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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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2010-09-30
Info/Broken? - Congress holds mortgage limits at nearly $730K
Discuss - Congress holds mortgage limits at nearly $730K
Congress holds mortgage limits at nearly $730K
2010-09-29
Info/Broken? - Mass. buoyed in recession, data indicate - Poverty stable, but facts may mask trouble
Discuss - Mass. buoyed in recession, data indicate - Poverty stable, but facts may mask trouble
Mass. buoyed in recession, data indicate - Poverty stable, but facts may mask trouble
2010-09-28
Info/Broken? - Mass. August home sales drop to lowest level in 2 decades
Discuss - Mass. August home sales drop to lowest level in 2 decades
Mass. August home sales drop to lowest level in 2 decades
2010-09-28
Info/Broken? - Beantown Bust: Boston Home Sales and Prices August 2010
Discuss - Beantown Bust: Boston Home Sales and Prices August 2010
Beantown Bust: Boston Home Sales and Prices August 2010
2010-09-27
Info/Broken? - Study: Massachusetts stays on track to lose U.S. House seat
Discuss - Study: Massachusetts stays on track to lose U.S. House seat
Study: Massachusetts stays on track to lose U.S. House seat
2010-09-27
Info/Broken? - One way to fix the U.S. real estate market: MIT
Discuss - One way to fix the U.S. real estate market: MIT
One way to fix the U.S. real estate market: MIT
2010-09-27
Info/Broken? - MA right-to-cure law extended from 90 to 150 days, other lending legislation expanded
Discuss - MA right-to-cure law extended from 90 to 150 days, other lending legislation expanded
MA right-to-cure law extended from 90 to 150 days, other lending legislation expanded
2010-09-24
Info/Broken? - Big downward shift looming in jumbo loan limits?
Discuss - Big downward shift looming in jumbo loan limits?
Big downward shift looming in jumbo loan limits?
2010-09-24
Info/Broken? - MA foreclosures double
Discuss - MA foreclosures double
MA foreclosures double
2010-09-24
Info/Broken? - RI home sales drop 29% in August
Discuss - RI home sales drop 29% in August
RI home sales drop 29% in August
2010-09-23
Info/Broken? - Foreclosure petitions hit highest level in a year
Discuss - Foreclosure petitions hit highest level in a year
Foreclosure petitions hit highest level in a year
2010-09-22
Info/Broken? - Wellesley 7th most expensive address in US
Discuss - Wellesley 7th most expensive address in US
Wellesley 7th most expensive address in US
2010-09-22
Info/Broken? - Housing recovery apt to take years
Discuss - Housing recovery apt to take years
Housing recovery apt to take years
2010-09-21
Info/Broken? - Massachusetts lags U.S. in income growth
Discuss - Massachusetts lags U.S. in income growth
Massachusetts lags U.S. in income growth
2010-09-21
Info/Broken? - Ambitious plans may reshape Boston's waterfront skyline
Discuss - Ambitious plans may reshape Boston's waterfront skyline
Ambitious plans may reshape Boston's waterfront skyline
2010-09-17
Info/Broken? - Middlesex North Registry of Deeds, mid-month stats for Sep 2010 vs Sep 2009: Deeds down 22%, foreclosure deeds up 136%
Discuss - Middlesex North Registry of Deeds, mid-month stats for Sep 2010 vs Sep 2009: Deeds down 22%, foreclosure deeds up 136%
Middlesex North Registry of Deeds, mid-month stats for Sep 2010 vs Sep 2009: Deeds down 22%, foreclosure deeds up 136%
2010-09-17
Info/Broken? - Some Mass. Real Estate "Treading Water"
Discuss - Some Mass. Real Estate "Treading Water"
Some Mass. Real Estate "Treading Water"
2010-09-16
Info/Broken? - Mass. unemployment rate drops to 8.8%
Discuss - Mass. unemployment rate drops to 8.8%
Mass. unemployment rate drops to 8.8%
2010-09-16
Info/Broken? - Banks must help Fannie, Freddie, regulator says
Discuss - Banks must help Fannie, Freddie, regulator says
Banks must help Fannie, Freddie, regulator says
2010-09-15
Info/Broken? - U.S. Home Prices Face Three-Year Drop as Inventory Surge Looms
Discuss - U.S. Home Prices Face Three-Year Drop as Inventory Surge Looms
U.S. Home Prices Face Three-Year Drop as Inventory Surge Looms
2010-09-15
Info/Broken? - Foreclosures sold for about 45% below assessment in Lowell
