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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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2010-10-29
Info/Broken? - Boston Bubble Wrap: September 2010 - Real prices dip back below 2008 (but still above 2009)
Discuss - Boston Bubble Wrap: September 2010 - Real prices dip back below 2008 (but still above 2009)
Boston Bubble Wrap: September 2010 - Real prices dip back below 2008 (but still above 2009)
2010-10-29
Info/Broken? - Gary Shilling: Further 20% drop in single-family prices over next few years
Discuss - Gary Shilling: Further 20% drop in single-family prices over next few years
Gary Shilling: Further 20% drop in single-family prices over next few years
2010-10-28
Info/Broken? - No return to boom years for the US real estate industry, new analysis suggests
Discuss - No return to boom years for the US real estate industry, new analysis suggests
No return to boom years for the US real estate industry, new analysis suggests
2010-10-28
Info/Broken? - Worries about paying the mortgage on rise, poll says
Discuss - Worries about paying the mortgage on rise, poll says
Worries about paying the mortgage on rise, poll says
2010-10-27
Info/Broken? - The Real Estate Market in 2030
Discuss - The Real Estate Market in 2030
The Real Estate Market in 2030
2010-10-27
Info/Broken? - The Fed's impending blunder
Discuss - The Fed's impending blunder
The Fed's impending blunder
2010-10-27
Info/Broken? - Natick home sales down 66% YOY, nominal median down 18%
Discuss - Natick home sales down 66% YOY, nominal median down 18%
Natick home sales down 66% YOY, nominal median down 18%
2010-10-27
Info/Broken? - Owners of foreclosed homes face risk due to banks' practices
Discuss - Owners of foreclosed homes face risk due to banks' practices
Owners of foreclosed homes face risk due to banks' practices
2010-10-26
Info/Broken? - MAR: Sep 2010 MA SFH nominal median up 1.7% YOY, volume down 13.8%
Discuss - MAR: Sep 2010 MA SFH nominal median up 1.7% YOY, volume down 13.8%
MAR: Sep 2010 MA SFH nominal median up 1.7% YOY, volume down 13.8%
2010-10-26
Info/Broken? - Homeowners' tax benefits face cuts
Discuss - Homeowners' tax benefits face cuts
Homeowners' tax benefits face cuts
2010-10-26
Info/Broken? - Inventory in Boston Metro up 20.7% YOY in Sep, 7th highest increase in nation
Discuss - Inventory in Boston Metro up 20.7% YOY in Sep, 7th highest increase in nation
Inventory in Boston Metro up 20.7% YOY in Sep, 7th highest increase in nation
2010-10-22
Info/Broken? - The Economist: How to fix housing
Discuss - The Economist: How to fix housing
The Economist: How to fix housing
2010-10-22
Info/Broken? - The policy options for alleviating America's huge negative-equity problem
Discuss - The policy options for alleviating America's huge negative-equity problem
The policy options for alleviating America's huge negative-equity problem
2010-10-22
Info/Broken? - Mass. foreclosures up nearly 27% YOY in September (though petitions down)
Discuss - Mass. foreclosures up nearly 27% YOY in September (though petitions down)
Mass. foreclosures up nearly 27% YOY in September (though petitions down)
2010-10-22
Info/Broken? - Fannie, Freddie tab could rise to $259B
Discuss - Fannie, Freddie tab could rise to $259B
Fannie, Freddie tab could rise to $259B
2010-10-21
Info/Broken? - Mass. foreclosure petitions drop 7% YOY in September
Discuss - Mass. foreclosure petitions drop 7% YOY in September
Mass. foreclosure petitions drop 7% YOY in September
