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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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<< << << Show Recent Links
2011-05-31
Info/Broken? - US real prices fall to 1999 levels, declines surpass Great Depression
Discuss - US real prices fall to 1999 levels, declines surpass Great Depression
US real prices fall to 1999 levels, declines surpass Great Depression
2011-05-30
Info/Broken? - Mass. economy brightening, except on Beacon Hill
Discuss - Mass. economy brightening, except on Beacon Hill
Mass. economy brightening, except on Beacon Hill
2011-05-27
Info/Broken? - Boston Bubble Wrap, Apr 2011: Real prices plunge 11.06% YOY, moving average turns negative once again, ending government's costly Weekend at Bernie's
Discuss - Boston Bubble Wrap, Apr 2011: Real prices plunge 11.06% YOY, moving average turns negative once again, ending government's costly Weekend at Bernie's
Boston Bubble Wrap, Apr 2011: Real prices plunge 11.06% YOY, moving average turns negative once again, ending government's costly Weekend at Bernie's
2011-05-27
Info/Broken? - Home shopping? Towns near Boston with biggest spring discounts
Discuss - Home shopping? Towns near Boston with biggest spring discounts
Home shopping? Towns near Boston with biggest spring discounts
2011-05-27
Info/Broken? - Massachusetts recovery leaves out many
Discuss - Massachusetts recovery leaves out many
Massachusetts recovery leaves out many
2011-05-27
Info/Broken? - Ex-Fannie executive defends Barney Frank
Discuss - Ex-Fannie executive defends Barney Frank
Ex-Fannie executive defends Barney Frank
2011-05-26
Info/Broken? - Book: Frank helped partner get Fannie Mae job
Discuss - Book: Frank helped partner get Fannie Mae job
Book: Frank helped partner get Fannie Mae job
2011-05-26
Info/Broken? - Fed knew about housing bubble from the start
Discuss - Fed knew about housing bubble from the start
Fed knew about housing bubble from the start
2011-05-26
Info/Broken? - Massive mortgage fraud case ends
Discuss - Massive mortgage fraud case ends
Massive mortgage fraud case ends
2011-05-25
Info/Broken? - Market for single-family homes still slow in April
Discuss - Market for single-family homes still slow in April
Market for single-family homes still slow in April
2011-05-24
Info/Broken? - April MA SFH Apr 2011 vs Apr 2010 - MAR: nominal median -8.5%, sales -20%
Discuss - April MA SFH Apr 2011 vs Apr 2010 - MAR: nominal median -8.5%, sales -20%
April MA SFH Apr 2011 vs Apr 2010 - MAR: nominal median -8.5%, sales -20%
2011-05-23
Info/Broken? - MLSPIN: MA SFH sales plunge 23% YOY in April, nominal median down 4.7%; brokers blame tax credit
Discuss - MLSPIN: MA SFH sales plunge 23% YOY in April, nominal median down 4.7%; brokers blame tax credit
MLSPIN: MA SFH sales plunge 23% YOY in April, nominal median down 4.7%; brokers blame tax credit
2011-05-20
Info/Broken? - State's jobless rate hits a two-year low
Discuss - State's jobless rate hits a two-year low
State's jobless rate hits a two-year low
2011-05-19
Info/Broken? - Forecaster: New England economy struggling to grow
Discuss - Forecaster: New England economy struggling to grow
Forecaster: New England economy struggling to grow
2011-05-18
Info/Broken? - MAR REALTOR(R) sentiment index down 41.51% YOY in Apr
Discuss - MAR REALTOR(R) sentiment index down 41.51% YOY in Apr
MAR REALTOR(R) sentiment index down 41.51% YOY in Apr
2011-05-17
Info/Broken? - Mass. residential foreclosures down, petitions climbing
Discuss - Mass. residential foreclosures down, petitions climbing
Mass. residential foreclosures down, petitions climbing
2011-05-17
Info/Broken? - Gary Shilling "Still Home Sick"
Discuss - Gary Shilling "Still Home Sick"
Gary Shilling "Still Home Sick"
2011-05-17
Info/Broken? - Menino to crack down on "problem properties"
Discuss - Menino to crack down on "problem properties"
Menino to crack down on "problem properties"
2011-05-16
Info/Broken? - CNNMoney Buy vs. Rent By City: Boston = Rent