Discuss - Foreclosures sold for about 45% below assessment in Lowell
Foreclosures sold for about 45% below assessment in Lowell
2010-09-15
Info/Broken? - Fannie, Freddie Future in Balance as Congress Ponders How to End Bailout
Discuss - Fannie, Freddie Future in Balance as Congress Ponders How to End Bailout
Fannie, Freddie Future in Balance as Congress Ponders How to End Bailout
2010-09-14
Info/Broken? - MA REALTOR(R) sentiment down 51.73% YOY in August
Discuss - MA REALTOR(R) sentiment down 51.73% YOY in August
MA REALTOR(R) sentiment down 51.73% YOY in August
2010-09-14
Info/Broken? - Karl Case "optimistic" about the housing market
Discuss - Karl Case "optimistic" about the housing market
Karl Case "optimistic" about the housing market
2010-09-14
Info/Broken? - MLSPIN: MA SFH sales fall 20% in August, but nominal median up 4.8%
Discuss - MLSPIN: MA SFH sales fall 20% in August, but nominal median up 4.8%
MLSPIN: MA SFH sales fall 20% in August, but nominal median up 4.8%
2010-09-13
Info/Broken? - Government sponsoring no/very-low down payment loans again in MA and 3 other states
Discuss - Government sponsoring no/very-low down payment loans again in MA and 3 other states
Government sponsoring no/very-low down payment loans again in MA and 3 other states
2010-09-10
Info/Broken? - Mortgage rates rise for first time in 12 weeks
Discuss - Mortgage rates rise for first time in 12 weeks
Mortgage rates rise for first time in 12 weeks
2010-09-09
Info/Broken? - Homebuyer tax credit: 950,000 must repay
Discuss - Homebuyer tax credit: 950,000 must repay
Homebuyer tax credit: 950,000 must repay
2010-09-09
Info/Broken? - Attorney charged in alleged condo-flipping scheme
Discuss - Attorney charged in alleged condo-flipping scheme
Attorney charged in alleged condo-flipping scheme
2010-09-09
Info/Broken? - Fed: Hub faring better than US economy, but housing acting as a drag
Discuss - Fed: Hub faring better than US economy, but housing acting as a drag
Fed: Hub faring better than US economy, but housing acting as a drag
2010-09-08
Info/Broken? - Massachusetts Pending Home Sales Down 10% YOY
Discuss - Massachusetts Pending Home Sales Down 10% YOY
Massachusetts Pending Home Sales Down 10% YOY
2010-09-08
Info/Broken? - First-Time Homebuyer Tax Credit, an Unmitigated Failure
Discuss - First-Time Homebuyer Tax Credit, an Unmitigated Failure
First-Time Homebuyer Tax Credit, an Unmitigated Failure
2010-09-08
Info/Broken? - Obama administration incentivizes lenders to forgive 10%+ of mortgage debt
Discuss - Obama administration incentivizes lenders to forgive 10%+ of mortgage debt
Obama administration incentivizes lenders to forgive 10%+ of mortgage debt
2010-09-07
Info/Broken? - Will America's universities go the way of its car companies?
Discuss - Will America's universities go the way of its car companies?
Will America's universities go the way of its car companies?
2010-09-07
Info/Broken? - Tech remains vital to Bay State economy
Discuss - Tech remains vital to Bay State economy
Tech remains vital to Bay State economy
2010-09-06
Info/Broken? - Government's dilemma: Help current or future owners?
Discuss - Government's dilemma: Help current or future owners?
Government's dilemma: Help current or future owners?
2010-09-03
Info/Broken? - S&P/Case-Shiller Boston Snapshot: Aug 31, 2010
Discuss - S&P/Case-Shiller Boston Snapshot: Aug 31, 2010
S&P/Case-Shiller Boston Snapshot: Aug 31, 2010
2010-09-02
Info/Broken? - Mortgage rates hit decades-low of 4.32%
Discuss - Mortgage rates hit decades-low of 4.32%
Mortgage rates hit decades-low of 4.32%
2010-09-01
Info/Broken? - Middlesex North Registry of Deeds, Aug 2010 vs Aug 2009: Deeds down 11%, foreclosure deeds up 165%
Discuss - Middlesex North Registry of Deeds, Aug 2010 vs Aug 2009: Deeds down 11%, foreclosure deeds up 165%
Middlesex North Registry of Deeds, Aug 2010 vs Aug 2009: Deeds down 11%, foreclosure deeds up 165%
2010-09-01
Info/Broken? - Why The S&P/Case-Shiller Index is rising while sentiment is falling
Discuss - Why The S&P/Case-Shiller Index is rising while sentiment is falling
Why The S&P/Case-Shiller Index is rising while sentiment is falling

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