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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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2011-03-31
Info/Broken? - Bay State foreclosure activity continued to decline in February
Discuss - Bay State foreclosure activity continued to decline in February
Bay State foreclosure activity continued to decline in February
2011-03-31
Info/Broken? - Experts say housing costs, schools key to job creation in Massachusetts
Discuss - Experts say housing costs, schools key to job creation in Massachusetts
Experts say housing costs, schools key to job creation in Massachusetts
2011-03-30
Info/Broken? - Inflation wrecking recovery; Massachusetts job fair canceled due to lack of employer participation
Discuss - Inflation wrecking recovery; Massachusetts job fair canceled due to lack of employer participation
Inflation wrecking recovery; Massachusetts job fair canceled due to lack of employer participation
2011-03-30
Info/Broken? - Home sales plunge to slowest February on record
Discuss - Home sales plunge to slowest February on record
Home sales plunge to slowest February on record
2011-03-30
Info/Broken? - Evergreen, Fidelity defend site closures
Discuss - Evergreen, Fidelity defend site closures
Evergreen, Fidelity defend site closures
2011-03-30
Info/Broken? - House votes to end mortgage reduction program
Discuss - House votes to end mortgage reduction program
House votes to end mortgage reduction program
2011-03-29
Info/Broken? - Boston's suburbs feel the pain of corporate relocations
Discuss - Boston's suburbs feel the pain of corporate relocations
Boston's suburbs feel the pain of corporate relocations
2011-03-29
Info/Broken? - MAR: MA SFH nominal median down 0.7% YOY in Feb, volume down 12.5%
Discuss - MAR: MA SFH nominal median down 0.7% YOY in Feb, volume down 12.5%
MAR: MA SFH nominal median down 0.7% YOY in Feb, volume down 12.5%
2011-03-29
Info/Broken? - Warren Group: MA SFH nominal median down 5.6% YOY in Feb, volume plunges 15.7%
Discuss - Warren Group: MA SFH nominal median down 5.6% YOY in Feb, volume plunges 15.7%
Warren Group: MA SFH nominal median down 5.6% YOY in Feb, volume plunges 15.7%
2011-03-29
Info/Broken? - Best and Worst States for Retirement (MA #43)
Discuss - Best and Worst States for Retirement (MA #43)
Best and Worst States for Retirement (MA #43)
2011-03-28
Info/Broken? - Growth slow in Boston metro area
Discuss - Growth slow in Boston metro area
Growth slow in Boston metro area
2011-03-25
Info/Broken? - Suffolk County inventory: foreclosures 6.30%, shadow 9.48%
Discuss - Suffolk County inventory: foreclosures 6.30%, shadow 9.48%
Suffolk County inventory: foreclosures 6.30%, shadow 9.48%
2011-03-24
Info/Broken? - US sales of new homes slowest in at least half-century
Discuss - US sales of new homes slowest in at least half-century
US sales of new homes slowest in at least half-century
2011-03-23
Info/Broken? - Newton's population up less than 2% from 2000, elderly population dives
Discuss - Newton's population up less than 2% from 2000, elderly population dives
Newton's population up less than 2% from 2000, elderly population dives
2011-03-23
Info/Broken? - U.S. Census Bureau Delivers Massachusetts' 2010 Census Population Totals
Discuss - U.S. Census Bureau Delivers Massachusetts' 2010 Census Population Totals
U.S. Census Bureau Delivers Massachusetts' 2010 Census Population Totals
2011-03-22
Info/Broken? - Treasury to sell mortgage securities - US has $142b in holdings bought to prop up market
Discuss - Treasury to sell mortgage securities - US has $142b in holdings bought to prop up market
Treasury to sell mortgage securities - US has $142b in holdings bought to prop up market
2011-03-21
Info/Broken? - Jobs Up In Massachusetts, But Confidence Low
Discuss - Jobs Up In Massachusetts, But Confidence Low
Jobs Up In Massachusetts, But Confidence Low
2011-03-18
Info/Broken? - Middlesex County inventory: foreclosures 4.15%, shadow ratio 3.80%
Discuss - Middlesex County inventory: foreclosures 4.15%, shadow ratio 3.80%
Middlesex County inventory: foreclosures 4.15%, shadow ratio 3.80%
2011-03-18
Info/Broken? - Editorial: Fidelity's decision
Discuss - Editorial: Fidelity's decision
Editorial: Fidelity's decision
2011-03-17
Info/Broken? - Fidelity move will have ripple effect
Discuss - Fidelity move will have ripple effect
Fidelity move will have ripple effect
2011-03-17
Info/Broken? - Patrick says Fidelity left him in dark on jobs move
Discuss - Patrick says Fidelity left him in dark on jobs move
Patrick says Fidelity left him in dark on jobs move
2011-03-16
Info/Broken? - Mass. could lose 10,000 units of affordable housing
Discuss - Mass. could lose 10,000 units of affordable housing
Mass. could lose 10,000 units of affordable housing
2011-03-16
Info/Broken? - Hub area price index rose 1.6% last year, but housing down
Discuss - Hub area price index rose 1.6% last year, but housing down
Hub area price index rose 1.6% last year, but housing down
2011-03-16
Info/Broken? - Freddie Mac's Former Chief May Face S.E.C. Action
Discuss - Freddie Mac's Former Chief May Face S.E.C. Action
Freddie Mac's Former Chief May Face S.E.C. Action
2011-03-15
Info/Broken? - Fidelity to close Marlboro office, move 1,100 jobs out of Mass.