2010-10-21
Info/Broken? - New England companies see sales rebound, but few new jobs
Discuss - New England companies see sales rebound, but few new jobs
New England companies see sales rebound, but few new jobs
2010-10-20
Info/Broken? - Richard Peiser: A government-forced moratorium will destroy the already-crippled housing market
Discuss - Richard Peiser: A government-forced moratorium will destroy the already-crippled housing market
Richard Peiser: A government-forced moratorium will destroy the already-crippled housing market
2010-10-19
Info/Broken? - Bank of America, GMAC say they're ready to resume foreclosures
Discuss - Bank of America, GMAC say they're ready to resume foreclosures
Bank of America, GMAC say they're ready to resume foreclosures
2010-10-19
Info/Broken? - US issues new rules for appraisers
Discuss - US issues new rules for appraisers
US issues new rules for appraisers
2010-10-18
Info/Broken? - Niall Ferguson - U.S. will default or inflate
Discuss - Niall Ferguson - U.S. will default or inflate
Niall Ferguson - U.S. will default or inflate
2010-10-18
Info/Broken? - An election that could shake up Greater Boston's housing market
Discuss - An election that could shake up Greater Boston's housing market
An election that could shake up Greater Boston's housing market
2010-10-18
Info/Broken? - MA REALTOR(R) sentiment down 51.42% YOY in September
Discuss - MA REALTOR(R) sentiment down 51.42% YOY in September
MA REALTOR(R) sentiment down 51.42% YOY in September
2010-10-15
Info/Broken? - Boston MSA Price/Income Approximation: 1975 - 2009 (- 2014)
Discuss - Boston MSA Price/Income Approximation: 1975 - 2009 (- 2014)
Boston MSA Price/Income Approximation: 1975 - 2009 (- 2014)
2010-10-15
Info/Broken? - Mortgage rates continue to fall
Discuss - Mortgage rates continue to fall
Mortgage rates continue to fall
2010-10-15
Info/Broken? - US foreclosures reach a record high
Discuss - US foreclosures reach a record high
US foreclosures reach a record high
2010-10-14
Info/Broken? - MLSPIN: MA SFH sales fall 16% in September, nominal median up 1.5%
Discuss - MLSPIN: MA SFH sales fall 16% in September, nominal median up 1.5%
MLSPIN: MA SFH sales fall 16% in September, nominal median up 1.5%
2010-10-14
Info/Broken? - The descent of Fannie Mae and Freddie Mac
Discuss - The descent of Fannie Mae and Freddie Mac
The descent of Fannie Mae and Freddie Mac
2010-10-14
Info/Broken? - Stance on Fannie and Freddie dogs Frank
Discuss - Stance on Fannie and Freddie dogs Frank
Stance on Fannie and Freddie dogs Frank
2010-10-13
Info/Broken? - Boston Foundation: Greater Boston housing market might be facing period of more instability
Discuss - Boston Foundation: Greater Boston housing market might be facing period of more instability
Boston Foundation: Greater Boston housing market might be facing period of more instability
2010-10-13
Info/Broken? - Is housing the most dangerous asset in the world?
Discuss - Is housing the most dangerous asset in the world?
Is housing the most dangerous asset in the world?
2010-10-13
Info/Broken? - Mortgage refinancing requests climb 21%
Discuss - Mortgage refinancing requests climb 21%
Mortgage refinancing requests climb 21%
2010-10-12
Info/Broken? - State's economy vulnerable, analysts say
Discuss - State's economy vulnerable, analysts say
State's economy vulnerable, analysts say
2010-10-12
Info/Broken? - Financial services strong in Mass.
Discuss - Financial services strong in Mass.
Financial services strong in Mass.
