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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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2010-08-31
Info/Broken? - MA foreclosures spike ~80% YOY in July - Vincent M. Valvo: increasing foreclosure activity likely for next few months
Discuss - MA foreclosures spike ~80% YOY in July - Vincent M. Valvo: increasing foreclosure activity likely for next few months
MA foreclosures spike ~80% YOY in July - Vincent M. Valvo: increasing foreclosure activity likely for next few months
2010-08-31
Info/Broken? - MA months of supply jumps from 6.4 to 9.9
Discuss - MA months of supply jumps from 6.4 to 9.9
MA months of supply jumps from 6.4 to 9.9
2010-08-30
Info/Broken? - W Boston faces foreclosure
Discuss - W Boston faces foreclosure
W Boston faces foreclosure
2010-08-27
Info/Broken? - Boston Bubble Wrap: July 2010
Discuss - Boston Bubble Wrap: July 2010
Boston Bubble Wrap: July 2010
2010-08-27
Info/Broken? - Mass. misery on the rise
Discuss - Mass. misery on the rise
Mass. misery on the rise
2010-08-26
Info/Broken? - Boston buyers still wildly irrational, expect 12% yearly appreciation over next decade
Discuss - Boston buyers still wildly irrational, expect 12% yearly appreciation over next decade
Boston buyers still wildly irrational, expect 12% yearly appreciation over next decade
2010-08-25
Info/Broken? - US July new home sales fall to slowest pace on record
Discuss - US July new home sales fall to slowest pace on record
US July new home sales fall to slowest pace on record
2010-08-24
Info/Broken? - MA SFH Jul 2010 vs Jul 2009 - MAR: nominal median up 7.4%, volume down 28%; Warren Group: nominal median up 3%, volume down 26%
Discuss - MA SFH Jul 2010 vs Jul 2009 - MAR: nominal median up 7.4%, volume down 28%; Warren Group: nominal median up 3%, volume down 26%
MA SFH Jul 2010 vs Jul 2009 - MAR: nominal median up 7.4%, volume down 28%; Warren Group: nominal median up 3%, volume down 26%
2010-08-23
Info/Broken? - Housing Fades as a Means to Build Wealth, Analysts Say
Discuss - Housing Fades as a Means to Build Wealth, Analysts Say
Housing Fades as a Means to Build Wealth, Analysts Say
2010-08-23
Info/Broken? - Economists blew the bubble
Discuss - Economists blew the bubble
Economists blew the bubble
2010-08-23
Info/Broken? - Refinancing boom no blast for Mass. banks
Discuss - Refinancing boom no blast for Mass. banks
Refinancing boom no blast for Mass. banks
2010-08-20
Info/Broken? - Private sector employers add another 19,000 jobs in Massachusetts
Discuss - Private sector employers add another 19,000 jobs in Massachusetts
Private sector employers add another 19,000 jobs in Massachusetts
2010-08-20
Info/Broken? - Nearly 50% leave Obama mortgage-aid program
Discuss - Nearly 50% leave Obama mortgage-aid program
Nearly 50% leave Obama mortgage-aid program
2010-08-19
Info/Broken? - Boston Fed's self-exoneration for lack of bubble foresight is bogus
Discuss - Boston Fed's self-exoneration for lack of bubble foresight is bogus
Boston Fed's self-exoneration for lack of bubble foresight is bogus
2010-08-18
Info/Broken? - CME market maker fields questions on Boston housing futures contracts
Discuss - CME market maker fields questions on Boston housing futures contracts
CME market maker fields questions on Boston housing futures contracts
2010-08-18
Info/Broken? - Frank says abolish Freddie and Fannie
Discuss - Frank says abolish Freddie and Fannie
Frank says abolish Freddie and Fannie
2010-08-17
Info/Broken? - Mass. Realtor sentiment plunges 25.72% YOY
Discuss - Mass. Realtor sentiment plunges 25.72% YOY
Mass. Realtor sentiment plunges 25.72% YOY
2010-08-17
Info/Broken? - Text of Geithner's speech on Fannie and Freddie
Discuss - Text of Geithner's speech on Fannie and Freddie
Text of Geithner's speech on Fannie and Freddie
2010-08-17
Info/Broken? - Somerville real estate broker charged with embezzlement
Discuss - Somerville real estate broker charged with embezzlement
Somerville real estate broker charged with embezzlement
2010-08-17
Info/Broken? - Mortgage eligibility at heart of Fannie, Freddie debate
Discuss - Mortgage eligibility at heart of Fannie, Freddie debate
Mortgage eligibility at heart of Fannie, Freddie debate
2010-08-16
Info/Broken? - A special case - The demand for financial assets is not like the demand for iPods
Discuss - A special case - The demand for financial assets is not like the demand for iPods
A special case - The demand for financial assets is not like the demand for iPods
2010-08-16
Info/Broken? - MLSPIN: Bay State home sales dive 30% in July, but nominal median up 6%
Discuss - MLSPIN: Bay State home sales dive 30% in July, but nominal median up 6%
MLSPIN: Bay State home sales dive 30% in July, but nominal median up 6%
2010-08-16
Info/Broken? - Only 36.1% of home sale attempts were successful in Suffolk county in 2009
Discuss - Only 36.1% of home sale attempts were successful in Suffolk county in 2009
Only 36.1% of home sale attempts were successful in Suffolk county in 2009
2010-08-13
Info/Broken? - Barney Frank: "I work closely with the National Association of Realtors. So I'll say the policies I support are ones realtors support."