Discuss - Fidelity to close Marlboro office, move 1,100 jobs out of Mass.
Fidelity to close Marlboro office, move 1,100 jobs out of Mass.
2011-03-15
Info/Broken? - Massachusetts REALTOR(R) sentiment down 32% YOY
Discuss - Massachusetts REALTOR(R) sentiment down 32% YOY
Massachusetts REALTOR(R) sentiment down 32% YOY
2011-03-14
Info/Broken? - Republicans Set to Begin Chipping Away at Fannie Mae, Freddie Mac
Discuss - Republicans Set to Begin Chipping Away at Fannie Mae, Freddie Mac
Republicans Set to Begin Chipping Away at Fannie Mae, Freddie Mac
2011-03-10
Info/Broken? - Zillow Launches Rent Zestimates
Discuss - Zillow Launches Rent Zestimates
Zillow Launches Rent Zestimates
2011-03-09
Info/Broken? - Bank of America to put almost half of mortgages into "bad bank"
Discuss - Bank of America to put almost half of mortgages into "bad bank"
Bank of America to put almost half of mortgages into "bad bank"
2011-03-08
Info/Broken? - 1 in 5 Boston homeowners has no equity
Discuss - 1 in 5 Boston homeowners has no equity
1 in 5 Boston homeowners has no equity
2011-03-08
Info/Broken? - Counties Seek Millions From Mortgage Giant
Discuss - Counties Seek Millions From Mortgage Giant
Counties Seek Millions From Mortgage Giant
2011-03-08
Info/Broken? - AGs say they aim to repair foreclosure system
Discuss - AGs say they aim to repair foreclosure system
AGs say they aim to repair foreclosure system
2011-03-07
Info/Broken? - Property is widely seen as a safe asset. It is arguably the most dangerous of all, says Andrew Palmer
Discuss - Property is widely seen as a safe asset. It is arguably the most dangerous of all, says Andrew Palmer
Property is widely seen as a safe asset. It is arguably the most dangerous of all, says Andrew Palmer
2011-03-07
Info/Broken? - Promised relief, many instead deeper in debt
Discuss - Promised relief, many instead deeper in debt
Promised relief, many instead deeper in debt
2011-03-04
Info/Broken? - Norfolk County inventory: foreclosures 4.35%, shadow ratio 7.39%
Discuss - Norfolk County inventory: foreclosures 4.35%, shadow ratio 7.39%
Norfolk County inventory: foreclosures 4.35%, shadow ratio 7.39%
2011-03-04
Info/Broken? - Drop in Mass. foreclosures tied to fewer seizures
Discuss - Drop in Mass. foreclosures tied to fewer seizures
Drop in Mass. foreclosures tied to fewer seizures
2011-03-04
Info/Broken? - The end of 30-year fixed-rate mortgage?
Discuss - The end of 30-year fixed-rate mortgage?
The end of 30-year fixed-rate mortgage?
2011-03-03
Info/Broken? - Bernanke won't rule out more bond buying to lift economy
Discuss - Bernanke won't rule out more bond buying to lift economy
Bernanke won't rule out more bond buying to lift economy
2011-03-03
Info/Broken? - Fed reports growth in region's manufacturing, tech and staffing industries
Discuss - Fed reports growth in region's manufacturing, tech and staffing industries
Fed reports growth in region's manufacturing, tech and staffing industries
2011-03-03
Info/Broken? - Mass. foreclosures fall in January, likely due to lender slowing rather than borrower stability
Discuss - Mass. foreclosures fall in January, likely due to lender slowing rather than borrower stability
Mass. foreclosures fall in January, likely due to lender slowing rather than borrower stability
2011-03-02
Info/Broken? - New England's largest technology employers
Discuss - New England's largest technology employers
New England's largest technology employers
2011-03-02
Info/Broken? - Pending home sales down 17.6% YOY in February
Discuss - Pending home sales down 17.6% YOY in February
Pending home sales down 17.6% YOY in February
2011-03-01
Info/Broken? - Geithner wants housing overhaul bill in 2 years
Discuss - Geithner wants housing overhaul bill in 2 years
Geithner wants housing overhaul bill in 2 years
2011-03-01
Info/Broken? - Real estate signs of shame in Webster
Discuss - Real estate signs of shame in Webster
Real estate signs of shame in Webster
2011-03-01
Info/Broken? - Foreclosures cost Rhode Island $5.6 billion
Discuss - Foreclosures cost Rhode Island $5.6 billion
Foreclosures cost Rhode Island $5.6 billion

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