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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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2011-02-28
Info/Broken? - Beantown Bust: Boston Home Sales and Prices January 2011
Discuss - Beantown Bust: Boston Home Sales and Prices January 2011
Beantown Bust: Boston Home Sales and Prices January 2011
2011-02-28
Info/Broken? - Big banks may have to take cut on housing crisis
Discuss - Big banks may have to take cut on housing crisis
Big banks may have to take cut on housing crisis
2011-02-28
Info/Broken? - Salem witch brews up remedy for foreclosures
Discuss - Salem witch brews up remedy for foreclosures
Salem witch brews up remedy for foreclosures
2011-02-27
Info/Broken? - Buffett on Housing: "Within a year or so residential housing problems should largely be behind us, the exceptions being only high-value houses and..."
Discuss - Buffett on Housing: "Within a year or so residential housing problems should largely be behind us, the exceptions being only high-value houses and..."
Buffett on Housing: "Within a year or so residential housing problems should largely be behind us, the exceptions being only high-value houses and..."
2011-02-25
Info/Broken? - S&P/Case-Shiller Boston Snapshot: Futures price in real bottom at end of 2011
Discuss - S&P/Case-Shiller Boston Snapshot: Futures price in real bottom at end of 2011
S&P/Case-Shiller Boston Snapshot: Futures price in real bottom at end of 2011
2011-02-25
Info/Broken? - Boston Bubble Wrap, Jan 2011: MA SFH real median down 6.64% YOY
Discuss - Boston Bubble Wrap, Jan 2011: MA SFH real median down 6.64% YOY
Boston Bubble Wrap, Jan 2011: MA SFH real median down 6.64% YOY
2011-02-25
Info/Broken? - Essex County inventory: foreclosures 6.66%, shadow ratio 2.60%
Discuss - Essex County inventory: foreclosures 6.66%, shadow ratio 2.60%
Essex County inventory: foreclosures 6.66%, shadow ratio 2.60%
2011-02-25
Info/Broken? - Fannie, Freddie narrow losses but seek more aid
Discuss - Fannie, Freddie narrow losses but seek more aid
Fannie, Freddie narrow losses but seek more aid
2011-02-24
Info/Broken? - Redfin: The Double-Dip (Probably) Stops Dipping in March
Discuss - Redfin: The Double-Dip (Probably) Stops Dipping in March
Redfin: The Double-Dip (Probably) Stops Dipping in March
2011-02-24
Info/Broken? - Foreclosures Jump on Martha's Vineyard
Discuss - Foreclosures Jump on Martha's Vineyard
Foreclosures Jump on Martha's Vineyard
2011-02-23
Info/Broken? - MAR REALTOR(R) sentiment index down 38% YOY in Jan
Discuss - MAR REALTOR(R) sentiment index down 38% YOY in Jan
MAR REALTOR(R) sentiment index down 38% YOY in Jan
2011-02-23
Info/Broken? - MAR: MA SFH nominal median down 5.2% YOY in Jan
Discuss - MAR: MA SFH nominal median down 5.2% YOY in Jan
MAR: MA SFH nominal median down 5.2% YOY in Jan
2011-02-23
Info/Broken? - Tim Warren: "By the end of this year, we'll be saying that the bust is over."
Discuss - Tim Warren: "By the end of this year, we'll be saying that the bust is over."
Tim Warren: "By the end of this year, we'll be saying that the bust is over."
2011-02-22
Info/Broken? - Case Shiller Confirms Housing Double Dip Accelerated, 20-City Composite At Lowest Since June 2009
Discuss - Case Shiller Confirms Housing Double Dip Accelerated, 20-City Composite At Lowest Since June 2009
Case Shiller Confirms Housing Double Dip Accelerated, 20-City Composite At Lowest Since June 2009
2011-02-22
Info/Broken? - Warren Group: MA SFH nominal median down 7% YOY in Jan
Discuss - Warren Group: MA SFH nominal median down 7% YOY in Jan
Warren Group: MA SFH nominal median down 7% YOY in Jan
2011-02-21
Info/Broken? - Chinatown complex gets green light from city
Discuss - Chinatown complex gets green light from city
Chinatown complex gets green light from city
2011-02-18
Info/Broken? - Suffolk County Feb 4 inventory: foreclosures 6.69%, shadow ratio 8.61%
Discuss - Suffolk County Feb 4 inventory: foreclosures 6.69%, shadow ratio 8.61%
Suffolk County Feb 4 inventory: foreclosures 6.69%, shadow ratio 8.61%
2011-02-18
Info/Broken? - New Newton zoning regulations cause controversy
Discuss - New Newton zoning regulations cause controversy
New Newton zoning regulations cause controversy
2011-02-18
Info/Broken? - Rips in the mortgage blueprint
Discuss - Rips in the mortgage blueprint
Rips in the mortgage blueprint
2011-02-17
Info/Broken? - Digging deep to keep roofs over their heads
Discuss - Digging deep to keep roofs over their heads
Digging deep to keep roofs over their heads
2011-02-16
Info/Broken? - Mass. bankruptcy claims still on the rise
Discuss - Mass. bankruptcy claims still on the rise
Mass. bankruptcy claims still on the rise
2011-02-14
Info/Broken? - Hoping Obama Housing Plan is For Real
