed's Record Profit Does Not Change Anything. US Still "Doomed" says Marc Faber
Fed's Record Profit Does Not Change Anything. US Still "Doomed" says Marc Faber
2010-01-13
Info/Broken? - Survey: housing prices in Boston in 2010 and beyond?
Discuss - Survey: housing prices in Boston in 2010 and beyond?
Survey: housing prices in Boston in 2010 and beyond?
2010-01-13
Info/Broken? - Massachusetts schools brace for deep cuts
Discuss - Massachusetts schools brace for deep cuts
Massachusetts schools brace for deep cuts
2010-01-12
Info/Broken? - Fed split over rate impact of mortgage purchases
Discuss - Fed split over rate impact of mortgage purchases
Fed split over rate impact of mortgage purchases
2010-01-11
Info/Broken? - Hoenig Says Fed Should End Mortgage Program in March
Discuss - Hoenig Says Fed Should End Mortgage Program in March
Hoenig Says Fed Should End Mortgage Program in March
2010-01-11
Info/Broken? - Putting their faith into the foreclosure fight - Religious groups lobby government, lenders
Discuss - Putting their faith into the foreclosure fight - Religious groups lobby government, lenders
Putting their faith into the foreclosure fight - Religious groups lobby government, lenders
2010-01-11
Info/Broken? - Does CRE foreshadow fate of residential real estate once government life support stops increasing?
Discuss - Does CRE foreshadow fate of residential real estate once government life support stops increasing?
Does CRE foreshadow fate of residential real estate once government life support stops increasing?
2010-01-08
Info/Broken? - Youth populations drop 1.2M in Northeast, Midwest
Discuss - Youth populations drop 1.2M in Northeast, Midwest
Youth populations drop 1.2M in Northeast, Midwest
2010-01-08
Info/Broken? - Six arraigned in mortgage fraud scheme
Discuss - Six arraigned in mortgage fraud scheme
Six arraigned in mortgage fraud scheme
2010-01-07
Info/Broken? - US jobs may rebound in 2010, but MA projected to continue losing
Discuss - US jobs may rebound in 2010, but MA projected to continue losing
US jobs may rebound in 2010, but MA projected to continue losing
2010-01-06
Info/Broken? - Discussion: Housing market in 2010
Discuss - Discussion: Housing market in 2010
Discussion: Housing market in 2010
2010-01-06
Info/Broken? - Stealthy Christmas Eve unlimited credit extension for GSEs seen as backdoor bailout
Discuss - Stealthy Christmas Eve unlimited credit extension for GSEs seen as backdoor bailout
Stealthy Christmas Eve unlimited credit extension for GSEs seen as backdoor bailout
2010-01-06
Info/Broken? - Expired listings surge across Massachusetts as 2009 ends
Discuss - Expired listings surge across Massachusetts as 2009 ends
Expired listings surge across Massachusetts as 2009 ends
2010-01-06
Info/Broken? - MAR reports increase in housing sales in December
Discuss - MAR reports increase in housing sales in December
MAR reports increase in housing sales in December
2010-01-06
Info/Broken? - Massachusetts could lose congressman in population count, possibly from Western Mass
Discuss - Massachusetts could lose congressman in population count, possibly from Western Mass
Massachusetts could lose congressman in population count, possibly from Western Mass
2010-01-05
Info/Broken? - Pending Sales Dropped 26% in the Northeast
Discuss - Pending Sales Dropped 26% in the Northeast
Pending Sales Dropped 26% in the Northeast
2010-01-04
Info/Broken? - U.S. Loan Effort Is Seen as Adding to Housing Woes
Discuss - U.S. Loan Effort Is Seen as Adding to Housing Woes
U.S. Loan Effort Is Seen as Adding to Housing Woes
2010-01-04
Info/Broken? - Calculated Risk: Government Housing Support Update
Discuss - Calculated Risk: Government Housing Support Update
Calculated Risk: Government Housing Support Update

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2010 51 40 63 63 42 48 45 42 40 52 36 43
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2007 63 36 85 60 55 45 62 59 52 76 60 60
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2005               41 28 18 17 23

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