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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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2010-06-30
Info/Broken? - House votes to extend tax credit closing deadline 3 months
Discuss - House votes to extend tax credit closing deadline 3 months
House votes to extend tax credit closing deadline 3 months
2010-06-29
Info/Broken? - Boston real estate agent arrested by FBI, accused of being Russian spy
Discuss - Boston real estate agent arrested by FBI, accused of being Russian spy
Boston real estate agent arrested by FBI, accused of being Russian spy
2010-06-29
Info/Broken? - Fred Thompson Wants Poor Old People to Buy Sleazy, Gov't-Backed Reverse Mortgages
Discuss - Fred Thompson Wants Poor Old People to Buy Sleazy, Gov't-Backed Reverse Mortgages
Fred Thompson Wants Poor Old People to Buy Sleazy, Gov't-Backed Reverse Mortgages
2010-06-29
Info/Broken? - Middlesex North Registry of Deeds: Preview of end-of-June stats
Discuss - Middlesex North Registry of Deeds: Preview of end-of-June stats
Middlesex North Registry of Deeds: Preview of end-of-June stats
2010-06-28
Info/Broken? - Double-dip drama: Feeble figures fuel fears (US)
Discuss - Double-dip drama: Feeble figures fuel fears (US)
Double-dip drama: Feeble figures fuel fears (US)
2010-06-28
Info/Broken? - Boston Program Helps Owners Get Foreclosed Homes Back
Discuss - Boston Program Helps Owners Get Foreclosed Homes Back
Boston Program Helps Owners Get Foreclosed Homes Back
2010-06-25
Info/Broken? - Boston Bubble Wrap: May 2010
Discuss - Boston Bubble Wrap: May 2010
Boston Bubble Wrap: May 2010
2010-06-25
Info/Broken? - Mass. legislature approves $28B budget
Discuss - Mass. legislature approves $28B budget
Mass. legislature approves $28B budget
2010-06-24
Info/Broken? - Homeowners who abandon loans face Fannie Mae penalty - Seven-year ban would punish such borrowers
Discuss - Homeowners who abandon loans face Fannie Mae penalty - Seven-year ban would punish such borrowers
Homeowners who abandon loans face Fannie Mae penalty - Seven-year ban would punish such borrowers
2010-06-24
Info/Broken? - Do the math on overrides
Discuss - Do the math on overrides
Do the math on overrides
2010-06-24
Info/Broken? - In scam, prisoners cash in on tax break
Discuss - In scam, prisoners cash in on tax break
In scam, prisoners cash in on tax break
2010-06-24
Info/Broken? - US new-home sales crash in May as tax aid ends
Discuss - US new-home sales crash in May as tax aid ends
US new-home sales crash in May as tax aid ends
2010-06-23
Info/Broken? - Redfin CEO: "Entry-level demand has been sinking like a rock.  July is going to be very soft."
Discuss - Redfin CEO: "Entry-level demand has been sinking like a rock.  July is going to be very soft."
Redfin CEO: "Entry-level demand has been sinking like a rock. July is going to be very soft."
2010-06-23
Info/Broken? - Fed to keep rates low to support weak recovery
Discuss - Fed to keep rates low to support weak recovery
Fed to keep rates low to support weak recovery
2010-06-23
Info/Broken? - Somerville budget calls for 67 job cuts
Discuss - Somerville budget calls for 67 job cuts
Somerville budget calls for 67 job cuts
2010-06-23
Info/Broken? - Medford mayor plans more layoffs
Discuss - Medford mayor plans more layoffs
Medford mayor plans more layoffs
2010-06-22
Info/Broken? - MAR: May 2010 MA SFH median up 4% nominally over May 2009
Discuss - MAR: May 2010 MA SFH median up 4% nominally over May 2009
MAR: May 2010 MA SFH median up 4% nominally over May 2009
2010-06-22
Info/Broken? - Warren Group: May 2010 MA SFH median up 2.6% nominally over May 2009
Discuss - Warren Group: May 2010 MA SFH median up 2.6% nominally over May 2009
Warren Group: May 2010 MA SFH median up 2.6% nominally over May 2009
2010-06-22
Info/Broken? - Barney Frank lines up loan help for jobless homeowners
Discuss - Barney Frank lines up loan help for jobless homeowners
Barney Frank lines up loan help for jobless homeowners
2010-06-21
Info/Broken? - Global markets fear US Treasuries sell-off as China ends currency freeze
Discuss - Global markets fear US Treasuries sell-off as China ends currency freeze
Global markets fear US Treasuries sell-off as China ends currency freeze
2010-06-21
Info/Broken? - Former MAR pres Gary Rogers on news of 31% volume increase in May: "There's no question the market has stabilized", claims tax credit not primary factor
Discuss - Former MAR pres Gary Rogers on news of 31% volume increase in May: "There's no question the market has stabilized", claims tax credit not primary factor
Former MAR pres Gary Rogers on news of 31% volume increase in May: "There's no question the market has stabilized", claims tax credit not primary factor
2010-06-18
Info/Broken? - Migration map
Discuss - Migration map
Migration map
2010-06-18
Info/Broken? - Speculation on Green Line extension in Somerville
Discuss - Speculation on Green Line extension in Somerville
Speculation on Green Line extension in Somerville
2010-06-17
Info/Broken? - MA foreclosed homes rise by 120%
Discuss - MA foreclosed homes rise by 120%
MA foreclosed homes rise by 120%
2010-06-17
Info/Broken? - Fannie, Freddie to delist their shares