Discuss - CNNMoney Buy vs. Rent By City: Boston = Rent
CNNMoney Buy vs. Rent By City: Boston = Rent
2011-05-13
Info/Broken? - Winding Down Fannie and Freddie Starts with Loan Limits
Discuss - Winding Down Fannie and Freddie Starts with Loan Limits
Winding Down Fannie and Freddie Starts with Loan Limits
2011-05-13
Info/Broken? - Inflation rises at fastest rate since October 2008
Discuss - Inflation rises at fastest rate since October 2008
Inflation rises at fastest rate since October 2008
2011-05-13
Info/Broken? - Slipping and stalling with housing
Discuss - Slipping and stalling with housing
Slipping and stalling with housing
2011-05-13
Info/Broken? - High rent district
Discuss - High rent district
High rent district
2011-05-12
Info/Broken? - How the $8,000 Tax Credit Cost Home Buyers $15,000
Discuss - How the $8,000 Tax Credit Cost Home Buyers $15,000
How the $8,000 Tax Credit Cost Home Buyers $15,000
2011-05-11
Info/Broken? - WBUR's Radio Boston at 3PM potentially covering Boston housing market
Discuss - WBUR's Radio Boston at 3PM potentially covering Boston housing market
WBUR's Radio Boston at 3PM potentially covering Boston housing market
2011-05-11
Info/Broken? - New Fiserv Forecast Predicts Decrease In Mass. Home Prices
Discuss - New Fiserv Forecast Predicts Decrease In Mass. Home Prices
New Fiserv Forecast Predicts Decrease In Mass. Home Prices
2011-05-11
Info/Broken? - Retreat on big mortgages may hurt upscale market
Discuss - Retreat on big mortgages may hurt upscale market
Retreat on big mortgages may hurt upscale market
2011-05-10
Info/Broken? - Bay State property tax overrides threaten to divide communities, citizens
Discuss - Bay State property tax overrides threaten to divide communities, citizens
Bay State property tax overrides threaten to divide communities, citizens
2011-05-09
Info/Broken? - Middlesex court executions up 50% YOY in April
Discuss - Middlesex court executions up 50% YOY in April
Middlesex court executions up 50% YOY in April
2011-05-06
Info/Broken? - Fed event at Hynes helps homeowners behind on mortgages
Discuss - Fed event at Hynes helps homeowners behind on mortgages
Fed event at Hynes helps homeowners behind on mortgages
2011-05-05
Info/Broken? - Mass. home vacancy rate up
Discuss - Mass. home vacancy rate up
Mass. home vacancy rate up
2011-05-04
Info/Broken? - Poll: Massachusetts residents' confidence in economy slips
Discuss - Poll: Massachusetts residents' confidence in economy slips
Poll: Massachusetts residents' confidence in economy slips
2011-05-04
Info/Broken? - US says Deutsche Bank profited off mortgage insurance through fraud
Discuss - US says Deutsche Bank profited off mortgage insurance through fraud
US says Deutsche Bank profited off mortgage insurance through fraud
2011-05-03
Info/Broken? - MA SFH under agreement plunges 24.2% YOY in April
Discuss - MA SFH under agreement plunges 24.2% YOY in April
MA SFH under agreement plunges 24.2% YOY in April
2011-05-03
Info/Broken? - Harvard report finds rental housing "affordability crisis"
Discuss - Harvard report finds rental housing "affordability crisis"
Harvard report finds rental housing "affordability crisis"
2011-05-02
Info/Broken? - Condo sales in downtown Boston fall while (nominal) prices rise
Discuss - Condo sales in downtown Boston fall while (nominal) prices rise
Condo sales in downtown Boston fall while (nominal) prices rise
2011-05-02
Info/Broken? - Massachusetts High Court Hears Pivotal Mortgage-Transfer Case
Discuss - Massachusetts High Court Hears Pivotal Mortgage-Transfer Case
Massachusetts High Court Hears Pivotal Mortgage-Transfer Case
2011-05-02
Info/Broken? - For many homeowners, false hope - Firms offer mortgage relief, then fail to deliver, state says
Discuss - For many homeowners, false hope - Firms offer mortgage relief, then fail to deliver, state says
For many homeowners, false hope - Firms offer mortgage relief, then fail to deliver, state says

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