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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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<< << << Show Recent Links
2010-02-26
Info/Broken? - S&P/Case-Shiller Boston Snapshot: Feb 23, 2010 - Futures prices through 2014 Q3
Discuss - S&P/Case-Shiller Boston Snapshot: Feb 23, 2010 - Futures prices through 2014 Q3
S&P/Case-Shiller Boston Snapshot: Feb 23, 2010 - Futures prices through 2014 Q3
2010-02-26
Info/Broken? - Boston Bubble Brief, Jan 2010: MA SFH median real YOY increase of 10.70% exceeds all increases on record
Discuss - Boston Bubble Brief, Jan 2010: MA SFH median real YOY increase of 10.70% exceeds all increases on record
Boston Bubble Brief, Jan 2010: MA SFH median real YOY increase of 10.70% exceeds all increases on record
2010-02-26
Info/Broken? - Home sales down 11% in Northeast, but up 11% in Mass?
Discuss - Home sales down 11% in Northeast, but up 11% in Mass?
Home sales down 11% in Northeast, but up 11% in Mass?
2010-02-26
Info/Broken? - Obama may ban foreclosures without review
Discuss - Obama may ban foreclosures without review
Obama may ban foreclosures without review
2010-02-26
Info/Broken? - Freddie Mac to stop buying interest-only mortgages... in Sep 2010
Discuss - Freddie Mac to stop buying interest-only mortgages... in Sep 2010
Freddie Mac to stop buying interest-only mortgages... in Sep 2010
2010-02-26
Info/Broken? - When did the housing bubble begin?
Discuss - When did the housing bubble begin?
When did the housing bubble begin?
2010-02-25
Info/Broken? - Joel Kotkin: Boston, et al, overbuilt and over-expensive - America's future lies in places like Texas
Discuss - Joel Kotkin: Boston, et al, overbuilt and over-expensive - America's future lies in places like Texas
Joel Kotkin: Boston, et al, overbuilt and over-expensive - America's future lies in places like Texas
2010-02-25
Info/Broken? - Sales of new homes fall to record low with Northeast leading declines at 35%
Discuss - Sales of new homes fall to record low with Northeast leading declines at 35%
Sales of new homes fall to record low with Northeast leading declines at 35%
2010-02-24
Info/Broken? - Newton, MA ranked one of the highest-income cities in U.S.
Discuss - Newton, MA ranked one of the highest-income cities in U.S.
Newton, MA ranked one of the highest-income cities in U.S.
2010-02-24
Info/Broken? - Fed's next move to hit housing, mortgage rates
Discuss - Fed's next move to hit housing, mortgage rates
Fed's next move to hit housing, mortgage rates
2010-02-23
Info/Broken? - Mortgage Crunch Coming
Discuss - Mortgage Crunch Coming
Mortgage Crunch Coming
2010-02-23
Info/Broken? - Jan 2010 MA SFH median vs Jan 2009: MAR up 14.1% (nominal), Warren Group up 9.6% (nominal)
Discuss - Jan 2010 MA SFH median vs Jan 2009: MAR up 14.1% (nominal), Warren Group up 9.6% (nominal)
Jan 2010 MA SFH median vs Jan 2009: MAR up 14.1% (nominal), Warren Group up 9.6% (nominal)
2010-02-22
Info/Broken? - Federal government responsible for up to 95% of mortgages in 2009 Q4
Discuss - Federal government responsible for up to 95% of mortgages in 2009 Q4
Federal government responsible for up to 95% of mortgages in 2009 Q4
2010-02-19
Info/Broken? - Mortgage crisis spreads in Greater Lowell suburbs
Discuss - Mortgage crisis spreads in Greater Lowell suburbs
Mortgage crisis spreads in Greater Lowell suburbs
2010-02-19
Info/Broken? - Fed announces surprise rate hike
Discuss - Fed announces surprise rate hike
Fed announces surprise rate hike
2010-02-18
Info/Broken? - City reaps benefit of federal job bucks
Discuss - City reaps benefit of federal job bucks
City reaps benefit of federal job bucks
2010-02-17
Info/Broken? - Takeover bid targets owner of Nouvelle at Natick
Discuss - Takeover bid targets owner of Nouvelle at Natick
Takeover bid targets owner of Nouvelle at Natick
2010-02-16
Info/Broken? - Massachusetts Association of Realtors(R) debuts index to track local expectations
Discuss - Massachusetts Association of Realtors(R) debuts index to track local expectations
Massachusetts Association of Realtors(R) debuts index to track local expectations
2010-02-15
Info/Broken? - Nantucket sees home foreclosures soar in '09
Discuss - Nantucket sees home foreclosures soar in '09
Nantucket sees home foreclosures soar in '09
2010-02-12