Discuss - Fannie, Freddie to delist their shares
Fannie, Freddie to delist their shares
2010-06-16
Info/Broken? - Mass. foreclosure petitions drop 9%
Discuss - Mass. foreclosure petitions drop 9%
Mass. foreclosure petitions drop 9%
2010-06-16
Info/Broken? - Builders pessimistic on recovery - Confidence dwindles as incentives end
Discuss - Builders pessimistic on recovery - Confidence dwindles as incentives end
Builders pessimistic on recovery - Confidence dwindles as incentives end
2010-06-16
Info/Broken? - Elliott Pollack: Prices for some areas to spike upward "like a hockey stick"
Discuss - Elliott Pollack: Prices for some areas to spike upward "like a hockey stick"
Elliott Pollack: Prices for some areas to spike upward "like a hockey stick"
2010-06-15
Info/Broken? - MAR index of local Realtor sentiment plunges from 51.76 to 39.49, contradicting recent MAR comments that members expect price increases to continue
Discuss - MAR index of local Realtor sentiment plunges from 51.76 to 39.49, contradicting recent MAR comments that members expect price increases to continue
MAR index of local Realtor sentiment plunges from 51.76 to 39.49, contradicting recent MAR comments that members expect price increases to continue
2010-06-14
Info/Broken? - Mass. broker: Mortgages tougher to get
Discuss - Mass. broker: Mortgages tougher to get
Mass. broker: Mortgages tougher to get
2010-06-14
Info/Broken? - Housing still sluggish - Report: Problems persist
Discuss - Housing still sluggish - Report: Problems persist
Housing still sluggish - Report: Problems persist
2010-06-14
Info/Broken? - Mass. tops US in retail revival
Discuss - Mass. tops US in retail revival
Mass. tops US in retail revival
2010-06-11
Info/Broken? - Study: Housing (still) out of reach in Mass.
Discuss - Study: Housing (still) out of reach in Mass.
Study: Housing (still) out of reach in Mass.
2010-06-11
Info/Broken? - Mortgage fees could rise
Discuss - Mortgage fees could rise
Mortgage fees could rise
2010-06-11
Info/Broken? - 30-year mortgages near record low
Discuss - 30-year mortgages near record low
30-year mortgages near record low
2010-06-10
Info/Broken? - MBA: Mortgage Purchase Applications decline 35%
Discuss - MBA: Mortgage Purchase Applications decline 35%
MBA: Mortgage Purchase Applications decline 35%
2010-06-10
Info/Broken? - Fed's 'Beige Book' sees modest growth in Boston, U.S.
Discuss - Fed's 'Beige Book' sees modest growth in Boston, U.S.
Fed's 'Beige Book' sees modest growth in Boston, U.S.
2010-06-09
Info/Broken? - Boston #8 in Forbes' Most Innovative US Cities
Discuss - Boston #8 in Forbes' Most Innovative US Cities
Boston #8 in Forbes' Most Innovative US Cities
2010-06-08
Info/Broken? - Citigroup poll finds relative optimism in N.E.
Discuss - Citigroup poll finds relative optimism in N.E.
Citigroup poll finds relative optimism in N.E.
2010-06-08
Info/Broken? - Phony foreclosure aid is targeted
Discuss - Phony foreclosure aid is targeted
Phony foreclosure aid is targeted
2010-06-07
Info/Broken? - Number of sellers projected to exceed buyers in MA starting sometime between 2011 - 2015
Discuss - Number of sellers projected to exceed buyers in MA starting sometime between 2011 - 2015
Number of sellers projected to exceed buyers in MA starting sometime between 2011 - 2015
2010-06-04
Info/Broken? - MAR president Kevin Sears: "Even with the homebuyer tax credit expiring at the end of April, members feel prices will continue to move up"
Discuss - MAR president Kevin Sears: "Even with the homebuyer tax credit expiring at the end of April, members feel prices will continue to move up"
MAR president Kevin Sears: "Even with the homebuyer tax credit expiring at the end of April, members feel prices will continue to move up"
2010-06-03
Info/Broken? - Pending home sales drop as tax credit ends
Discuss - Pending home sales drop as tax credit ends
Pending home sales drop as tax credit ends
2010-06-03
Info/Broken? - Brookline man convicted in mortgage fraud scheme
Discuss - Brookline man convicted in mortgage fraud scheme
Brookline man convicted in mortgage fraud scheme
2010-06-02
Info/Broken? - 10 Best Cities for the Next Decade
Discuss - 10 Best Cities for the Next Decade
10 Best Cities for the Next Decade
2010-06-02
Info/Broken? - Survey Finds Nearly Half of Americans Can't Afford "Large" Down Payments on Mortgages
Discuss - Survey Finds Nearly Half of Americans Can't Afford "Large" Down Payments on Mortgages
Survey Finds Nearly Half of Americans Can't Afford "Large" Down Payments on Mortgages
2010-06-02
Info/Broken? - Confidence up in Mass., index shows
Discuss - Confidence up in Mass., index shows
Confidence up in Mass., index shows
2010-06-01
Info/Broken? - Strapped towns tax Catholic properties
Discuss - Strapped towns tax Catholic properties
Strapped towns tax Catholic properties

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2012 24 23 27 19 16 6 9 11 7 7 8 13
2011 38 46 45 44 38 45 41 33 21 22 26 31
2010 51 40 63 63 42 48 45 42 40 52 36 43
2009 52 52 59 63 56 37 53 50 52 68 56 54
2008 76 79 77 71 69 51 56 49 66 61 42 48
2007 63 36 85 60 55 45 62 59 52 76 60 60
2006 24 19 40 46 59 45 34 42 44 50 57 49
2005               41 28 18 17 23

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