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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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2011-08-31
Info/Broken? - July foreclosure starts hit highest level of 2011
Discuss - July foreclosure starts hit highest level of 2011
July foreclosure starts hit highest level of 2011
2011-08-30
Info/Broken? - S&P/Case-Shiller Boston down 2.1% YOY (nominal) in June
Discuss - S&P/Case-Shiller Boston down 2.1% YOY (nominal) in June
S&P/Case-Shiller Boston down 2.1% YOY (nominal) in June
2011-08-29
Info/Broken? - Foreclosure mess here to stay - Study: Mass. woes won't go away till '17
Discuss - Foreclosure mess here to stay - Study: Mass. woes won't go away till '17
Foreclosure mess here to stay - Study: Mass. woes won't go away till '17
2011-08-29
Info/Broken? - Working poor left behind in Massachusetts' economic rebound
Discuss - Working poor left behind in Massachusetts' economic rebound
Working poor left behind in Massachusetts' economic rebound
2011-08-29
Info/Broken? - Gambling projections for Mass. no sure bet
Discuss - Gambling projections for Mass. no sure bet
Gambling projections for Mass. no sure bet
2011-08-26
Info/Broken? - Foreclosures hit yearly high in Massachusetts
Discuss - Foreclosures hit yearly high in Massachusetts
Foreclosures hit yearly high in Massachusetts
2011-08-25
Info/Broken? - States Where No One Wants To Buy A New Home (Mass. #7)
Discuss - States Where No One Wants To Buy A New Home (Mass. #7)
States Where No One Wants To Buy A New Home (Mass. #7)
2011-08-25
Info/Broken? - Low rates squeeze savers and may hold back economy
Discuss - Low rates squeeze savers and may hold back economy
Low rates squeeze savers and may hold back economy
2011-08-24
Info/Broken? - US home mortgage applications fall to 15-year low
Discuss - US home mortgage applications fall to 15-year low
US home mortgage applications fall to 15-year low
2011-08-23
Info/Broken? - MAR on MA SFH Jul 2011 vs. Jul 2010: nominal median down 3%, volume up 14%
Discuss - MAR on MA SFH Jul 2011 vs. Jul 2010: nominal median down 3%, volume up 14%
MAR on MA SFH Jul 2011 vs. Jul 2010: nominal median down 3%, volume up 14%
2011-08-23
Info/Broken? - Warren Group on MA SFH Jul 2011 vs. Jul 2010: nominal median down 0.78%, volume up 7%
Discuss - Warren Group on MA SFH Jul 2011 vs. Jul 2010: nominal median down 0.78%, volume up 7%
Warren Group on MA SFH Jul 2011 vs. Jul 2010: nominal median down 0.78%, volume up 7%
2011-08-23
Info/Broken? - States' foreclosure talks with big mortgage servicers stall
Discuss - States' foreclosure talks with big mortgage servicers stall
States' foreclosure talks with big mortgage servicers stall
2011-08-19
Info/Broken? - Mass. jobless rate holds steady - Economists cautious as state outperforms nation again in July
Discuss - Mass. jobless rate holds steady - Economists cautious as state outperforms nation again in July
Mass. jobless rate holds steady - Economists cautious as state outperforms nation again in July
2011-08-18
Info/Broken? - S&P Said To Face U.S. Probe On Mortgages
Discuss - S&P Said To Face U.S. Probe On Mortgages
S&P Said To Face U.S. Probe On Mortgages
2011-08-18
Info/Broken? - Cheap Mortgages, America's Hidden Entitlement
Discuss - Cheap Mortgages, America's Hidden Entitlement
Cheap Mortgages, America's Hidden Entitlement
2011-08-18
Info/Broken? - U.S. Mortgage Rates Tumble to Lowest in More Than 50 Years
Discuss - U.S. Mortgage Rates Tumble to Lowest in More Than 50 Years
U.S. Mortgage Rates Tumble to Lowest in More Than 50 Years
2011-08-17
Info/Broken? - Boston homeowners see mortgage balances rise
Discuss - Boston homeowners see mortgage balances rise
Boston homeowners see mortgage balances rise