Info/Broken? - Bank of America forecloses on house that MA couple had paid cash for
Discuss - Bank of America forecloses on house that MA couple had paid cash for
Bank of America forecloses on house that MA couple had paid cash for
2010-02-12
Info/Broken? - Boston Fed confronting conventional wisdom of widespread home ownership
Discuss - Boston Fed confronting conventional wisdom of widespread home ownership
Boston Fed confronting conventional wisdom of widespread home ownership
2010-02-11
Info/Broken? - First time buyers in MA jumped to 52% in 2009 from 45% in 2008
Discuss - First time buyers in MA jumped to 52% in 2009 from 45% in 2008
First time buyers in MA jumped to 52% in 2009 from 45% in 2008
2010-02-11
Info/Broken? - CalPERS project in Boston on verge of going bust
Discuss - CalPERS project in Boston on verge of going bust
CalPERS project in Boston on verge of going bust
2010-02-11
Info/Broken? - Pair of Lynn homes targeted for wrecking ball
Discuss - Pair of Lynn homes targeted for wrecking ball
Pair of Lynn homes targeted for wrecking ball
2010-02-10
Info/Broken? - Zillow: Boston sliding into new housing slump
Discuss - Zillow: Boston sliding into new housing slump
Zillow: Boston sliding into new housing slump
2010-02-10
Info/Broken? - U.S. Science and Engineering Stats Tell a "Worrisome Story"
Discuss - U.S. Science and Engineering Stats Tell a "Worrisome Story"
U.S. Science and Engineering Stats Tell a "Worrisome Story"
2010-02-09
Info/Broken? - No Exit in Sight for U.S. As Fannie, Freddie Flail
Discuss - No Exit in Sight for U.S. As Fannie, Freddie Flail
No Exit in Sight for U.S. As Fannie, Freddie Flail
2010-02-08
Info/Broken? - Prof. Case: Reflections on the Housing Market
Discuss - Prof. Case: Reflections on the Housing Market
Prof. Case: Reflections on the Housing Market
2010-02-05
Info/Broken? - Local banks ordered to shore up finances
Discuss - Local banks ordered to shore up finances
Local banks ordered to shore up finances
2010-02-05
Info/Broken? - Bay State homeowners' equity among highest in nation, although some ZIP codes are struggling
Discuss - Bay State homeowners' equity among highest in nation, although some ZIP codes are struggling
Bay State homeowners' equity among highest in nation, although some ZIP codes are struggling
2010-02-04
Info/Broken? - The dangers of strategic default
Discuss - The dangers of strategic default
The dangers of strategic default
2010-02-03
Info/Broken? - Barney Frank: Friend or Foe to Fannie and Freddie?
Discuss - Barney Frank: Friend or Foe to Fannie and Freddie?
Barney Frank: Friend or Foe to Fannie and Freddie?
2010-02-03
Info/Broken? - Middlesex North Registry of Deeds: Orders of notice in Jan up 546% YOY, 66% MOM
Discuss - Middlesex North Registry of Deeds: Orders of notice in Jan up 546% YOY, 66% MOM
Middlesex North Registry of Deeds: Orders of notice in Jan up 546% YOY, 66% MOM
2010-02-03
Info/Broken? - Developer resorts to auction to sell single-family house on Beacon Hill
Discuss - Developer resorts to auction to sell single-family house on Beacon Hill
Developer resorts to auction to sell single-family house on Beacon Hill
2010-02-03
Info/Broken? - Study finds use of food pantries soaring in Mass. - Need for help rose 23%
Discuss - Study finds use of food pantries soaring in Mass. - Need for help rose 23%
Study finds use of food pantries soaring in Mass. - Need for help rose 23%
2010-02-02
Info/Broken? - Rising FHA default rate foreshadows a crush of foreclosures
Discuss - Rising FHA default rate foreshadows a crush of foreclosures
Rising FHA default rate foreshadows a crush of foreclosures
2010-02-02
Info/Broken? - FHA to encourage flipping
Discuss - FHA to encourage flipping
FHA to encourage flipping
2010-02-02
Info/Broken? - Pending home sales in Mass. rose for 7th month
Discuss - Pending home sales in Mass. rose for 7th month
Pending home sales in Mass. rose for 7th month
2010-02-01
Info/Broken? - Frank leads push to disband mortgage corporations
Discuss - Frank leads push to disband mortgage corporations
Frank leads push to disband mortgage corporations
2010-02-01
Info/Broken? - State's home sales have first yearly rise since '04
Discuss - State's home sales have first yearly rise since '04
State's home sales have first yearly rise since '04

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