Discuss - Hoping Obama Housing Plan is For Real
Hoping Obama Housing Plan is For Real
2011-02-14
Info/Broken? - Ameriquest coverage was near breaking point for Patrick
Discuss - Ameriquest coverage was near breaking point for Patrick
Ameriquest coverage was near breaking point for Patrick
2011-02-14
Info/Broken? - MIT's Billion Prices Project massively expands depth of inflation tracking
Discuss - MIT's Billion Prices Project massively expands depth of inflation tracking
MIT's Billion Prices Project massively expands depth of inflation tracking
2011-02-11
Info/Broken? - Middlesex County Feb 4 inventory: foreclosures 4.82%, shadow ratio 1.44%
Discuss - Middlesex County Feb 4 inventory: foreclosures 4.82%, shadow ratio 1.44%
Middlesex County Feb 4 inventory: foreclosures 4.82%, shadow ratio 1.44%
2011-02-11
Info/Broken? - Obama wants big changes in mortgages
Discuss - Obama wants big changes in mortgages
Obama wants big changes in mortgages
2011-02-11
Info/Broken? - Foreclosures hit high-end Boston properties
Discuss - Foreclosures hit high-end Boston properties
Foreclosures hit high-end Boston properties
2011-02-11
Info/Broken? - Foreclosure drop not all good news
Discuss - Foreclosure drop not all good news
Foreclosure drop not all good news
2011-02-10
Info/Broken? - Rate on 30-year mortgage hits 5.05%
Discuss - Rate on 30-year mortgage hits 5.05%
Rate on 30-year mortgage hits 5.05%
2011-02-09
Info/Broken? - Boston area homes sold at a loss hit 30% in December
Discuss - Boston area homes sold at a loss hit 30% in December
Boston area homes sold at a loss hit 30% in December
2011-02-09
Info/Broken? - State officials attempt to promote right-to-cure law
Discuss - State officials attempt to promote right-to-cure law
State officials attempt to promote right-to-cure law
2011-02-09
Info/Broken? - Shiller: Housing Bubbles Are Few and Far Between
Discuss - Shiller: Housing Bubbles Are Few and Far Between
Shiller: Housing Bubbles Are Few and Far Between
2011-02-08
Info/Broken? - S&P raises MA rating from stable to positive
Discuss - S&P raises MA rating from stable to positive
S&P raises MA rating from stable to positive
2011-02-07
Info/Broken? - MIT: Is US Housing Over- or Under-Priced? Some Historical Perspective (PDF)
Discuss - MIT: Is US Housing Over- or Under-Priced? Some Historical Perspective (PDF)
MIT: Is US Housing Over- or Under-Priced? Some Historical Perspective (PDF)
2011-02-07
Info/Broken? - MAR: Massachusetts January 2011 Pending Homes Sales Down as Snow Plays Factor
Discuss - MAR: Massachusetts January 2011 Pending Homes Sales Down as Snow Plays Factor
MAR: Massachusetts January 2011 Pending Homes Sales Down as Snow Plays Factor
2011-02-04
Info/Broken? - Norfolk County Jan 6 inventory: foreclosures for sale 3.58%, shadow ratio 9.94%
Discuss - Norfolk County Jan 6 inventory: foreclosures for sale 3.58%, shadow ratio 9.94%
Norfolk County Jan 6 inventory: foreclosures for sale 3.58%, shadow ratio 9.94%
2011-02-04
Info/Broken? - In a jam, more skip mortgage payments in Mass.
Discuss - In a jam, more skip mortgage payments in Mass.
In a jam, more skip mortgage payments in Mass.
2011-02-04
Info/Broken? - Cape home lottery winners decline to buy
Discuss - Cape home lottery winners decline to buy
Cape home lottery winners decline to buy
2011-02-04
Info/Broken? - Long-stalled residences back in play
Discuss - Long-stalled residences back in play
Long-stalled residences back in play
2011-02-03
Info/Broken? - Delayed mortgage aid set for March - US to provide bridge loans to unemployed
Discuss - Delayed mortgage aid set for March - US to provide bridge loans to unemployed
Delayed mortgage aid set for March - US to provide bridge loans to unemployed
2011-02-02
Info/Broken? - Would 30% down cure or kill the housing market?
Discuss - Would 30% down cure or kill the housing market?
Would 30% down cure or kill the housing market?
2011-02-02
Info/Broken? - Massachusetts ranked 3 most likely to go bankrupt
Discuss - Massachusetts ranked 3 most likely to go bankrupt
Massachusetts ranked 3 most likely to go bankrupt
2011-02-02
Info/Broken? - Local business confidence rose in January
Discuss - Local business confidence rose in January
Local business confidence rose in January
2011-02-01
Info/Broken? - Homeowners face abatement deadline
Discuss - Homeowners face abatement deadline
Homeowners face abatement deadline
2011-02-01
Info/Broken? - Ruling staves off foreclosure for W hotel developer
Discuss - Ruling staves off foreclosure for W hotel developer
Ruling staves off foreclosure for W hotel developer
2011-02-01
Info/Broken? - 1 of 5 mortgages in default after aid
Discuss - 1 of 5 mortgages in default after aid
1 of 5 mortgages in default after aid

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