2011-08-17
Info/Broken? - Obama: Another year or more for housing turnaround
Discuss - Obama: Another year or more for housing turnaround
Obama: Another year or more for housing turnaround
2011-08-16
Info/Broken? - Confidence index falls for Mass. Realtors
Discuss - Confidence index falls for Mass. Realtors
Confidence index falls for Mass. Realtors
2011-08-15
Info/Broken? - Today is 40th anniversary of US severing dollar's last, tenuous link to gold
Discuss - Today is 40th anniversary of US severing dollar's last, tenuous link to gold
Today is 40th anniversary of US severing dollar's last, tenuous link to gold
2011-08-12
Info/Broken? - No vacancy: Downtown Hub rents hitting peak levels
Discuss - No vacancy: Downtown Hub rents hitting peak levels
No vacancy: Downtown Hub rents hitting peak levels
2011-08-11
Info/Broken? - Market volatility didn't spare Bay State - Biotech gains in year; energy takes hit
Discuss - Market volatility didn't spare Bay State - Biotech gains in year; energy takes hit
Market volatility didn't spare Bay State - Biotech gains in year; energy takes hit
2011-08-10
Info/Broken? - Deal offers mortgage relief for thousands - Lender, Mass. sign $125m settlement
Discuss - Deal offers mortgage relief for thousands - Lender, Mass. sign $125m settlement
Deal offers mortgage relief for thousands - Lender, Mass. sign $125m settlement
2011-08-09
Info/Broken? - Boston home market sinks to (nominal) '02 levels as losses mount
Discuss - Boston home market sinks to (nominal) '02 levels as losses mount
Boston home market sinks to (nominal) '02 levels as losses mount
2011-08-09
Info/Broken? - Fear of double dip recession spreads to Bay State
Discuss - Fear of double dip recession spreads to Bay State
Fear of double dip recession spreads to Bay State
2011-08-08
Info/Broken? - Massachusetts home foreclosures on the rise again
Discuss - Massachusetts home foreclosures on the rise again
Massachusetts home foreclosures on the rise again
2011-08-08
Info/Broken? - Renting generally beat buying over the last 30 years
Discuss - Renting generally beat buying over the last 30 years
Renting generally beat buying over the last 30 years
2011-08-06
Info/Broken? - S&P downgrades US debt for 1st time in history; may impact borrowing costs (e.g., mortgages)
Discuss - S&P downgrades US debt for 1st time in history; may impact borrowing costs (e.g., mortgages)
S&P downgrades US debt for 1st time in history; may impact borrowing costs (e.g., mortgages)
2011-08-05
Info/Broken? - MA bankruptcy case upholds MERS-held mortgage
Discuss - MA bankruptcy case upholds MERS-held mortgage
MA bankruptcy case upholds MERS-held mortgage
2011-08-04
Info/Broken? - July Pending Home Sales in Massachusetts up 5.0% YOY
Discuss - July Pending Home Sales in Massachusetts up 5.0% YOY
July Pending Home Sales in Massachusetts up 5.0% YOY
2011-08-03
Info/Broken? - Huge cuts could imperil recovery, economists say
Discuss - Huge cuts could imperil recovery, economists say
Huge cuts could imperil recovery, economists say
2011-08-02
Info/Broken? - Middlesex North Registry of Deeds, Jul 2011 vs Jul 2010: Deeds up 8%, orders of notice up 11%
Discuss - Middlesex North Registry of Deeds, Jul 2011 vs Jul 2010: Deeds up 8%, orders of notice up 11%
Middlesex North Registry of Deeds, Jul 2011 vs Jul 2010: Deeds up 8%, orders of notice up 11%
2011-08-01
Info/Broken? - Home sales dive 20% - Shaky economy, tighter lending keep potential buyers on sidelines
Discuss - Home sales dive 20% - Shaky economy, tighter lending keep potential buyers on sidelines
Home sales dive 20% - Shaky economy, tighter lending keep potential buyers on sidelines

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