2010-10-12
Info/Broken? - Foreclosures accounted for about 1/3 of MA sales in Q2
Discuss - Foreclosures accounted for about 1/3 of MA sales in Q2
Foreclosures accounted for about 1/3 of MA sales in Q2
2010-10-12
Info/Broken? - Wall St. against foreclosure halt
Discuss - Wall St. against foreclosure halt
Wall St. against foreclosure halt
2010-10-11
Info/Broken? - Census: College grads hightail it from Hub
Discuss - Census: College grads hightail it from Hub
Census: College grads hightail it from Hub
2010-10-11
Info/Broken? - Amid criticism, zero-down-payment mortgages still available
Discuss - Amid criticism, zero-down-payment mortgages still available
Amid criticism, zero-down-payment mortgages still available
2010-10-11
Info/Broken? - Foreclosure freeze could prolong housing downturn for years
Discuss - Foreclosure freeze could prolong housing downturn for years
Foreclosure freeze could prolong housing downturn for years
2010-10-08
Info/Broken? - CNNMoney: Renting still more advantageous than buying in Boston
Discuss - CNNMoney: Renting still more advantageous than buying in Boston
CNNMoney: Renting still more advantageous than buying in Boston
2010-10-08
Info/Broken? - Lawyer: 'Insane' foreclosures should be undone
Discuss - Lawyer: 'Insane' foreclosures should be undone
Lawyer: 'Insane' foreclosures should be undone
2010-10-07
Info/Broken? - U.S. charges Dorchester developer, four others in condo flips
Discuss - U.S. charges Dorchester developer, four others in condo flips
U.S. charges Dorchester developer, four others in condo flips
2010-10-07
Info/Broken? - Foreclosure laws being reviewed - Task force seeks ways to simplify
Discuss - Foreclosure laws being reviewed - Task force seeks ways to simplify
Foreclosure laws being reviewed - Task force seeks ways to simplify
2010-10-06
Info/Broken? - US offers mortgage aid to the jobless - MA homeowners could get $50K; Some loans may not have to be repaid
Discuss - US offers mortgage aid to the jobless - MA homeowners could get $50K; Some loans may not have to be repaid
US offers mortgage aid to the jobless - MA homeowners could get $50K; Some loans may not have to be repaid
2010-10-06
Info/Broken? - AG asks for halt to foreclosures - Coakley wants banks to prove they comply
Discuss - AG asks for halt to foreclosures - Coakley wants banks to prove they comply
AG asks for halt to foreclosures - Coakley wants banks to prove they comply
2010-10-05
Info/Broken? - Bay State pending single-family home sales fell 19% YOY in September
Discuss - Bay State pending single-family home sales fell 19% YOY in September
Bay State pending single-family home sales fell 19% YOY in September
2010-10-05
Info/Broken? - State taking hard look at foreclosure practices - Lender errors raise concerns about lack of judicial review
Discuss - State taking hard look at foreclosure practices - Lender errors raise concerns about lack of judicial review
State taking hard look at foreclosure practices - Lender errors raise concerns about lack of judicial review
2010-10-04
Info/Broken? - Middlesex North Registry of Deeds, Sep 2010 vs Sep 2009: Deeds down 18%, foreclosure deeds up 165%
Discuss - Middlesex North Registry of Deeds, Sep 2010 vs Sep 2009: Deeds down 18%, foreclosure deeds up 165%
Middlesex North Registry of Deeds, Sep 2010 vs Sep 2009: Deeds down 18%, foreclosure deeds up 165%
2010-10-04
Info/Broken? - Study: Many in Hub still can't afford to buy homes
Discuss - Study: Many in Hub still can't afford to buy homes
Study: Many in Hub still can't afford to buy homes
2010-10-01
Info/Broken? - Boston Bubble Wrap: August 2010
Discuss - Boston Bubble Wrap: August 2010
Boston Bubble Wrap: August 2010
2010-10-01
Info/Broken? - Foreclosure Errors Cloud Homeownership With "Blighted Titles"
Discuss - Foreclosure Errors Cloud Homeownership With "Blighted Titles"
Foreclosure Errors Cloud Homeownership With "Blighted Titles"
2010-10-01
Info/Broken? - 30-year mortgage rate sinks to 4.32%
Discuss - 30-year mortgage rate sinks to 4.32%
30-year mortgage rate sinks to 4.32%

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