Discuss - Barney Frank: "I work closely with the National Association of Realtors. So I'll say the policies I support are ones realtors support."
Barney Frank: "I work closely with the National Association of Realtors. So I'll say the policies I support are ones realtors support."
2010-08-13
Info/Broken? - Locally, foreclosures still a problem
Discuss - Locally, foreclosures still a problem
Locally, foreclosures still a problem
2010-08-13
Info/Broken? - New wave of foreclosures
Discuss - New wave of foreclosures
New wave of foreclosures
2010-08-12
Info/Broken? - Mortgage rates hit low of 4.44%
Discuss - Mortgage rates hit low of 4.44%
Mortgage rates hit low of 4.44%
2010-08-11
Info/Broken? - The return to Mass. of no money down mortgages
Discuss - The return to Mass. of no money down mortgages
The return to Mass. of no money down mortgages
2010-08-11
Info/Broken? - Rise in executions evidence that bill for decade of consumer credit is still outstanding
Discuss - Rise in executions evidence that bill for decade of consumer credit is still outstanding
Rise in executions evidence that bill for decade of consumer credit is still outstanding
2010-08-10
Info/Broken? - Rentals in Boston area harder to find, afford
Discuss - Rentals in Boston area harder to find, afford
Rentals in Boston area harder to find, afford
2010-08-10
Info/Broken? - Mortgage giants' fate unclear - US weighs value of huge subsidies
Discuss - Mortgage giants' fate unclear - US weighs value of huge subsidies
Mortgage giants' fate unclear - US weighs value of huge subsidies
2010-08-10
Info/Broken? - Bachus Seeks Hearing on Fannie Mae Whistleblower
Discuss - Bachus Seeks Hearing on Fannie Mae Whistleblower
Bachus Seeks Hearing on Fannie Mae Whistleblower
2010-08-09
Info/Broken? - Patrick signs foreclosure relief bill into law
Discuss - Patrick signs foreclosure relief bill into law
Patrick signs foreclosure relief bill into law
2010-08-07
Info/Broken? - Pending condo sales in East Cambridge reveal market weakness
Discuss - Pending condo sales in East Cambridge reveal market weakness
Pending condo sales in East Cambridge reveal market weakness
2010-08-06
Info/Broken? - Patrick signs sweeping economic bill
Discuss - Patrick signs sweeping economic bill
Patrick signs sweeping economic bill
2010-08-06
Info/Broken? - 15-year mortgage rate sinks below 4%
Discuss - 15-year mortgage rate sinks below 4%
15-year mortgage rate sinks below 4%
2010-08-05
Info/Broken? - Aid bill contains $655m for Mass.
Discuss - Aid bill contains $655m for Mass.
Aid bill contains $655m for Mass.
2010-08-05
Info/Broken? - Developer plans two 15-story towers in Fenway
Discuss - Developer plans two 15-story towers in Fenway
Developer plans two 15-story towers in Fenway
2010-08-04
Info/Broken? - Middlesex North Registry of Deeds, Jul 2010: Deeds down 12%, foreclosure deeds up 87%
Discuss - Middlesex North Registry of Deeds, Jul 2010: Deeds down 12%, foreclosure deeds up 87%
Middlesex North Registry of Deeds, Jul 2010: Deeds down 12%, foreclosure deeds up 87%
2010-08-03
Info/Broken? - MacroMarkets pre-bubble trend: US now undervalued, Boston still overvalued by ~15%
Discuss - MacroMarkets pre-bubble trend: US now undervalued, Boston still overvalued by ~15%
MacroMarkets pre-bubble trend: US now undervalued, Boston still overvalued by ~15%
2010-08-03
Info/Broken? - MA pending home sales down 18% YOY in July, 3rd straight month of declines
Discuss - MA pending home sales down 18% YOY in July, 3rd straight month of declines
MA pending home sales down 18% YOY in July, 3rd straight month of declines
2010-08-02
Info/Broken? - Foreclosure looms - Everett family caught in housing crash seeks to save "dream"
Discuss - Foreclosure looms - Everett family caught in housing crash seeks to save "dream"
Foreclosure looms - Everett family caught in housing crash seeks to save "dream"

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